ALROSA Goes Online: Diamonds with Guaranteed Origin and Social Distancing

By National Jewelers


The COVID-19 pandemic has forced consumers to pay special attention to the traceability of goods. Under these conditions, jewelry manufacturers and retailers will have to catch up and find a way to guarantee the origin of...

The COVID-19 pandemic has forced consumers to pay special attention to the traceability of goods. Under these conditions, jewelry manufacturers and retailers will have to catch up and find a way to guarantee the origin of diamonds, which don’t have any mandatory standards of disclosure yet. Russia's largest diamond miner ALROSA offers a solution: a B2B trading platform with thousands of fully traceable diamonds available online.

The coronavirus has changed consumer habits – it is a fact that cannot be denied. The economic crisis and reduced earnings and jobs are forcing people to save and spend money thoughtfully. According to McKinsey, in addition to overall savings, people are beginning to evaluate brands and the values they convey more closely – in particular, pay attention to how they observe social and environmental responsibility and how they care about their employees. It is possible that social responsibility is also becoming more important because the pandemic made people understand the value of human lives and the importance of support and care more than ever before.

A recent study by IBM and the National Retail Federation shows that about 60% of buyers in the USA are willing to change their purchasing habits to favor products that are less harmful to the environment, about 80% believe social responsibility is extremely important factor and 71% are even ready to pay extra for traceability. Not surprisingly, these factors are most important for the younger generations, Millennials and Gen Zs, which are the main consumption drivers.

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Diamond Tracing Against Consumer Fears
For diamonds, this topic is particularly relevant, primarily due to well-established negative stereotypes about the industry. Despite the fact that the Kimberley Process has long defeated conflict diamonds, many buyers are still afraid to get a "blood" diamond. The appearance of synthetics on the market has added a new fear - the possibility of buying a fake diamond at the price of a natural one. Working with such stones can cost a jeweler or manufacturer their reputation.

In addition, diamond mining is often associated with poor working conditions and environmental pollution, despite many evidences to the contrary. And finally, rough and polished diamonds often participate in dozens of transactions before hitting the counter, and who knows if this stone gets in the wrong hands during this journey.

In an era when consumers pay special attention to the ethical origin of goods, the task of the manufacturer and retailer is to give people as much information about it as possible. It is unrealistic to hope for good sales and reputation. However, the situation is complicated by the fact that today, the market still does not have any standard for the mandatory disclosure of information about the origin of a diamond. While some market participants are working on their own tracing systems and data, smaller ones are not in a hurry to spend their time and effort on this.

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Vertical Integration as a Traceability Recipe
In general, working in the diamond market has become more difficult than ever. But today, ALROSA, the world's largest diamond miner and producer of Russian-cut polished stones, is trying to make this process as simple and convenient as possible for all market participants. This fall, the company is launching a digital platform for trading polished diamonds with 100% origin guarantee.

Today, it is easier for ALROSA to work with tracing than anyone else on the market. It is the only company with a complete vertically integrated production cycle: diamond mining, sorting, cutting and even a Russian jewelry manufacturer. At the time of mining, each diamond receives a unique ID, which can be used to track its entire journey. Integrated databases, within the companies of the Group, allow to see the stone at any production and cutting stage.

Previously, diamonds produced by ALROSA were only available for personal viewings or in catalogues. Now the company's stock is uploaded to the platform, available in English and Chinese. ALROSA only sells diamonds of its own production to guarantee the stones’ origin. Confirmation is performed automatically: when a diamond is uploaded to the site, information from databases is automatically collected by its ID. As a result, the consumer sees not only standard 4C data, but also information about the origin, starting with the place of extraction of the diamond and ending with the name of the cutter and his experience.

"Our goal is not only to build an effective sales channel for ALROSA polished diamonds, but also to give the market a simple and convenient tool. Our partners will know for sure that they bought a completely natural diamond, produced in accordance with all standards of social and environmental responsibility. It protects their reputation and can be a marketing instrument to communicate to their retail customer as well,” says Rebecca Foerster, the President of ALROSA USA.

For consumers, each diamond has three marketing support options attached. Every buyer of a diamond receives its digital passport with detailed origin information. It can be customized with the name of the jewelry manufacturer to provide the full chain of that diamond to a retail consumer. The diamond is also accompanied with a unique customized video story that is generated automatically, depending on the parameters of the diamond, starting with the region where this very rough diamond was mined and extracted. This is a nice extra feature for consumers who like to share their life and interesting facts in social networks.

Those customers who buy ALROSA polished regularly, will also get a Diamond Origin Report passport as part of a joint program between ALROSA and GIA, a certificate of participation in the Sustainable Diamonds program, as well as a package of marketing materials on diamonds’ origin for online and offline advertising campaigns. And those who work with any of ALROSA’s diamond jewelry brands will get this same full support.

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Buy from a Distance
Digital solutions and going online should make it easier for consumers to choose and purchase safely. In the case of the diamond market, the ability to buy online is important not only for jewelry consumers, but also for midstream players. For many years, the diamond trade required to make dozens of trips to different parts of the world every year to see, evaluate and buy goods. The coronavirus has shown that the world air traffic is easily stopped. Moreover, some market participants still say that they prefer not to visit another country even when flights are already allowed. Behaviour has changed as a result of the pandemic.

ALROSA started to work on the trading platform long before the COVID-19, not only for regular goods, but also for sales auctions of unique and natural color diamonds. Previously, such auctions took place only live in-person, because expensive stones require precise study. Starting this year, ALROSA will move them online as well, with the option of viewing the stones in person with all anti-COVID precautions.

The first online auction is True Colors, their traditional annual auction for natural fancy color polished diamonds.

ALROSA is the world's largest producer of rough diamonds in carats and that gives reason to believe that the company is also ahead in of color rough diamond production. Color diamonds are found in all ALROSA’s deposits, but two areas can boast the greatest reserves – alluvials of "Anabar Diamonds" in Yakutia and open pits of "Severalmaz" in the Arkhangelsk region.

Seeing the market potential, they stopped selling the bulk of their colored rough and directed it to their in-house cutting division a few years ago, which has now become one of the largest producers of polished colored diamonds. They sell the best of these diamonds at auctions called True Colors. The first auction took place in 2018 in Hong Kong.

Now, the company is forming a new set of diamonds that will be put up for auctions. True Colors 2020 will feature diamonds weighing up to 22 carats. In addition, they are planning to hold an auction for high quality white diamonds of various cuts weighing up to 30 carats. As always, potential buyers will be able to get the most detailed information about each diamond, including detailed images and characteristics, both online and at live viewings if they want to attend.