Diamond shoppers today have more choices than ever on where to buy their diamond engagement ring, diamond earrings and other diamond jewelry items. However, with greater selections come bigger potential risks and rewards. You need to do your homework and understand how to select the best company for your diamond purchase.
The retail diamond market is comprised of three broad categories of diamond sources; jewelry stores, ecommerce diamond companies and diamond brokers.
Jewelry Stores
Until recent years, jewelry stores were the only option for most diamond shoppers. This was especially true for smaller towns and rural areas. These stores had a monopoly, much like Ma Bell with the phone systems during most of the 20th century. Jewelry stores were the only game in town and could set their prices at whatever markup they wanted.
Jewelry stores depend on impulse buying so they focus on having a selection to pick from, name recognition through extensive advertising, and being convenient so shoppers can walk in and make a purchase with no education or knowledge of the product. If it looks nice to an impulse buyer, they will pull out the credit card and have it gift-wrapped. To attract the impulse buyer, jewelers built elaborate stores with polished marble floors, expensive display cases, and lighting that makes everything in the store sparkle.
To pay for the stores, the decorations and all the expensive advertising, jewelry stores must maintain high markups on the items they sell. The more expensive stores have bigger inventory, higher rent and more advertising, which dictates the higher markup necessary to pay for all that overhead.
E-Commerce Diamond Retailers
The online shopping cart of hundreds of jewelry retailers has been one of the big growth areas for e-commerce. Shoppers can shop from the convenience of their home or work computer, look at the pictures of thousands of jewelry items online and place their order without ever talking to a human. E-commerce diamond retailers provide a list of diamonds owned by groups of wholesalers and let the shopper pick the diamond they want based on the specifications in the list. The shopper pays for the diamond in advance and then the wholesaler or the retailer ships the diamond to the consumer.
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