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Mar 20

Wholesale Diamonds – How to Buy Diamonds, Advice From an Insider

Wholesale Diamonds- Is it possible for you to buy at wholesale prices?, maybe. Today, there are many different ways to find good deals on diamonds and some of these modern ways to buy a diamond did not exist last century when I started off in the jewelry business. Understanding the diamond distribution system will help you understand where and how you will buy your next diamond.

OK… let’s get started! First, an overview of the diamond distribution system is needed so that we can have a common point of reference when these terms are used. The diamonds come out of the diamond mine (the source) and then make their way to the diamond cutters, this is the manufacturer level. From the manufacturer, the diamonds usually move on to the dealers, these people are the wholesaler level. The last stop has the diamonds showing up in the showcases of your local diamond jewelry store, and this is the retail level. That was a fast and simple trip down the diamond distribution pipeline but it is generally how a few million carbon atoms that got together over a billion years ago to form a diamond ended up in a beautiful piece of diamond jewelry. Most people are used to seeing and buying diamonds at a local retail diamond jewelry store, actually 95% of all diamond jewelry is sold at retail diamond jewelry stores.

Wholesale to the public? This is actually a strange term and I have to laugh a bit every time I see it. If a company is selling something to the public it is not wholesale, it is actually retail, and when “wholesale to the public” is proudly displayed outside of a jewelry store it is really a deception. A retail customer needs many different levels of “service” that retail stores are set up to offer and the costs of these services are included in their pricing structure. Many of the diamond wholesalers that I have been in are basically a simple office setting with desks, maybe a computer, some diamond scales, large tables, and some safes. Diamond wholesalers do not have offices in popular retail areas because the office spaces would end up being too expensive. Diamond wholesalers generally have a small staff and have limited hours (no weekends or evening hours). If a diamond wholesaler regularly opened their doors to the retail public, then they would soon find that the retail diamond jewelry stores that they have been doing business with for years would not be happy and these retail diamond jewelry stores will no longer want to do business with that diamond wholesaler because now that diamond wholesaler is in competition with them. Now, don’t get me wrong, it is possible to “get a deal” at a diamond wholesaler but you will have to really be in the market for some “major bling”. A diamond wholesaler probably will not open their doors to you if you want to come in and spend $900 on a diamond but if somebody who is “connected” (they know the right people) and they are ready to spend some serious money (many thousands of dollars) on a large, high quality diamond, well then the doors will most likely open for them.

The retail diamond jewelry store isn’t what it used to be! The idea that retail diamond jewelry stores mark up their diamonds and diamond jewelry by 2 or 3 times is a hard image to change. Back in the old days there used to be such types of markups on loose diamonds and diamond jewelry, but those days are long since gone! Over the years I’ve seen many changes in how diamond jewelry is distributed. When I started working at a wholesale jewelry supplier many years ago, gold was $35 per ounce, there were not many Gemologists around, diamonds were not regularly sold with diamond grading reports, Al Gore had not invented the Internet yet so there wasn’t any Blue Nile, and there wasn’t any home shopping channels because there wasn’t any cable TV. There have been a lot of changes in the way loose diamonds and diamond jewelry is bought and sold since that time and along with those changes in the distribution system a reduction of the retail diamond jewelry store’s markups has resulted. There are still some larger markups on some items in the retail jewelry stores but it is generally for items in the lower price ranges.

So where can I get the best prices on diamonds? The universally accepted GIA diamond grading system has had the effect of “commoditizing” diamonds. When something has become a commodity, it will have the same quality regardless of it’s source, so price will become the determining factor. If I am looking to buy a Sony HD-TV model ABC-123, all of these models that come off of Sony’s production line will be identical, so it is easy to search around town and go online to check pricing of this TV. Based on the pricing and availability of this TV I can then make my decision. Diamonds are a bit different because you cannot get the diamonds to be consistently identical. If you go online and you do a search for a 0.50ct. SI1 G Round Brilliant Cut diamond you will find a group of diamonds that will sell for between $900 to about $1300. These diamonds are all very similar but they vary in price, which means that there is a slight variation in their qualities. These are good prices on these types of diamonds but it will be a blindfolded choice as to which one you should buy. If you went to a local retail diamond jewelry store you might be able to see a selection of diamonds and your eyes will help you make the decision as to which diamond is best. If you do choose your diamond online and it gets sent to you and everything looks good, now what? Are you going to staple it to your ear? Duct tape it to her finger? You will need to go to a local jeweler in order to get your diamond set into a mounting. Do you have a local jeweler lined up that will be willing to set your diamond? Maybe yes, maybe no.

So where does that leave me? It is difficult, if not impossible, for most people to buy diamonds at wholesale prices and you should be cautious, actually be afraid, of anyone who advertises that they can sell diamonds to everyone at wholesale diamond prices and be afraid of anyone who claims that by following their secret advice (this means buying their book) you will be able to save thousands of dollars on your next diamond purchase. There has always been these type of sellers that make up some highly inflated price, they then place a big red “X” through that price, and because you are such a great person they will sell it to you for 40, 50, or even 60% off the original (inflated) price, lucky you! Price is not the only consideration when searching for a diamond and if that is your only focus, it can then leave you open to being deceived! The diamond distribution system has become more efficient and streamlined over the years and I think that now is a very good time to buy a diamond.

The local retail diamond jewelry stores do provide valuable services for most people. If you feel that you could save some money by buying a diamond from another source, then it will require you to do more work in order to save that money. You will have to learn as much as you need to know about diamonds along with researching diamond pricing so that you can get a realistic idea about diamond qualities and pricing so you will know a good deal when you find it. Remember, generally, you do get what you pay for and unfortunately over the years I have seen people make poor choices because they have focused solely on price. It would be nice if we could walk into a wholesale distributor buy items at the wholesale price anytime we wanted to make a purchase but life isn’t that easy.

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