Wholesale Diamonds?

It’s a catch phrase that is becoming increasingly popular nowadays – “wholesale prices, direct to the public!” But what does that mean?

Unfortunately, there are so many factors to consider – the 4Cs, certification, credit terms and buying method, that determining an accurate wholesale price for a particular diamond is near impossible.

For example, the wholesale price of a GIA certified stone with three months credit terms would be a lot higher than an IGI certified stone paid with cash upfront – possibly a 20% or more price difference.

In addition to this, because every diamond is unique, a set wholesale price is difficult to ascertain, unlike say televisions or cars with wholesale and retail prices set by manufacturers.

Setting A Benchmark

In the diamond industry, dealers use a list, published weekly by Rapaport. Essentially, it’s a group of tables with colour, carat weight and clarity information and the prices associated with each particular grade. With this information as a basis, dealers can state the prices of their diamonds in terms of the Rapaport list, eg: “-30%” or “+5%”. However, the wholesale price off the list can vary greatly – for example, small diamonds (under 1 carat) tend to attract the biggest discounts off the list price, whilst larger diamonds (2+ carats) tend attract the least, and a lot of the time sell for above the list price on a wholesale level.

Of course the list prices are confidential, but at times is used by so-called “diamond wholesalers” to show consumers what a great deal  they’re getting!

The New Deal

Back in the old days, diamond wholesalers used to buy from either other wholesalers or from manufacturers. Nowadays, thanks largely to the internet and international trade barriers being eliminated, retailers can buy direct from manufacturers. This eliminates the wholesaler or “middle-man”, but it also eliminates the wholesale price. If both a retailer and wholesaler buy their stones from a manufacturer and attach a 20% markup to them, what is the wholesale price?

In the end, consumers should be consumers and wholesalers should be wholesalers. Instead of thinking about the wholesale price, consumers should focus more on the true value that a retailer is giving them.

This entry was written by Nikhil Jogia and was posted on on Wednesday, September 12th, 2007 at 4:25 pm and is filed under Buying Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.