People often ask me if retail values on eBay are 'realistic' or 'overinflated'

I have people ask me all the time to explain exactly what a 'retail replacement value' or 'appraisal value' is so I will try to make this short and to the point.

Firstly most appraisals are for insurance replacement value, IE: an 'on demand' price.

'On demand' jewelry generally has a 200% to 800% mark up at the retail level, sometimes even more. This usually depends on the supply chain of an item, for example, Diamonds and Tanzanite are controlled commodities, there are large companies that do the mining and have companies contracted to buy from them and cut the rough. These companies then then sell to wholesalers who sell to retailers so the difference between Appraised Value and Fair Market Value is less.

Stones like Ruby, Emerald, Sapphire and most other colored stones often have very long supply chain, and can pass through literally dozens of hands before they end up in the hands of the retail jeweler, often gemstone rough will pass through five or more people before it even gets cut, and all along the way everyone is taking some profit.

So what does this mean for your appraised value? It boils down to this: an item that is appraised at $1000 is anywhere from about $42 to $200 when a jeweler is buying the item outright from a wholesaler. (eBay is advantageous to wholesalers because normally even if a retailer is buying items outright from a wholesaler they will ask for term payment over 30 to 90 days, whereas on eBay you are getting your money before you even send the merchandise, a level of comfort that is hard to beat)

Cash retail selling price is generally 1/2 to 1/3 of 'on demand' retail. (This is also sometimes called 'Fair Market Value')

Most of the people selling jewelery and gemstones on eBay are in fact wholesalers not retailers (which is the case with us as well) because retail jewelers simply can't afford to compete.

So the question is, are you still getting a deal buying at 5% to 20% of the appraised value? Well even you have a connection to a wholesaler of jewelry and gemstones, they will generally still sell the item at a higher price than what they would sell to a retail jeweler for (although cheaper than you would pay retail)

All of that said, if you are still uncomfortable buying an item from a particular seller on eBay, you shouldn't. There is no need to tie yourself up in knots waiting a week or two for an item to arrive.