jewelers profit more through EGL? help me figure it out!

[essequamvideri]

Sorry this is long:

So I'm on a quest to find the best eyeclean diamond 4500 dollars can buy and there are several observations I've made from dealing with multiple vendors over the last few weeks. Check out my previous posts for a recap.

1) They all push me towards EGL certified diamonds.

My lead off statement in the store is always that cut is my priority and that everything else is based on my impression, but cut must be certified. With each dealer, the first stone they told me they loved and "would have sold already" is an ideal cut, eyeclean G or H EGL diamond. When I start to tell them that I would rest easier with a GIA certificate, they push harder in many different ways.

One jeweler told me that 80% of the public in my town wear EGL stones and don't care about the difference. Is that supposed to be reassuring? I don't think the 80% is spending as much time researching. Doesn't 80% of the public also carry credit card debt, and 50% of newlyweds get divorced...don't give me that percentage crap.

I'm not a public idiot. I'm a novice jeweler buyer expecting to be taken advantage of and I don't want to hear percentages because they make your sales pitch sound trite and overpolished (no puns).

One jeweler lined up 4 diamonds with varying certification (1 GIA, 1 AGS, 1 EGL, 1 uncertified) and had my girlfriends (fiancee soon

) sister pick out her favorite. She was there to help me with the mounting. He gave us a loupe for in the store and then walked us outside to see the varied responses to natural light, etc. To his delight, she picked the EGL stone. He said, "that's all the certification you need". Well he is right that they all were beautiful...and honestly the difference was not that noticable. But if I can find that same ideal G SI2 online for 4200 dollars with a GIA, why would I pay the same for a less respected certificate. Also, the ideal GIA and AGS stones he chose had much larger inclusions...which I would suppose was part of his plan to show the lack of importance between certifications. Did you not think I would notice?

I must admit, I completely understand being satisfied with a beautiful stone, regardless of certification. I know that a little sheet of paper shouldn't come between one's love for their love's choice. I buy off-brand clothing and thrift store bargains. I use off-brand golf equipment (the ball is what matters!

) and when I get my oil changed I use the cheapest fluid possible. But a diamond is unique. it's a one time choice that should symbolize my care and concern for my fiancee and our future. The chance of being fleeced by a jeweler only shrinks with more knowledge...and everything I have read tells me that the GIA and AGS are more respected, thorough, and accurate than the EGL. Somebody has to be paying for all of those shiny track lights and security system updates!

2) Once we move past the EGL certification thing, the change in their demeanor as saleperson's are amazing. They seem to be more honest, and almost defeated in their previous attempts to push off an EGL stone in my direction. It's like, oh well...I can sell the next schmuck an EGL stone, but this guy really won't settle for anything less than GIA or AGS. It's really weird because it's happened to all 3 of the jewelers I'm working with. Am I imagining this? I trust all 3 of them (don't cringe) for seperate personal reasons.

When I share prices online, a few of them use varied arguments to say that buying online is unsafe and undependable.

a) They say that the salepersons' have never seen the stones I am asking about. From what I've read...wrong.

b) They say that there is no warranty. From what I've read...wrong.

c) They say that there is an paysite online database (that jewelers pay for) that lists the purchase price of every diamond and that he can show me how much they are ripping people off.

I don't know about this one. I should have asked him to show it to me. Do any of you know about this?


My main question is...how does the profit margin for EGL compare to GIA or AGS as a seller? Was it a coincidence that they all seemed so flattened after I said that I needed GIA or AGS?

Also, are any of my aforementioned conclusions flawed? I don't want to be cementing bad conclusions...so if there is anything I have come up with or shared that you think I am wrong about...please help me out. I'm just trying to find a winner for my lady!


Thanks for your help,

Essequamvideri

 

[oldminer]

If a G color EGL diamond costs $4000 and an theoretically identical GIA graded H color diamond costs $4000 and you are a "shopper" for G color at a certain price, say $5000, you will likely buy the EGL graded diamond. Most consumers really can''t see one color grade unless properly instructed. You''ll also think that the store offering the H color stone for $5000 was higher priced, but you''d be incorrect.

Sharp retailers pay discounts for EGL diamonds greater than for GIA diamonds. If they ask identical prices for weight, color and clarity disregarding the lab''s name on the report, then they definitely make more money on thge more deeply discounted diamonds...... It makes perfect sense. It isn''t a story to warm your heart, but it is pretty much the same in all business, not just diamonds.

 

[denverappraiser]

You’ve done some good research. Congratulations. I’ll try to add a few insights.

Check the database here for a particular set of weight/color/clarity/shape specs. Usually you’ll get dozens to hundreds of offers for superficially similar stones and the range of prices is often a factor of 2 or more. (you can sort by price by clicking on the column header) The difference has to do primarily with grading accuracy and cutting. You’ll notice that, in general, the most expensive come from GIA&AGS and the cheapest come form EGL International and EGL-USA. The database here doesn’t have stones without lab exams at all but, if it did, you would find these near the bottom of the list.

This is not a coincidence. For each particular stone, the lab was not chosen randomly. The cutter or dealer who ordered the report selected that one because they thought it would produce the highest price. The tradeoff is selling an AGS/GIA for a premium or offering a ‘discount’ on a higher grade. Put another way, is it better to come in at the top of the list for H/SI1 with an AGS report or near the bottom of the list with an F/VS2/EGLI report?

There are several subscription services where jewelers can get offers from wholesalers that are similar in style to the Pricescope database. Some are free and some have a fee attached. A wholesaler will make their retailers aware of what they have for sale, the retailer will mark it up to cover their own value added services and quote you an offer. If you express interest, they’ll order in the stone and show it to you. If you buy it, they take their cut and pay the supplier and if you don’t they send it back. Nothing is lost except a bit of shipping and time. This is a common process both online and with storefront dealers. This is how a store can offer 60,000 stones or more without saddling their stockholders with a hundred million dollars in debt to support the inventory. The assumption that ALL stones you see online are part of this system is simply not correct. With a couple of high profile exceptions, most of the successful online jewelers are jewelers from someone else’s neighborhood who are expanding online so they can reach a global market. Just like your local store, it sometimes behooves them to carry inventory of the kind of goods they do well with. This both gives them a better markup, it gives them more control over exacty what they get and it prevents their competitors from offering the exact same stone for a cheaper price. In case you haven’t noticed, this is a wickedly competitive business.

The same issue applies to warranties, trade in’s, return periods, financing and most of the other value added services that come from retailers. They’re not all the same but the important difference isn’t whose neighborhood they are in. Some online stores have incredible support and some B&M’s are dreadful. Each needs to be evaluated on their own merits. My general observation is that the top end of the Internet folks are among the best but there is a tendency to consider ‘Internet dealer’ to mean the search results when you Google ‘discount diamonds’ (277,000 hits right now) and I agree that the vast majority of those are people I wouldn’t even consider doing business with. That strikes me as equivalent to dialing a random number on the phone, turning over your credit card to whoever answers and, when you get a bad deal, blaming it on the phone company.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver