Food for Thought re: Online Vendors

[mjbipjd78]

My ring wasn''t purchased from an online vendor and I know I''m likely to get lashed on this one.

After reading the postings on this site for quite sometime and observing the almost unanimous support WF receives, I went and took a look at their site (and others like Blue Nile, etc...). If a well-cut diamond is a commodity (i.e. the value will continue to increase) why would these vendors who are selling "ideal cut" diamonds only buy back the diamond for a percentage of the price you paid? And why would some only do that for ten days or a month or one year? If you are buying a well-cut diamond, shouldn''t the jeweler be willing to buy it back at 100% of the price you paid at any time in the future? In actuality, this would still be at a loss to the purchaser because the value would have increased over time.

Isn''t it just enough of a warranty to make the consumer feel warm and fuzzy? If the jeweler instead bluntly told me that my "ideally" cut diamond will be worth at least 30% less before a month has passed, it wouldn''t be that reassuring to me. It would make me feel like I''m paying at least 30% too much for that diamond. It seems that it would be different if it were a car or an asset that depreciates in value, but it would seem that any well-cut diamond is always capable of being resold at its present market value to even the most discriminating purchaser.

Just wondering how everyone else makes sense of what seems to me to be an incongruency.

 

[oldminer]

Diamonds are not a commodity. They have certain aspects which are like commodities, but they are unique, not all the same. I know there are those who will insist diamonds are becoming a commodity, but while we may get closer as time goes on, I doubt we will get there until synthetic diamonds are commonly available in the colorless range.

Diamonds are not like real estate where nearly all buyers pay the same amount for your property. There is a wholesale market for diamonds and a very wide retail range, too. Diamonds are far from a one price item even for virtually identical stones. It depends where one buys them and much more, too.

Just be realistic. Little is worth today what you paid for it day or a week ago. There are costs of sales to be considered and ONLY the end user pays those costs. Diamonds have a good part of their cost in shipping, handling and postage. That money is absolutely lost and not part of the underlying "value".

Dealers who make a very small margin cannot afford to gamble on the direction prices of diamonds will go into the future as they have no cushion of profits. High price places may have a large cushion of cash profits to fall back on. Diamonds have gone up in price for many years, but after 1980, they fell like rocks

, especially the finest ones, because of dumb speculation and a feverish economy.

It is way better to pay the right price now than to pay extra to get a future promise of "all your money back on a trade-up". Do you have any idea of what inflation will make of "all your money back"? I have seen prices increase for many things 10 times in the past 20 years. It isn''t funny. It is a silent tax created mostly by printing money and the government spending what we don''t have by increasing our National debt. Consumers don''t seem to notice this quiet inflation. Retirees love high interest rates so their fixed incomes rise over time, but inflation is always more rapid still. Right now, low interest rates have killed retirees fixed incomes, but inflation keeps right on going.

Buy right now. Understand that a diamond is a luxury item that is relatively illiquid. You will likely lose money if you decide to sell it. Driving a new car off the lot is a 20% or more loss. This is NOT depreciation, but a direct cost of buying it new and from a dealer who has a large overhead. Don''t confuse the terms and understand the process better.

I hope this helps some of you to understand the situation and do the best you can.

 

[RockDoc]

I think sellers are just CYA with a 30% reduction. If the market prices increase they you can negotiate more, but if they stay level, they''d probably at least have to stick with their offer. A lot depends on having to pay you in cash. No one really has a crystal ball as what changes will occur in the future. The market has a way of seeking its own level and varies from time to time. In that the major source, De Beers has consistently been increasing the cost of its diamonds, or restricting supply to accomplish the same goal, this isn''t written in stone. While based on past experience De Beers doesn''t reduce prices generally

Generally, diamond sellers get their stones with terms for payment, from wholesalers. sometimes even on consignment.
When they buy a stone from you, they have to pay you cash. You''d probably get more for reselling you diamond if you were to provide in on a consignment basis.

With interest rates rising, and many people who do buy diamonds may have to borrow corporately to get the cash to buy them, so that has to be factored in the reason as to why they''d pay less.

Assuming you''re paying 30% too much isn''t reasonable to assume. Most of the stones sold on the internet are marked up a lot less than the B&M type stores, but that doesn''t hold true for every B&M store. Some are learning to compete with the internet. A good test of whether the 30% less on a cash buyout is reasonable is ask your local jeweler what he''d pay to buy it back.

Rockdoc

 

[belle]

Date: 3/30/2006 1:06:10 PM
Author:mjbipjd78
My ring wasn''t purchased from an online vendor and I know I''m likely to get lashed on this one.

After reading the postings on this site for quite sometime and observing the almost unanimous support WF receives, I went and took a look at their site (and others like Blue Nile, etc...). If a well-cut diamond is a commodity (i.e. the value will continue to increase) why would these vendors who are selling ''ideal cut'' diamonds only buy back the diamond for a percentage of the price you paid? And why would some only do that for ten days or a month or one year? If you are buying a well-cut diamond, shouldn''t the jeweler be willing to buy it back at 100% of the price you paid at any time in the future? In actuality, this would still be at a loss to the purchaser because the value would have increased over time.

Isn''t it just enough of a warranty to make the consumer feel warm and fuzzy? If the jeweler instead bluntly told me that my ''ideally'' cut diamond will be worth at least 30% less before a month has passed, it wouldn''t be that reassuring to me. It would make me feel like I''m paying at least 30% too much for that diamond. It seems that it would be different if it were a car or an asset that depreciates in value, but it would seem that any well-cut diamond is always capable of being resold at its present market value to even the most discriminating purchaser.

Just wondering how everyone else makes sense of what seems to me to be an incongruency.

just wondering how you actually came to these conclusions when you said you actually looked at the wf site.

 

[JohnQuixote]

Date: 3/30/2006 1:06:10 PM
Author:mjbipjd78
My ring wasn't purchased from an online vendor and I know I'm likely to get lashed on this one.

After reading the postings on this site for quite sometime and observing the almost unanimous support WF receives, I went and took a look at their site (and others like Blue Nile, etc...). If a well-cut diamond is a commodity (i.e. the value will continue to increase) why would these vendors who are selling 'ideal cut' diamonds only buy back the diamond for a percentage of the price you paid? And why would some only do that for ten days or a month or one year? If you are buying a well-cut diamond, shouldn't the jeweler be willing to buy it back at 100% of the price you paid at any time in the future? In actuality, this would still be at a loss to the purchaser because the value would have increased over time.

Isn't it just enough of a warranty to make the consumer feel warm and fuzzy? If the jeweler instead bluntly told me that my 'ideally' cut diamond will be worth at least 30% less before a month has passed, it wouldn't be that reassuring to me. It would make me feel like I'm paying at least 30% too much for that diamond. It seems that it would be different if it were a car or an asset that depreciates in value, but it would seem that any well-cut diamond is always capable of being resold at its present market value to even the most discriminating purchaser.

Just wondering how everyone else makes sense of what seems to me to be an incongruency.

I understand where you’re coming from. You just want to see sellers stand behind their product. That’s logical. For reasons Dave and Bill expounded upon, diamond sellers can’t just be diamond renters – but there are options to generate the product confidence you seek.

You mentioned WF. If you take another look you’ll find that we and several PS vendors offer trade-up options. The terms vary, but all reflect confidence in the inventory we select for our vaults. It’s a good fit for buyers and sellers alike: The vendor gladly takes back what was sold - which is a good assurance of quality for the buyer. Meanwhile, the buyer can’t just ‘rent’ the diamond, he/she will invest something more for the upgrade, while getting back all, or almost all (depends on the policy) of what he/she paid in the first place.

Some internet vendors don’t stock their own inventory; they are brokers for supply houses. It would not make sense for them to buy diamonds back or offer a trade-up, since they did not own them in the first place. It’s not right for that business model and they may compensate with other benefits.

Each company has a range of services and benefits to suit circumstances and business model. If you contact different vendors I am sure they can explain their array of options/benefits to you logically.

 

[mjbipjd78]

I was just curious as to the explanation. I appreciate the insight. I''m always one for a good debate

Its just that when we purchased my diamond, we got a lifetime buyback policy that doesn''t require a trade-in. And the lifetime trade-in policy appreciates to account for inflation.

 

[MissAva]

You did not buy chance buy from the infamous “Diamond Guy” did you? If so I am sorry to say that the “guarantee” is not worth the paper it is written on. Do a quick search here on PS and see.

 

[lil_jay78]

Geez, I''m such a rookie compared to everyone else that''s posted, but I just wanted to share my experience as well.

As I am currently "in the market" for a diamond," which I ended up getting from WF, I went in to about 5 or 6 different B&M''s, most of the mainstream ones, like Robbins Bros, that dominate the market. None of them offerred a lifetime buyback, only lifetime trade-up policy. But even with that lifetime 100% tradeup policy, you have to trade up for 2x the amount!!! So if you have a $10k ring, you have to trade up minimum for $20k!

My advice...
read ALL of the fine print...a lesson I''ve learned the hard way at times.