Hanadama - Truth vs Reality

[pearldiver52865]

Edit: This Thread contains some inappropriate and inflammatory statements.
Those statements are not condoned by the CPAA and I apologize to anyone that it offends. I have decided to leave this thread uncensored due the important topics that it has raised with respect to Pearl grading and retail education among others.

I hope any inappropriate statements are understood in context of this thread and conclusions should only be drawn after the discussions on both forums are read.

Peter Bazar


What is the truth about Hanadam pearl quality? Who is the pearl science labrotory? How come the largest and oldest pearl dealers in the US (i.e. Mikimoto, Imperial & Mastoloni) do not advertise or promote or ever mention this "quality" standard? Even Tiffany, which carries some of the finest pearl necklaces that I have EVER seen don't use the expression "Hanadama" to describe their pearl neklaces. Are all these online retailers (i.e. Pearl Paridise) just trying to create a standard measuring stick for consumers or just makke waves and crush one of the last true profit centers in our brick & mortar stores?

[pbazar]

Hanadama is a Japanese term which loosely translated as the Flower of the crop. It refers to the very best of the crop. As to its use by US pearl companies it was traditionally not used. Most companies use the AAA grade to designate this quality. Imperial uses Crown.
There is no standard grading system so one companies AAA may be comparable to an others A.

The very best Chinese Akoya AAA hanadama may be only A quality Japanese Quality.
Some internet pearl dealers sell only Chinese. Therefore they may refer to there best Quality as hanadama being only the best of the Chinese crop.

The older Japanese pearl houses generally reserve their best for their oldest and best customers. Giving those pearl dealers first choice

This is what makes it so difficult to compare

[pearldiver52865]

I understand and agree, but these internet based pearl sites are crushing the market by advertising super high quality at insane discounts. How do I respond to my customer's when they come into my store and ask about what these pearl sites are offering? How can American Pearl compare themselves to Mikimoto with such insane price differences and the consumer think that they are really comparing apples to apples. Now they are asking me for Hanadama....what am I suppose to tell them? I'm thinking of dropping pearls all together and just liquidating my $100K japanese akoya pearl strand inventory.

[JShepherd]

Mikimoto does actually use the term "hanadama". You can find it here on their Web site.
http://www.mikimoto.com/uk/about_jewell ... index.html

Hanadama literally translates "spherical flower". These are akoya pearls which have been separated after harvest and treated individually. In Japan, hama-age (freshly harvested pearls) auctions sell pearls in three numerical categories; one, two and three. Hanadama-grade pearls are sold separately at auctions in Tokyo and Kobe. The grade was once specifically reserved for akoya, but in 1997 the Japanese started introducing top-grade South Sea pearls into these auctions as well.

Hanadama pearls can be purchased from nearly any medium to large-size processor in Kobe. The Pearl Science Laboratory of Japan is the office that produces the hanadama certification. These pearls are not much different than a top-quality AAA grade strand (the best of level one at auction), but have simply been deemed the absolute best; much in the same way Imperial markets the Crown line.

Mr. Bazar is correct that the term hanadama has not been traditionally used in the US. It has, however, been widely used in Japan. Its usage online in the US stems from a need to prove to consumers the quality of our goods; much in the same way GIA certification of a diamond would. I know of no Internet dealers, however, that sell any akoya pearls from China as hanadama. All Internet dealers include the PSL certification with their pearls - those are from Japan and are the best of the best, just like Mikimoto.

Unfortunately, it is not possible for a brick and mortar operation to compete on quality and price with a large online operation. There is just no getting around that. The economies of scale both on the buying and selling side make an apples to apples competition impossible for a brick and mortar dealer. But online sellers have the much more difficult task of selling pearls site-unseen to consumers. In this aspect the traditional dealer is in a much stronger position; they have the face-to-face relationship with the customer. Currently, the available demographic to online sellers of jewelry (those consumers willing to purchase jewelry online) is less than 10%.

[pearldiver52865]

Mikimoto does actually use the term "hanadama". You can find it here on their Web site.
http://www.mikimoto.com/uk/about_jewell ... index.html

Hanadama literally translates "spherical flower". These are akoya pearls which have been separated after harvest and treated individually. In Japan, hama-age (freshly harvested pearls) auctions sell pearls in three numerical categories; one, two and three. Hanadama-grade pearls are sold separately at auctions in Tokyo and Kobe. The grade was once specifically reserved for akoya, but in 1997 the Japanese started introducing top-grade South Sea pearls into these auctions as well.

Hanadama pearls can be purchased from nearly any medium to large-size processor in Kobe. The Pearl Science Laboratory of Japan is the office that produces the hanadama certification. These pearls are not much different than a top-quality AAA grade strand (the best of level one at auction), but have simply been deemed the absolute best; much in the same way Imperial markets the Crown line.

Mr. Bazar is correct that the term hanadama has not been traditionally used in the US. It has, however, been widely used in Japan. Its usage online in the US stems from a need to prove to consumers the quality of our goods; much in the same way GIA certification of a diamond would. I know of no Internet dealers, however, that sell any akoya pearls from China as hanadama. All Internet dealers include the PSL certification with their pearls - those are from Japan and are the best of the best, just like Mikimoto.

Unfortunately, it is not possible for a brick and mortar operation to compete on quality and price with a large online operation. There is just no getting around that. The economies of scale both on the buying and selling side make an apples to apples competition impossible for a brick and mortar dealer. But online sellers have the much more difficult task of selling pearls site-unseen to consumers. In this aspect the traditional dealer is in a much stronger position; they have the face-to-face relationship with the customer. Currently, the available demographic to online sellers of jewelry (those consumers willing to purchase jewelry online) is less than 10%.

Mr. Shepherd:

Your aforementioned claim that the brick and mortar stores cannot compete with the online stores is just another example of the preposterous claims you make on your website (pearlparadise.com). If your Hanadama necklace is the same quality as Mikimoto's top quality, how in the world could actually think that offering the product at a 80-90% discount is boosting consumer confidence in the product. You may have a further reach than my stores, but as you said pearls really are a product that needs to be seen and explained. I recently had a client bring me a strand of your AAA 6.5-7mm akoya pearls. Not only were these poorer quality than the lowest quality Imperial pearls in my showcases, I brought the necklace to the JCK Las Vegas show and compared it to Mikimoto and Mastoloni necklaces. Again, it was worse than both of their lowest qualities. Both cited very poor coating, thin nacre, poor shape and bad matching for the grade of AAA. When I got back from the JCK show, I explained to him my findings. I gave him credit for what he paid for the necklace and sold him a "true" high quality “Crown” Japanese akoya pearl necklace. I learned a lot during the show and store owners need to be aware of the fake claims you and the rest of the on-line dealers are making. Also, store owners truly need to be better educated.

You and the rest of the on-line dealers are such fakes and a joke, and I find your predatory pricing tactics to doing more harm than good to the overall jewelry industry in the US. Your claims about discounts are just simple preposterous and your attempted use of the term "hanadama" and use of quality grades that mean nothing is undermining overall consumer confidence in cultured pearls. Though you think you are trying to create stability and parity in the market by comparing a PSL report to that of a GIA report, the discounts you offer are just too unbelievable to actually boost consumer confidence. If you were offering comparative product at a 10%-20% discount over the brick & mortar stores, that would do more for consumer confidence than using the term "hanadama"

[JShepherd]

I can understand you are upset. But I do not believe your customer story for an instant - although it does sound well-rehearsed. Our AAA grade 6.5 to 7 mm strands are of very high quality and we comparison grade all of the time - including at the Vegas show every year - that is the only reason we go. We ship approximately 250 pieces each day and have a return percentage of just over 2%. Those are actual, factual numbers. Those would not be if we sold garbage.

You may call our pricing and tactics predatory, but we call them competition. You may think we are a joke, but our business grows double digits every year while others falter, and The Wall Street Journal, The New York Times, USA Today, Los Angeles Business Journal, Inc Magazine, Entrepreneur Magazine and about a dozen others do not think we are a joke.

My claim that a brick and mortar store cannot compete against a large online dealer is not preposterous, it is absolute fact. Just like a B&M cannot compete with Blue Nile. B&Ms cannot buy thousands of pieces at a time and sell hundreds each day. B&Ms cannot buy large lots at auction or directly from producers and have economy of scale on their side. B&Ms pay a huge premium for their goods and have no choice but to sell at a higher margin. You call us a joke, just like many other B&Ms have in the past. I call it jealousy and this joke gets the last laugh.

Take one piece for example:
http://www.pearlparadise.com/detail.aspx?ID=2296

This is a perfectly round Tahitian strand with intense coloration and perfectly spotless for $3,700. We both know it would be impossible for a retail store to sell it at that price - or even buy it for that matter.

[pearldiver52865]

I can understand you are upset. But I do not believe your customer story for an instant. Our AAA grade 6.5 to 7 mm strands are of very high quality and we comparison grade all of the time - including at the Vegas show every year - that is the only reason we go. We ship approximately 250 packages each day and have a return percentage of just over 2%. Those are actual, factual numbers. Those would not be if we sold garbage.

You may call our pricing and tactics predatory, but we call them competition. You may think we are a joke, but our business grows double digits every year while others falter, and The Wall Street Journal, The New York Times, USA Today, Los Angeles Business Journal, Inc Magazine, Entrepreneur Magazine and about a dozen others do not think we are a joke.

My claim that a brick and mortar store cannot compete against a large online dealer is not preposterous, it is absolute fact. Just like a B&M cannot compete with Blue Nile. B&Ms cannot buy thousands of pieces at a time and sell hundreds each day. B&Ms cannot buy large lots at auction from producers and have economy of sale on their side. B&Ms pay a huge premium for their goods and have no choice but to sell at a higher margin. You call us a joke, just like many other B&Ms have in the past. I call it jealousy and this joke gets the last laugh.

Take one piece for example:
http://www.pearlparadise.com/detail.aspx?ID=2296

This is a perfectly round Tahitian strand with intense coloration and perfectly spotless for $3,700. We both know it would be impossible for a retail store to sell it at that price - or even buy it for that matter.

Jeremy:

I wonder what my existing supplier (Peter Bazar - Imperial) has to say about you response? According to you, I should just bail on pearls and Imperial is a thief.

[JShepherd]

Jeremy:

I wonder what my existing supplier (Peter Bazar - Imperial) has to say about you response? According to you, I should just bail on pearls and Imperial is a thief.

Fakes, jokes, thieves... Like I said before, it is understandable that you are upset. I'm sure it makes you feel better throwing around accusations and insults. But by resorting to name calling, you basically makes my point for me.

Introduce yourself! Let's have an actual conversation.

[pbazar]

I understand pearldiver’s frustration. Pearldiver, I do believe you are correct that Pearl Paradise “AAA” pearls are essentially equal to Imperial’s “A-“ quality.

Our (Imperial) grading system is extremely conservative and our high standards are closely related to Mikimoto’s own grading system.

Pearl Paradise has its origins in the Chinese freshwater pearl industry. As I understand it, Jeremy saw the potential online market for those pearls while he served as an airline steward. PP has promoted CFW and Chinese Akoya pearls. Pearl Paradise has also invested in a Chinese Akoya farm – a farm that we have used in the past for purchasing promotional quality pearls. (These farms recently suffered the worst die off of Akoya oysters in their farming history.)

I should also note that due to the warmer waters of southern China, even the best Chinese Akoya Pearls can not compare with top grade pearls from the colder water of Japan. While taking longer to cultivate, pearls produced from these colder waters generally produces a cleaner and finer nacre coating and brighter luster.

Respectfully, I have watched PP and its relentless self promotion along with Jeremy acting as the expert spokesman for the cultured pearl industry. While much of his information may be true to some extent, it doesn’t necessarily extend to the Japanese cultured pearl trade. It takes years and in some cases, generations of time to build the relationships and trust that allow companies such as Imperial access to the very best quality pearls. The fact is, the very best pearls are only offered to a select few and PP is not one of them. If you understand this than you can then see how “Crown” AAA skews Imperial’s grading system. And that is why I created the value pearl grading system.

I believe that B&Ms can compete with dot coms if they know their product and have pride in what they are selling.
Name calling will not serve anyone. PP is definitely working hard to carve out its share of the pearl market.
I work every day to ensure that my customers have the tools they need to compete.
The pearl industry in my experience has been one of friendly competition and I value my relationship with my fellow CPPA members.

PP has so far chosen to operate outside the industry and I challenge Jeremy to get more involved with the CPAA and the cultured pearl industry in general.

[JShepherd]

I respectfully disagree yet disagree very strongly.

I agree that Imperial's promotional quality does come from China, some from the farm in which we hold an investment. However, Imperial only buys the medium grade.

Mr. Bazar, you also know that we do indeed source a large portion of our akoya pearls from Japan. In fact, at the last JCK show you berated one of our suppliers for selling to us. But as we purchase more than $1 million per year from them, it had no effect. Also, they are only one of our Japanese suppliers, as we have several. It does not take years and years of relationship building to source top-grade pearls from Japan. It takes a knowledgable buyer with large demand.

Nearly all of our AAA akoya is sourced from Japan. It all comes from first harvest grade. Our hanadama is hanadama by Japanese standards and comes from hanadama-separated harvest pearls in Japan.

To say that we are dealers of Chinese freshwater and akoya is far from accurate. You know we deal in Japanese akoya, Australian and Indonesian South Sea, Tahitian pearls, freshwater pearls and natural pearls.

We buy Tahitian pearls directly for the most part, or at auction. We have never won an auction lot that was not A or A/B, or purchased one directly. Our strands are all composed of A and A/B grade. Established wholesalers like Imperial focus on the B/C and C/D grades for their necklace material. The finished strands have spots. Ours do not. Overall, our strands are a much better quality and a better value.

We purchase freshwater pearls in Zhuji typically on a material level. We process them to our standards and import them into the US where we assemble them ourselves. Established wholesalers buy from Hong Kong, for the most part. They pay a premium.

Mr. Bazar,
Respectfully, what you call self promotion I call successful marketing. Also, use of the term "self promoter" to describe me is a form of name calling, and countless people (my brother included) have told me you always refer to me as that. But I really don't care. It means I am doing what I do well. But when I do have a real problem with something, I bring it to the guide for really energetic discussion.

Why have I chosen to remain outside the industry and outside the folds of CPAA? Let's look at it this way. What is happening in the industry currently? What direction are things headed? What direction are we headed? What marketing strategies seem to work the best? Why would we want to help CPAA when we know several of the primary officers are scared by our success and talk down about us amongst themselves and often to nearly anyone who will listen? I submit that we are very involved in the industry. While some might not approve of our marketing tactics (too self promoting maybe), I do not think anyone can deny that we have done so much in increasing the overall popularity of pearls.
A funny side-note to this topic; Every time we have met you have promissed to send me an application for membership. So did Sonny. I have never received one.

PearlDiver,
If I can give you one piece of advice for increasing pearl sales it is this. Become completely educated about pearls. Take the time to read Strack, Donkin and Kunz. Today's pearl consumer is not the same consumer of a decade ago. Today, people go online and do research before making a large purchase decision.

With just a few days spent online, a consumer will have a much deeper book knowledge about pearls than the average seller of pearls. With a few questions, how can this not become immediately apparent?

Every associate in our office has read Strack and every associate could teach a class on pearls. We feel there is not a consumer question that we cannot answer - in house. Apart from the marketing success we have enjoyed, this is the strongest asset we have. Consumers know when you are in the know.