B2B Marketplace Fills Financing Gap For Int’l Jewelry Buyers

With over a million diamonds globally available from sellers all over the world, working with a customer to find the right item, such as an engagement ring, can be a huge challenge for retailers operating in the highly fragmented global jewelry market.

To solve that logistical challenge, business-to-business (B2B) firm Nivoda has created an online marketplace to bring diamond buyers and sellers together, connecting manufacturers such as diamond polishers directly with global retailers, the majority of which are brick-and-mortar stores.

When it comes to financing, banks are reluctant to lend to these small- and medium-sized enterprises (SMEs), and according to Nivoda’s CFO Bas Lustenhouwer, this has created a working capital gap in an already low-margin industry.

“Typically, what [brick-and-mortar stores] will do is to use the money that they receive from their customers to pay their suppliers. But if you want to then hold something in stock or to pay a supplier up front that becomes very difficult,” Lustenhouwer told PYMNTS.

Read more: Digital Dossiers Reduce Stress of D2C Diamond, Jewelry Sale

To ease that burden, the B2B diamond marketplace recently partnered with UK-based lender MarketFinance to offer flexible payment and financing options in multiple currencies, using the lender’s B2B Pay Later embedded finance offering available at checkout.

Watch MarketFinance CEO Interview: UK SMEs Gain ‘Instant, Single Click’ Lending Via Embedded Finance

With this solution, the restriction of buyers being able to access longer payment terms from only a few suppliers they have a long-term relationship with is removed.

“We’re able to offer 30- or 60-day payment terms and be [the] trusted middleman that connects buyers and sellers, while suppliers get their money a few days after the goods have been delivered to Nivoda,” Lustenhouwer explained.

Available in euros, pound sterling and U.S. dollars, the MarketFinance credit facility will also enable suppliers to transact with buyers in their currency of choice without wasting time on constantly monitoring currency exchange rates.

“When you are a small mom-and-pop jeweler in Amsterdam and your customers are paying you in euros, you will [very likely] also want to pay your suppliers in euros because managing that liquidity risk on a daily basis is not really part of [your] core business,” he pointed out.

Standardizing Global Stock, Eyes On the US

Launched in 2019, the UK-based B2B online platform today has about 1.6 million diamonds advertised on its site, the equivalent of about 80% of the world’s stock.

But standardizing global stock information and putting the world’s diamond supply at buyers’ fingertips has not been a walk in the park, particularly when doing business in a highly fragmented jewelry market with players operating at different levels of the supply chain.

“We’re dealing in a very fragmented market [with] tens of thousands of jewelry manufacturers and wholesalers. And to take all that data, [some from sophisticated APIs and others from Excel spreadsheets], map it out and show it in a standardized way to the buyers — that has been a massive [challenge],” Lustenhouwer said.

It’s a hurdle that they have successfully tackled with the development of an in-house software system, resulting in the display of millions of items in 3D video and images complete with detailed descriptions which he said is extremely valued by their retailer buyers.

Moving forward, Lustenhouwer said their biggest priority would be to strengthen Nivoda’s position in the U.S. market, where 50% of the global diamond engagement ring business lies. And within that market, brick-and-mortar stores, which still account for the largest part of sales, will be a key focus.

See also: Jewelers Mine the Market for Young Customers With Shift to Digital Diamonds

From a CFO perspective, he added that his aim is to build a scalable business by keeping a close eye on unit economics while further digitizing their processes and leveraging systems like the open banking system in Europe to provide a fast and frictionless experience for their platform users.

And the power of the right associations will be key to achieving that goal. “[Collaborating] with the right partners to have a smooth running, [automated] financial operation that we can roll out at scale to build a scalable organization is very important to us,” Lustenhouwer said.

For all PYMNTS EMEA coverage, subscribe to the daily EMEA Newsletter