Last week, Martin Rapaport lowered prices on the March 20 edition of his widely watched price list by an average of 7%, leading some companies to pull their inventory from RapNet, his online listing service. Afterward, following a vote of RapNet members, he agreed to suspend publication of his price list until May 1.
In a candid interview from his home in Israel, Rapaport discusses whether the boycott has hurt his business, his view of his list’s role, and if he agrees he has too much power.
What is your reaction to the latest furor?
First of all, I feel terrible. I care about the industry, and I care about its people, and I even care about the people who are trying to boycott. They are under tremendous strain and pressure.
People are boycotting us in the hope that they can blackmail me into not going down with diamond prices. Our job is to reflect what is going on in the market. We had to go down. When the market goes down, you can’t delay it. On RapNet, there are people selling at 50 below Rap. How can I not go down? Buyers will say, “You’re crazy if you don’t go down.” If the price list doesn’t reflect the industry, then it serves no purpose.
We are at the beginning of this. We can’t tell people things are the same when they’re not. I have a responsibility to communicate that things have changed. We have to be honest. We have to maintain credibility.
I’m not going to misrepresent prices. I’ve been doing this for 42 years. This is an oath.
A criticism that we have heard is, how can you lower prices when the market is virtually frozen?
There are always asking prices. There are always buyers. All the stores in the world can be closed, and there are buyers. You just have to find them, and you have to offer competitive prices. You can go to RapNet, you can see where the market sits right now.
You say that you lowered your prices because that’s where the market is. Yet, in the past, you have delayed price increases because you didn’t want to fuel speculation. Isn’t that a little contradictory—in that you want to reflect the market now, but not then?
The Rapaport list is a benchmark. It is not transaction prices. It’s an interpretation of prices. If you publish a benchmark price, you have a certain responsibility. It is very complicated. Let’s say the market is moving, and every week you go up or down 2%. That creates a cycle of expectations. People start chasing their tails. If we go up once, we would keep going up. So we wait to see how prices are shaking out before we make moves.
Why do people use the Rapaport list? Have you ever asked that? There are prices on RapNet. People can use those prices. But they want a credible benchmark. If there wasn’t the need for a benchmark, people wouldn’t use it. It’s a big advantage for the industry to have a standard to work off of. People want a benchmark that is sufficiently above the RapNet prices because that allows for profitability.
