JD.com has partnered with the independent technology company Everledger and the Gemological Institute of America (GIA) to “help increase trust and transparency in diamond provenance and further confidence in online diamond purchases,” according to a JD.com press release.
The strategic collaboration will leverage each partner’s strengths and bring GIA’s long-standing diamond grading expertise, Everledger’s insight and knowledge in blockchain technology, and JD.com’s unique retail and customer service experience to the fore. Through the inter-industry collaboration, JD.com’s customers will be able to verify the authenticity of a diamond and gain direct online access to insights about its characteristics.
The newly minted platform will also be used to prevent duplicate report fraud, while fraud detection algorithms will help JD.com prevent, detect, and minimize the fraudulent use of GIA reports. According to JD.com’s press release, the procedure “will provide unprecedented levels of transparency into the quality and authenticity of the diamonds consumers purchase online.”
Since China has a big counterfeit goods problem, this development could create a solid blueprint for smaller e-commerce players that struggle to overcome challenges brought by the unlawful trade of fake or illegal products. “Forgeries of luxury-brand products are more prevalent in China than in any other country in the world,” Daxue Consulting states. Despite government efforts to eliminate counterfeiting, China is still the global leader in manufacturing counterfeit merchandise, as over 80 percent of the world’s fakes come from China. Unfortunately, international efforts didn’t help either.
In fact, the market is in full expansion mode. The Organisation for Economic Co-operation and Development (OECD) reported that global trade in counterfeit and pirated products has grown from $250 billion in 2008 to nearly$1 trillion in 2016. That represents close to 2.5 percent of global imports.
Now, with the rise of e-commerce platforms, fake diamonds have taken the spotlight, and sellers have flooded the market with knockoff jewelry and counterfeit versions of designer pieces. Additionally, thanks to advances in technology and R&D, synthetic or lab-grown diamonds are being manufactured en masse. And China — the Henan Province, in particular — has become a global supplier of synthetic diamonds.
“China, and by extension Asia, is the main producer of synthetic diamonds,” said Margaux Donckier, the spokeswoman for the Antwerp World Diamond Center, to Xinhua. “Synthetic goods only represent about 3 to 5 percent of the [consumer] market, but the share is growing rapidly.”\
The popularity of synthetic diamonds skyrocketed in 2018 when De Beers made a historic U-turn and began advertising lab-grown diamonds through its Lightbox Jewelry brand. Laboratory-created diamonds (LGDs) should be advertised as such, but not all vendors and suppliers are honest with their communications, which creates confusion — or even fraud schemes. In fact, fraudulent diamond advertising and deceptive ads are very common, so having the stamp of approval from a reputable authority like GIA can help buyers root out fakes or synthetic diamonds falsely advertised as “real.”
“Everything GIA does — our research, education, and of course grading millions of diamonds each year in our laboratories around the world — has the singular mission of protecting consumers,” said Pritesh Patel, GIA’s chief operating officer.
Having proper mechanisms and an ethical model in place to safeguard the consumer’s interests is very important, especially in a market like China, where affluent, educated, and tech-savvy millennials account for 68 percent of diamond sales (compared to only 45 percent worldwide). Fortunately, advancements in blockchain technology and artificial intelligence (AI) can equip e-commerce platforms like JD.com with the technical support they need to combat fake jewelry and gems.
“Given the growth in e-commerce, fraud is a very real risk in the diamond market,” says Chris Taylor, Everledger’s chief operating officer, “which is why it’s so important that consumers have access to secure and trustworthy information. By bringing cutting edge blockchain technology, online luxury shopping, and GIA’s gold standard grading expertise together on JD.com, we’re empowering consumers to purchase luxury items with increased confidence.”
After years of scandals and abominable stories of “torture, beatings, and murder,” the diamond supply chain has the opportunity to bring righteousness and trust back to the jewelry business, and e-commerce giants like JD.com are on the frontline ready to help.