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BlueNile Vs. "wholesale"

I am going to throw this out to the group: Has anyone comparative
shopped for diamonds only to find that BlueNile is right in line
with the prices quoted from wholesalers?

Cameron

What wholesalers? If anyone can lead me in the direction of a true
wholesale company, I’d love to give them my business.

It’s funny you posted this question this evening. I was wondering
myself if there really is such a thing as “true wholesale” anymore.
Other than the Tucson Show, I don’t think there is. Every place I go
to seems to offer “wholesale to the public”. Where’s the wholesale
in that? I suppose if you purchase 100 of each gemstone you get a
price break - but I usually buy one of this and one of that - even
though it adds up to a heck of a lot of money every year and I place
numerous orders every week. It should put me in some sort of
wholesale buyer category - I’m still paying the same price for all my
materials that someone who makes a handful of bracelets a year pays
for the same materials. I blame it on the internet and Ebay…
Everything is wholesale nowadays…

Sorry to rant… I think I’ve been doing that a lot this month…

I find Blue Nile is pretty consistent with Rap prices. Therefore
the percentage back of Rap one is getting from their wholesaler
determines the difference.

But

http://www.whiteflash.com
and
http://www.diamondsonweb.com

are usually considerably below Rap.

I think that these online sources, while really benefiting the
consumer , are doing great damage to the middle-of-the-road jewelry
store.

The high end luxury stores: Boucheron, Bulgari, Cartier, Tiffany will
always have their clients and the “value” merchandisers like Costco
and Wal-Mart also have carved a comfortable niche. It’s the rest of
US that have to rethink diamond merchandising.

I haven’t used Blue Nile, but I did contact the Diamond Floor after
reading about them here. The guy I spoke to was very pleasant and
seemed eager to help, but wanted me to tell him how much what I
wanted should cost. I am new to buying diamonds, and want a carat or
two of small mellee. I don’t know what it should cost or where to
get it. They don’t list stuff this small on their web site, but
assured me they could provide it.

My response (by email) was, “Isn’t ths kind of silly? You are the
expert-- you tell me what it will cost!” I haven’t heard from him
since.

I confess that, in part, I’m hoping posting here will jog him into
action. If not, I’m hoping someone will tell me what a carat of
1-point or so mellee, of decent quality, should cost, or even
better, the name of someone who will be pleased to sell me what I
want at a fair price instead of playing guessing games.

Thanks, everybody!
Noel

What  wholesalers?  If anyone can lead me in the direction of a
true wholesale company, I'd love to give them my business. 

I couldn’t agree more! I knew that Rio was quasi-retail and
available to anyone/everyone, but I had thought that Stuller and a
NYC diamond dealer would be “wholesale”. I was shocked to find
BlueNile not only in the e x a c t same price range, but offering
certification - - which neither Stuller nor the diamond dealer
would offer at that price. There was an article about how to compete
with Wal-Mart today. The basic gist of it was to not fight the 800
pound gorilla (Wal-Mart). The key to success is to carve one’s own
niche out - - diamonds are now officially in the territory of the
800 pound Internet gorilla. And, by the way, Costco now has a
$180,000 yellow diamond ring for sale; as well as Cartier watches.
I am sure Sam’s Club won’t be far behind.

As I said elsewhere wholesale means buying a whole lot. Rio’s
pricing structure reflects “buy a lot”. There are price breaks
listed in their catalog; the more you buy the less each piece costs
individually.

What do you mean by wholesale? I would love to hear your definition
of this term. Honestly!

When it comes to diamonds are you capable of grading diamonds. What
does it mean to you that Blue Nile ( i don’t know who or what Blue
Nile is, nor have I done business with them) offers certification?
It seems to me a better thing is to develop a relationship with
someone whom you trust if you lack the training to grade diamonds.

Why does everybody beat up on Wal-Mart?

Kevin Kelly

Hi Noel

I find it hard to believe that a seller would ask you how much would
you pay. But anything is possible. To put it in the best possible
light, perhaps he was asking about the quality of stones you were
seeking by asking what price range.

What color and what clarity are you speaking of? That’s the first
step in determining price. Since you mentioned melee that’s the
size. If you called and said “I want a carat price on melee up to
10 points in G-H color, VS1” you might have gotten a totally
different response.

HTH

    What wholesalers?  

I think that we all need to rethink what buying wholesale means.
Rappaport does not list “wholesale” prices. That idea was corrupt
the first time someone suggested that it was. Everyone, and I mean
everyone can get diamonds for less than the sheet suggests. That
illustrates the very dishonesty of the system.

Wholesale means buying in bulk. Retailing means to add some value to
the items. “What value?” you ask? The added convenience of buying
one at a time in a place that is easy to get to.

When in Paris a few years ago, a cab driver explained the
distribution of new fashions to me. Seems that a type of jobber or
distributor will ride a truck, bike or motorcycle into the garment
district, buy a few dresses, deliver and sell them to retailers
around the city and skim a little in the transactions. These
messengers are buying wholesale, but only because they buy ten or
twelve at a time. The messengers create the value of local shopping
for the rest of Paris by their service. Anyone is welcome to shop in
the garment district. No one needs a special “wholesalers” license.
The restriction is market based in that the wholesaler gets rid of
the inconvenience of having to distribute the goods one at a time.

I am sure that there a a great number of hustlers on this list that
will cut their markup considerably if they are selling enough of an
item and can look forward to more deals. More movement, more deals
more trade and less aggravation. If you are buying one at a time,
consider yourself as buying close to retail with the possibility of
a discount.

I remember some years ago when a new retailer was surprised that we
would charge him $75 to build out a diamond solitaire while he
waited. “But I can get it for less in New York”. “We can too”, my
partner replied. So what?

Bruce D. Holmgrain
http://www.goldwerx.com
@Red_Rodder
JA Certified Master Bench Jeweler / CAD/CAM Solutions

    Has anyone comparative  shopped for diamonds only to find that
BlueNile is right in line with the  prices quoted from wholesalers?
Cameron 

I can usually get diamonds for around 10-15% below what BlueNile is
selling them to the customer for. The problem is, once I have to
collect New York’s 8.25% sales tax and pay shipping, I find I get to
flip a $10,000 diamond for around a hundred bucks. I usually just
tell the customer who’s been BN’d, go for it, get a bargain, step
right up, take your chances, etc. I’ve got a 1.25 carat stone
sitting in my shop right now that a “smart” buyer picked up on BN.
It’s GIA certed as VS1, F color. In my opinion, it’s VS2, F-G.
Tomorrow, I’m going to show it to another GG and get his opinion.
In any case, I’ll dig up a strong 1.25 VS1, F, put the two side by
side, and see if I can make a couple hundred. But I’ll do this more
for the customer, who I’ll make a custom platinum ring for, than to
get the money from the diamond sale. I’ll do well on the mounting.
Plus, there’s a principal involved. I’m going to try and “pimp” a
diamond, basically, just to show I’m the service guy and BN isn’t.
There’s no way this is worth my time. I feel sorry for the
retailers. The diamond business is a thing of the past, unless
you’ve got a hook-up for some secondary market stuff (read: pawn
shop).

David L. Huffman

        It's funny you posted this question this evening. I was
wondering myself if there really is such a thing as "true
wholesale" anymore. 

Hi Catherine;

Is anybody surprised at this? This is what happens when you turn
anything into a commodity. The whole process of grading a diamond
took away the idea that some diamonds were beautiful and some
weren’t. Now the assumption is that, of course, a VS is prettier
than an SI, and an SI is prettier than a I, etc. So, the end result?
If one SI is the same as another SI, more or less, then it’s about
price, isn’t it? Already happened with gold chain. And who’s going to
have the best price? The guy who can buy the cheapest and sell on the
smallest margin, and that would be somebody who gets a great deal by
buying in huge quantity, like Wal-Mart, Blue Nile, etc. Just curious,
does anyone know much about Blue Nile like who’s money started it,
who owns it now, etc? Doesn’t it just amaze the crap out of everybody
that they can sell millions of dollars of diamonds and not collect
one cent of state sales tax? Boy, it’s going to be exciting when all
this hits the fan, eh?

David L. Huffman

There is no such thing as “true wholesale” and what does that mean
anyway? This applies as much to Tucson as anywhere. There are
people who are given buyers badges at shows like GJX and GLDA who
are not in the business. They are buying for their personal use.

Wholesale means you buy a whole lot. If you are buying a certain
quantity from a company over a given period of time you should
approach them about special pricing consideration.

If you believe what you see on TV of course everything is wholesale.

Noel,

Melee is priced by the carat in a wide range of prices according to
quality. If you have access to a Jewelers building that is usually a
good place to begin to develop a relationship with a dealer who will
probably give you a decent price knowing that you might be a long
term customer. If you have an account with Stuller they also offer
melee at a slightly higher price, plus you pay shipping. But you
will have them in your hands the next business day, so the
convenience is worth the extra cost in some instances. In the past I
have paid $375/carat for .05 carat stones which are 2.4 mm in size
which was about $18 per stone. That would be a grade C, I2 quality
and G-I in color.

Good luck with your search and I hope this helps.

Susan Ronan
Coronado, CA where it rained again yesterday, but the sun is shining
today!

As to the whole issue of on-line diamonds, “Backa-Rap”, etc. Nobody
is giving away diamonds. Nobody at the levels below sight holders is
paying less for diamonds, except for the price breaks and the
occasional score. If you are paying more, maybe your source isn’t so
hot… I have found that, almost always, there is one single
reason why a stone is cheaper, and that is the make. Amateurs and
the less-experienced tend to put great stock in G/SI, H/VS-SI and
such, but that’s only a start, and just a framework. I barely glance
at the papers, look at the stone and see if I agree with the numbers,
and then I study the make. Without exception I have found something
off about a stone that’s underpriced. AND - it is almost never
reflected in the cert, because they are just shoveling stones
through, and are also preoccupied with color/clarity, as is the
industry. A dealer showed me a 3.5ct. that was cheap, and was all
proud of it and stuff, and then I showed him - the table was off
center, as was the culet, and the table also was not parallel to the
girdle - all fairly significantly so. When I showed him, he readily
agreed that it was true (he hadn’t realized) - and yet the cert - EGL

  • said good symmetry, polish, etc. This is a $20,000 stone, no less.
    And that is what many of the stones online are - most only have
    generic pictures, and often those that have actual photos you (with
    an eye) can see the off makes right there. Caveat Emptor!!!
Wholesale means you buy a whole lot. If you are buying a certain
quantity from a company over a given period of time you should
approach them about special pricing consideration. If you believe
what you see on TV of course everything is wholesale 

I don’t buy a lot, but I do buy some wholesale, not for personal
use. I don’t want to have to sell a lot “of the same thing!” I
spend niore than $300.00 when I do that. Whether it’s findings or
other kinds of things …

 I am new to buying diamonds, and want a carat or two of small
mellee. I don't know what it should cost or where to get it. 

Noel, We get our dia. from Stuller1ct.-C Quality runs about
$300.00 plus the size is consistant, which is not always the case
from a lot of the dealers. IN the last 12 years we,ve tried different
dia suppliers and prefer Stuller. usual disclaimer.

Leona

    Wholesale means you buy a whole lot. 

Hello Kevin and others;

If you want your argument to be based on semantics, you’re ok, but
the fact is, there is a broader meaning when we are talking about
conventional usage of the term “wholesale”.

It means, as most people understand it today, that if I am a
retailer, I am one of many “outlets” for your product so that you can
do what you do best, namely manufacture, and I will do what I do
best, that is, sell to the public. You will not have to worry about
sales tax, and I will have to collect it and hand it over to the
state. You can stay in one place, or even have your operation
overseas, but if you have lots of retailers like me across the
country, you’ll reach a broad market. You will only make as much
inventory as you need to fill your order or as much as you see fit
to stockpile, whereas, I will have to invest in a whole lot of
inventory, relative to my investment in my business, so that my
customers will feel they have choices, and I will sit on it until it
sells.

Now most jewelry retailers, other than the big box stores and mall
chains, will buy in amounts varying from one piece to dozens, but
over a period of time, that adds up to “quantity”. For instance, I
only spend around $1500-$2000 a month with my largest vendor, less
with a few others. Add that up month by month, year after year. I
expect to mark it up and sell it for more than I paid for it. Why?
Because I don’t work selling other peoples stuff for free. How much
I mark it up depends on who I’m selling to. What!? How’s that fair,
you ask? Simple. If I’m selling it to a retailer, I keep the price
low enough to make it possible for him to make a living reselling it
at a competitive price. If I sell it to a private customer, I sell
it at a competitive “retail” price so as not to undercut my
retailers. Is the diamond industry doing business this way? I
think not. And I know if I did business the way they are doing it, I
might very well be out of business in relatively short order. But it
appears to me the diamond industry is expecting most retail to end up
in the hands of a very few.

But they haven’t figured on the real 800 lb. gorilla. De Beers.
Wait until “the Octopus”, as they’ve been referred to historically,
starts setting up retail and online sales. Anybody else see this on
the horizon? Do you think it’s coincidence that, after decades of
not being allowed in this country for violation of the anti trust
laws, they finally fessed up, paid the fine, and are now good
citizens? Think it was keeping them up nights worrying that people
thought of them as a monopoly?

So why is it that diamonds are available to the public at near
wholesale prices? I have my theories (something along the lines of
an analogy to rats leaving a sinking ship), but I’ll be following
this thread to see what others have to say. And by the way, I hope
the “what’s wrong with Wal Mart” question is rhetorical. It’s been a
dead horse in these parts for some time now.

David L. Huffman

Just curious,

does anyone know much about Blue Nile like who’s money started it,
who owns it now, etc? Doesn’t it just amaze the crap out of
everybody that they can sell millions of dollars of diamonds and not
collect one cent of state sales tax? Boy, it’s going to be exciting
when all this hits the fan, eh?

Here is what I found about Blue Nile’s start: (From “Tech
Confidential”) but, Forbes.com has an interesting article about Mark
Vadon. The article includes an amusing anecdote about how Tiffany’s
"attitude" when he went in there to buy an engagement ring is what
prompted him to think outside the box about diamond sales.

  Blue Nile Inc.: The online jeweler, which went public May 20,
  2004,  saw its shares close 38.5% higher than their listing
  price on the first day of  trading in late May in an IPO led
  by Merrill Lynch & Co. and co-managed by  Bear, Stearns & Co.
  and Thomas Weisel Partners LLC. There was a time when  most
  people thought consumers would never buy items such as jewelry
  or shoes  online. That's how far Seattle-based Blue Nile has
  come. 

  Blue Nile, founded in 1999, raised $57 million in venture
  financing, including $7 million  in its most recent round of
  funding way back in 2001. Investors in that round  included
  Silicon Valley VC powerhouses Bessemer Venture Partners,
  Integral  Capital Partners, Kleiner Perkins Caufield & Byers,
  Lightspeed Venture Partners, Trinity Ventures and Seattle's
  Vulcan Ventures Inc. All had previously  invested in Blue Nile.

SideNote: Vulcan Ventures is Paul Allen (Microsoft co-founder)

By the way, the 800 pound Wal-Mart is now the world’s largest
jeweler according to an article “Diamonds in the Rough” on
http://www.theage.com.au. I am not opening a dialogue on quality of
merchandise, discussing the merits or lack thereof of Wal-Mart - -
I am just passing along

And, finally, yes, it is going to be very exciting when it hits the
fan.

Noel asked what a carat of decent diamond melee should cost. That
depends a lot on what you consider to be decent. You need to be
very specific about what you want. I am sure they can give you an
exact price if you say something like. I want 1 carat of .02 round
full cut diamonds g to h color and SI1to SI2 clarity. I can’t tell
you what they should cost but I can tell you what I have paid. At
the Tucson show I paid $285 per carat for that quality. And I
recently ordered the same stones from a dealer that I use and paid
$325.00 per carat. The second batch did turn out to be a little
better. I will be very interested to see what others of you are
paying or if you are even willing to say it here.

John Wade
wadedesigns@aol.com

    Why does everybody beat up on Wal-Mart? 

Kevin, there has been a lot of discussion on this topic on Orchid. I
don’t know if it’s archived.The subject was “weapons of mass
destruction.”

MY reason for ‘dissing’ Sprawl-Mart is their predatory policies. It
is well known and a matter of public record that Sprawl-Mart will
move into a semi-rural area (e.g. upstate New York.) They destroy
the local retail economy by underpricing.

In the particular case of upstate NY, Sprawl-Mart dedided after a
year or two that the area couldn’t support their type of monster
store, so they simply closed up shop, and left the area. Now the
locals have NO PLACE to shop.

Also, their dealings with their suppliers leaves a lot to be desired.
See http://www.fastcompany.com/magazine/77/walmart.html

David Barzilay
Lord of the Rings
607 S Hill St Ste 850
Los Angeles, CA 90014-1718
213-488-9157

    But they haven't figured on the real 800 lb. gorilla.  De
Beers. Wait until "the Octopus", as they've been referred to
historically, starts setting up retail and online sales.  Anybody
else see this on the horizon? 

Yes, De Beers LV has been looming on the horizon for a few years,
now. Sightholders have been dwindling, owing to this and other
concerns of theirs. It’ll be interesting to see that particular ship
hit the sand.

    So why is it that diamonds are available to the public at near
wholesale prices?  I have my theories (something along the lines
of an analogy to rats leaving a sinking ship), but I'll be
following this thread to see what others have to say. 

I’m not sure the rats left the ship so much as the ship left port
without them. De Beers has cut a tremendous amount of their
sightholders, creating the Supplier of Choice program. That action
left a lot of companies who needed/wanted rough out in the cold.
Obviously, that plays some part, but it’s also possible that
Internet sales of diamonds has increased to the point that this
non-traditional source is becoming more popular.

More and more people plug into the Internet and learn to search for
the products they want each day. Diamonds are no different. The time
of secretive cabals in the diamond industry may be coming to an end.
But only time will tell.

James in SoFl