A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
Diamond.com is expecting Ashford.com to double Diamond’s sales and make the online jeweler profitable. Diamond says Ashford will allow it to leverage its bulk buying discounts and marketing expertise in luxury goods.
By shoring up weaknesses at its recently acquired Ashford.com, Diamond.com expects to reap big rewards, the company tells InternetRetailer.com. “We’re comfortable it will double our sales and make us profitable,” says Jeff Kornblum, COO of Odimo Inc., parent of Diamond.com.
Diamond.com acquired Ashford last week from GSI Commerce Inc. in a cash-and-stock transaction. GSI, which acquired Ashford earlier this year for $14 million, said it will realize a loss of $7 million to $10 million related the sale of Ashford assets. GSI CEO Michael Rubin said GSI didn’t have the jewelry-specific infrastructure to support Ashford.
But Odimo, which owns WorldofWatches.com in addition to Diamond.com, has perfected the jewelry market and is projecting that it will process 90,000 orders this year, up 15% from last year in jewelry, watches and accessories, Kornblum says. “We’ll be able to do things GSI wasn’t able to do,” Kornblum says. He notes that Odimo can buy jewelry and watch inventory at low bulk prices and that its infrastructure is capable of handling more than three times its current volume.
He adds that Odimo will implement cross-selling opportunities across Ashford.com, Diamond.com and WorldofWatches.com. While Odimo helps Ashford to better merchandise jewelry sales, Kornblum says, Ashford’s expertise in merchandising accessories may help the other Odimo sites.
As part of the acquisition terms, GSI will receive a $500,000 deposit for a final inventory purchase on Dec. 27 and a $4.5 million 5-year promissory note, warrants to purchase Diamond.com stock, and 10%, or a maximum of $2 million, of Diamond.com’s earnings through 2007.