Retailers/Diamond District

[bluepetal]

I have always been curious about this: When my jeweler says that he has to look for the stone I want, and a couple of days later brings back 5 stones to choose from --- where does he get these stones, and does he have to pay for them, or are the "borrowed" pending sale.

 

[DiamondExpert]

He is bringing in the stones from wholesalers, one or several, and he has to pay shipping/ins each way for the stones he does not sell...just the cost of doing business - but it can get expensive.

 

[denverappraiser]

Bluepetal,
There is a substantial network of diamond wholesalers who are in the business of supporting retail jewelry vendors, both online and on the street. It’s actually a pretty clever system. An individual wholesaler will establish a relationship with many different dealers to sell their stones into a variety of different marketplaces. This allows the dealer to have access to a large variety of stores of different styles ranging from designer boutiques to discount websites and it gives the stores access to a large and varied inventory without the related costs (like security and bank interest). The customer gets exactly what they want and everyone makes a sale. It’s an interesting partnership that benefits both the dealers and the consumer.

This system has been in place for decades but it’s starting to unravel. As DiamondExpert points out, it can get expensive for both of the dealers involved and other distribution channels have appeared that are less expensive albeit less convenient for the consumer. Classically the dealers have been able to offer this as a ‘free’ service but they are finding this increasingly difficult to do since most of their costs are incurred before the actual sale happens and they find themselves in the position of offering this benefit to the customers for free and then losing the final sale, and the related revenue, to a dealer that has less overhead.

Neil Beaty, GG ISA
Independent Appraisals in Denver