Stefan Austermühle, General Manager of Gemrock Peru                       June 2021

The COVID Virus has changed the reality of the global gemstones and crystal industry. Many companies disappeared and many new ones appeared. Gem shows stopped existing or are of minuscular size. The internet has become the dominating sales-path. Read here about our perception of this change, how we adapted and what every gemstone business can learn from this.

COVID – A global problem that in many cases has not been taken serious, but keeps affecting our industry. In March 2020, when we had just in time returned from the Tucson Gemshow and went into our first lockdown in Peru, sitting at home for 4 entire months, our government had promised that this drastic measure would prevent a massive infection and resolve the problem. Today, 15 months and three further lockdowns later, we all know better.

In Peru, a country with only 30 million inhabitants, more than 2 million people have been infected of which more than 180 000 people have been killed by COVID and with only 5 % of the population having received a vaccine yet, still more than 8000 people get infected every day.

Tourism, the third biggest industry of Peru, has effectively become eliminated, leaving hundreds of thousands of Peruvians without job. And our industry, the mining industry (Perus biggest economic force), has suffered more than other industries from infection and death, because when you work in a mine you are living close up with many people.

Most Peruvians know at least one person that has died. For us, three of our stone providers (miners) have fallen victim to the disease. Two of our Peruvian competitors are not in the race for clients anymore, because their managers/owners got sick and died.

As dramatic as these numbers sound, the economic toll COVID has and still is taking from our industry on a global scale might be even worse. According to customs export information, all our Peruvian competitors suffered severe economic reductions. In 2020 the average stone export has fallen to less than 40 % of the amount of 2019, with some of our competitors suffering a reduction in sales of 75 to even 95 %.

Since our company was founded we had been building a database of more than 1500 companies working in crystal and gemstone sales all around the world. We built this database from gem show catalogues, so all these companies have been in business over the last few years. When updating our database we had to find out that more than 40% of these companies where not active any more, most likely they went bankrupt.

So how did the disease affect Gemrock Peru? Actually not a lot.

Why is that?

When we went into lockdown, of course we lost money, but we still were a rather small company, so it wasn’t that much. During our lockdown time we decided for a bold move swimming against the current. While everybody reduced his business and went into “saving” mode, we attracted foreign investment in order to grow our company and went into “spending” mode. Today we have a company on a terrain 4 times bigger than before with 6 times more machines than before and 3 times more staff. When coming out of the first lockdown our clients had sold out their stock and we then sold them our stock while moving the plant and building new infrastructure.

Months later, however,  we restarted business in a new reality:

• Some of our clients have disappeared.
• Big contracts are slowly comming back. While we were used to get orders of several hundreds of kilos of product to even tons, now we have many orders between 200 and 500 USD, means we have to work much more in order to attract the same total volume of contracts.
• While before COVID we had mainly established companies with big volumes as clients, nowadays we have dozens of start-up companies in our client base. Our salesforce has converted into educators about stones, minerals and crystals as well as mining. Our shipping logistics officer has converted into a teacher about international bank charges, shipping logistics and customs procedures. We are in process to create a business coaching online course on how to buy, import and export crystals and gemstones for our start-up clients. In fact, customer service, always something we focused on with great care, has become our superior strength. We do accompany our clients on their import journey every step and do assist them 24/7 to resolve all their problems. We believe that this consumer service has become our secret weapon and one of the reasons for our latest success in business.
• We created unique and (for our branch) spearheading offers like “Buy Now, Pay Later”-Agreements and DropShipping contracts to support startup companies.
• Our clients are not ordering big amounts of products from only a few stones anymore. Nowadays our clients order a little bit of each from many different stones. This meant we had to become very flexible in our production line and coordinating the order of dozens of small clients at the same time has forced our production management to completely change the production flow and become very dynamic.
• Our clients are searching for new products and new stones. Everybody wants to differentiate himself from his competition. This resulted in us sourcing today many more different Peruvian stones (more than 30 currently) than before COVID. At the same time we have created a product development team and we are constantly increasing the type of products we can offer to our clients, also inventing completely new products and venturing into jewelry and home décor, diversifying our product offer on a weekly basis. We are now asking our clients to just sent us a picture or drawing of what they are looking for and we will develop and produce it in case its not already in our product line.
• We are now having clients from 5 different continents. Before COVID we never had a client from any Asian or South American country. Today we are exporting to Singapore, Hongkong, Colombian and Argentine retail clients and are negotiating with our first retail clients from Japan, India and Malaysia. Means our sales force now is challenged by many more languages and works basically 24/7 in order to be able to attend our clients in all these different time zones.
• More and more of our clients are searching for ethically sourced gemstones. This is the greatest news for us because this new trend is what we had counted on when we did create Gemrock Peru. 100 % of our Peruvian lapidary industry is “informal”, means they work in cash, avoid paying taxes, don’t hire staff but contract services and don’t pay health, labor or retirement benefits to their workers. So Gemrock Peru is the countries only formal company paying our contracted workers all benefits and paying fair salaries. In order to survive in a surrounding of unfair competition, Gemrock Peru has always opted for standing out of the crowd by producing highest possible quality. Now we have more and more clients rewarding our effort by paying a fair price for a high quality product.
• We created a spearheading initiative to promote ethical crystal mining globally and offer our clients to partner with this project.

So, what is it a lapidary company has to do in order to prosper in COVID and post-COVID reality?

• Be a friend, partner, advisor and (if required) teacher to your business client
• Provide the best possible quality product
• Provide the best possible customer service
• Stay strong to your principles by supporting the sustainable development of your countries economy, as well as pay your workers the benefits any client would expect for himself.
• Become extremely flexible in your production management and super diverse in your product variety
• Motivate all your staff to always give their best.

So far our strategy did work. Over the last three months Gemrock Peru has increased its contract volume from month to month in over 100 percent.

More and more clients base their trust in us and are willing to pay a fair price for excellent quality and service. So last but not least, let me thank all of you that are already clients of Gemrock for your trust in our company. And let me invite all of you that are still not clients of Gemrock Peru, to give it a try.

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