Stay away from the mall !
Jan 18 '00
Some random advice on how to bypass the retail jeweler, still keep your shirt and end up with a nice piece of jewelry:
Fine diamond jewelry is a fascinating business in the USA. A very large retail markup plus the relatively poor state of buyer education make for the potential for big savings if you do some homework and are willing to do some of the legwork yourself. Savings of 50% of retail price are quite achievable.
It helps to understand something about how the market works. First, you need to know that cut diamonds are a commodity with quoted market prices, just like pork bellies. Most folk know this as the Rapaport price (known as the "Rap" in the trade. See http://www.rapaport.com/) Prices are quoted for all the different diamond grades and sizes. Often retailers will show customers a copy of the Rap report to prove that they're offering a good deal. But, what most folk don't know is that the Rap prices are for stones graded by one of the reputable grading labs (GIA or EGL), and that they're actually 30% or so above the US wholesale price. So, when the mall jeweler shows you that he's selling you an uncertified stone for only 15% above rap, in reality he's making plenty of profit on the sale. If you can buy certified stones at 20% below rap you're getting a great deal. If you're paying above rap you're paying too much.
Retail jewelers don't just take your money and laugh to the bank though. They offer some real services that you will loose if you bypass them: You can return a piece bought from a retail store for a full refund. You can exchange a piece for something different. You can "upgrade" to a larger stone at some point in the future and get full credit for your first purchase. You can buy the piece on credit. Completed pieces (setting with stones) are offered. Wholesalers may only supply loose stones and the job of finding a setting and getting the two put together can be a big time sink.
These services might be important to you (for example if the recipient of the piece might not like it).
However if you know what you want, can pay cash and are willing to do some calling around to find a goldsmith, big savings are possible.
So retail outlets both take a big markup on the items they sell and charge for services you might not need. You can save money by going further up the food chain to the guy the mall jeweler buys from, or above.
You'll find plenty of information on diamond grading, so I won't go into that. Just know that under jewelry wearing conditions, it's impossible to tell the difference between SI clarity and anything better. Similarly it's hard to distinguish color H from anything better (unless the stone is set with others which have a significantly different color). SI1/G or H stones are a great bargain because they look just as good as any higher graded stone, but cost much less. Unfortunately it can be hard to find stones at this "sweet spot" in the grading matrix, so you might need to settle for something close.
Stones larger than around 0.5 ct are typically certified. You should only buy certified stones, and only accept GIA or EGL certs, unless you really know what you're doing (or feel lucky :) If you have a trusted relationship with a cutter or a wholesaler, you can save money by buying uncertified stones, but it's not worthwhile for larger stones because the cost to get them certified is trivial compared to the purchase price. Smaller stones aren't usually certified because the cost is large compared to the purchase price. Here you need to rely on the honesty of the vendor and your own eye.
Another bargain opportunity if you're buying a larger stone ( > 50 points) is to find one with a weight just under a Rap weight group. For example, stones weighing more than 1 carat cost much more (per carat) than stones at around 80 and 90 points. Of course the trade knows this, and the cutters will try hard to get a stone above the weight line. You won't find many 99 point or 1.99 carat stones:)
You need to know something about grading reports, mostly to spot poor cutting. The clarity and color aspects are scientifically measured and easy to understand, but cutting flaws which can affect how the stone looks are harder to see. Grading reports do not say "the cutting on this stone sucks". I recommend reading "The Diamond Ring Buying Guide" to learn how to interpret grading reports.
http://www.amazon.com/exec/obidos/ASIN/0929975243/qid=948219943/sr=1-1/104-6256370-5338831
Don't get hung up on cut angles. You'll probably be offered stones with "ideal cut". Often this means nothing at all, but some stones are selected and cut to precisely the "real ideal" geometry (56% table or so). In reality you can't tell the difference between a 56% table and a 60% table in a stone when it's set and worn. Cutting stones to the precise geometry of the ideal cut makes them more expensive (because they have a lower weight than they would have otherwise). It's better to buy a larger stone than to get the cutting angles precisely right, at least up to a point. Some stones of course are cut badly---usually to gain weight at the expense of brilliance. How to spot these is covered in the book cited above.
Another great way to educate yourself and train your eye is to visit plenty of jewelers and ask to see pieces. Try to find a good jeweler---they're typically not in the mall---look for them elsewhere. The "retail wholesale" outlets (e.g. The Shane Company) aren't bad, but be aware that they are indeed not selling at wholesale prices. Tiffany's is actually pretty good if you have one near you. They sell absolutely no junk and their prices aren't at all bad (for the quality of their pieces).
So you can get more sparkle for your buck by educating yourself about diamond grading and cutting. The retail trade will try to sell you either complete junk, or product that is of a higher quality than you need.
Who can you buy from if you're willing to avoid the retail sale channel? There are three sources:
1. Local wholesale jewelers. In any large metro area there will be one or two jewelry dealers. They supply most of the fine pieces you will see in the local retail jewelers. They won't have a store front of their own, and in order to keep their retail customers happy, they won't advertise. But, they will often sell to anyone who knocks on their door, especially if you take the time to educate yourself before approaching them, and you have a good idea of what you want. A good way to find these guys is to look in the yellow pages for "estate jewelry buyers", meaning that they buy second hand pieces. Often the guys dealing in estate pieces are also the local wholesalers. Ask around, someone that you know might already have a relationship with a local wholesaler.
2. Cutters and national wholesalers. In the US, most diamond trading is done out of either New York City or Los Angeles. Anyone claiming to be a big noise in the business who doesn't have an address in one of those cities is probably blowing smoke. It's possible for "ordinary folk" to transact business with one of the big traders in NYC. Again they don't typically advertise, so you have to look around. Some of them do have internet sites, so go surfing. You really, really need to know what you want to buy to deal with these guys---time is money to them, but some excellent bargains can be found. You might hear tales of bargains to be had in places like Antwerp and Israel. However as far as I know prices aren't significantly lower than here in the US. Not low enough to make it worth the hassle and risk to go offshore anyhow.
3. Internet diamond sites, e.g. http://www.tradeshop.com and http://www.bluenile.com. This could be the way of the future, but personally I'm somewhat wary of these sites. I like the reassurance that my personal contact with the wholesalers gives. I'm not convinced that the Internet diamond sellers are able to buy stones for significantly less than anyone else. These sites however are a great source of information. If you're smart you can pretty much reverse engineer the rap prices from information on their site. If you can't find a source of type 1 or 2, then these guys are I'm sure a better deal than the local retail jeweler.
Once you've found your source of attractively priced stones, you need to locate someone to make a piece of jewelry! This can be hard. Retail jewelers typically don't actually make jewelry (although they will tell you that they do): goldsmiths make jewelry. Often they work out of their house, or from a "hole in the wall" shop. You can find them in the yellow pages (under goldsmiths). The local wholesaler type people will have one or more goldsmiths they use, so ask them for a recommendation. Try to avoid being sucked into the custom setting trap. Goldsmiths love to practice their art, but it's possible to buy a zillion different settings from a catalog and (roughly speaking) plonk the stones in. Ideally you can find a goldsmith who is willing to let you flick through the pages of some findings manufacturers and pick your design. They can then either order it from the manufacturer or fabricate something similar. Hand fabrication is expensive and to be avoided if you can. Sometimes it's the only way to get what you want. Custom casting is even more expensive and to be avoided unless you really trust the goldsmith and can't get what you want as a finding or by fabrication. Findings and casting is all done by large companies who operate out of LA or NYC, so distrust anyone who tells you that they "make their own". Ask them to show you how:)
Lastly, if you're not inclined to take on the extra work needed to deal with wholesalers, or if you're the kind of person who wants to see and handle the piece before buying, you do need to buy from a retail jeweler. However, avoid those mall outlets. Look for a family-run jeweler with lower-rent premises. Get personal recommendations from friends and family. Try to find a jeweler who is also a diamond "broker" (meaning that they hold stock for other jewelers in the area who can't afford to do so themselves). Don't settle for someone who is rude or insulting to you, there's no shortage of retail jewelers!
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Member: David Boreham
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