Oct 242012
 

Can the average consumer buy loose diamonds at wholesale prices? That’s the question, and so many consumers have asked it.

wholesale diamondsAnd, after a quick search for “wholesale diamonds” on Google, you’d certainly think so.

But out of all the hundreds of listings for wholesale diamonds, are ALL of them misleading?

Pretty much. But let me explain.

Why no one is selling wholesale diamonds to the public

No one is selling at wholesale prices to the public, because nobody is buying a large quantity of stones from diamond cutters and selling one diamond

 

to one customer off the street (unless you’re one of those customers with a LOT of money). The mark-up on

diamonds is so small at this point that when a wholesaler buys a large quantity from a diamond cutter, it becomes logistically impossible to make enough money selling one diamond at a time to the end consumer. They must sell their stones in bulk to the next person, a retailer. The distribution chain looks like this:

Mining Company—>Diamond Cutter—>Wholesaler—>Retailer—>Consumer

This is something else to consider. There is no wholesale diamond price list. Every diamond is different, and part of the value of the diamond depends on how it looks to the dealer and what they’re willing to pay for it, or how much they’re buying in bulk.

Both wholesalers and retailers have different mark-ups, and this is where you’re going to see the fluctuation in prices. No matter what they say, any company selling diamonds online is still a retailer (I’ll get into this more below).

Also, it is ILLEGAL for a business to claim they “sell wholesale diamonds to the public.” Many do, though.

I would not recommend buying a diamond from an online vendor who claims they’re selling at wholesale prices. It’s not true, so why did they say that? Is it because it’s a good marketing tactic, or is it because there’s something wrong with the diamond? Guess you don’t know until you buy it.

Why it might SEEM like you can buy wholesale diamonds

For anyone who searches the internet for the best diamond prices and then comes into a brick and mortar store to buy, the question always comes up:

“Why can I get what looks to be the same diamond for SO much less?”

Like I said, everybody’s markup is different, and online vendors have certainly lowered markups in the industry because they don’t have the overhead of a brick and mortar store. A lot of stores will still match online prices, or come very close and include their many services within the price. That being said, it is still SO easy to be mislead by prices online – even on diamonds that come with a GIA certificate .

How can this be?

Well, part of the reason stems from the fact that diamonds are not exchanged between dealers based on certificates. They go by how the diamond “faces up,” or how it looks to the average consumer. We always tell our customers to buy the diamond, not the certificate. We run across certificates all the time that are not accurate. Most diamond retailers LOVE diamonds that are graded better than they look – they get it for less, slap a cheap price on a certified stone, and get it sold.

That’s not all. We’ve even seen prices from online vendors, for GIA certified stones, that are LOWER than the wholesale prices we can buy them for as a jewelry store! The reason for this phenomenon is because those stones are truly and horribly misgraded, so the price the seller paid was below normal in the first place. Then there are cases where an online vendor has sold the diamond multiple times because the customers keep sending it back – it’s not what they expected. Hence, the price goes down even further until it’s sold.

I hope this clears up some of the confusion on whether or not you can actually buy diamonds at wholesale prices. Feel free to ask any questions in the comments.

  4 Responses to “The Truth About Wholesale Diamonds”

  1. You did leave out one situation. What happens when the retailer buys at huge discounts from other sources such as buying off the street. We for example by about 75-100 diamonds a year off the street and normally sell at or below wholesale for quick turnover. We do no advertise that we sell wholesale but our prices are at wholesale or below.

    • You make a good point – we also buy diamonds off the street and sell them close to wholesale.

      However, this is the exception and not the norm. Trying to buy this way is also an easy way to be fooled because most of these diamonds aren’t certified and quality can be exaggerated.

      The point is to avoid retailers who use the “wholesale” phrase to sell you. The major online vendors aren’t buying off the street.

      • My wife just lost her marquise ct stone from the setting on her wedding band, it was 1/2 carot. How can I buy a new stone by itself to reset it?

  2. I am trying to start a local online diamond business. What does “off the street mean”?
    Can you share with me where I would go to purchase inventory ? Do I but only in the US or abroad as well

    Diamond Cutter—>Wholesaler

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