Vashi Dominguez had only been studying law for two years when he realised it wasn't for him. "It was just something I was doing while I figured what I was going to do." Fortunately for Dominguez, he had already found the answer. He was working part-time in an electronics store in his native Tenerife and really enjoyed it. "I asked my boss to get rid of my salary but give me commission on what I sold he agreed and I made a lot of money."
Soon Dominguez had saved up enough to start his own store. "My boss wasn't mad. There are hundreds of electronics stores in Tenerife." Most had the same supplier, so success came down to salesmanship, which Dominguez excelled at. Within a year, he decided to enter the wholesale market himself.
He travelled to Hong Kong to deal with manufacturers directly, negotiating deals on popular electronics items, then selling to shops in mainland Spain, Portugal and Tenerife. But "competing with giants like Panasonic" wasn't easy. Price deflation was also a big problem. "In 2000, the cheapest digital cameras cost €6,000. By the end of the year, a new model was selling for €100."
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Dominguez quit while he was ahead and hunted for a new industry with more sustainable margins. He settled on diamonds. "Ever since I was a little boy I was fascinated that something so small could cost so much." After struggling to find a supplier "it's a close-knit community and they don't like dealing with outsiders" he found a dealer in Mumbai. He bought some loose diamonds and jewellery and sold them in Spain. "The margins were anywhere between 3% to 20%." He bought more stock and by 2004 was selling £20m-worth of diamonds to jewellers across Europe.
But it wasn't all plain sailing. "I often travelled with millions of pounds' worth of diamonds. I was insured but you know that people will hurt you for that amount of money." He was also struggling to maintain margins and cash flow. To attract business he was selling on credit, but that left him exposed if a jeweller he supplied went bust. It also meant he was paying his suppliers in cash but waiting months for repayment from customers.
So he sold out again and looked for a new business. "I wanted to do something online and with consumers." He spent three years working on a business model. By 2007, he was ready. He used his contacts to negotiate good deals on loose diamonds and jewellery. Unlike other online firms, he took delivery of the stock himself so customers could come and inspect the goods before buying. He also reduced his risks by negotiating with suppliers to allow him to return any unsold jewellery.
He spent £250,000 on his first batch of stock and £80,000 more on marketing. He used affiliated marketing firms who guaranteed him a set number of customers for spending a given amount. "It means you don't lose money trying to win new customers." He also invested in internet advertising that offered promotions tailored to users' searches.
Sales grew, with DiamondManufacturers.co.uk selling £3.5m-worth of diamonds last year. Dominguez, now 33, is upbeat about the future. "I still have a lot to do in the UK. I only have 2% market share. But I also plan to expand internationally by 2014."
James graduated from Keele University with a BA (Hons) in English literature and history, and has a NCTJ certificate in journalism.
After working as a freelance journalist in various Latin American countries, and a spell at ITV, James wrote for Television Business International and covered the European equity markets for the Forbes.com London bureau.
James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report.
He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.
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