In this article we will discuss what is buying diamonds wholesale, who can buy diamonds wholesale, how to buy diamonds wholesale and what does it mean to buy a diamond wholesale. These are terms commonly searched without truly understanding the meaning
First of all, what does “wholesale” mean? By definition it means selling in quantity to retailers who will resell those goods. So, what does “retail” mean? By definition it means selling in individual quantities to the end consumer. Having said that, how does an individual consumer then buy wholesale when purchasing only one product without the intention of reselling it? Basically, it means buying at a price that a retailer would pay.
So then how does one buy at a price a retailer would pay? Well, we now need to explain the diamond supply chain which is a very unique system. Once this system is understood, the term “buying wholesale” will make more sense.
Debeers Group is the worlds leading diamond company with *** in diamond exploration, mining, sorting sales, grading and marketing. They operate 3, of the handful of mines, that account for a majority of the worlds diamonds. It is commonly understood that Debeers is basically a monopoly that controls the supply and price of diamonds worldwide.
Debeers has an interesting way of selling the rough diamonds that they mine. 90% of those diamonds are sold in what is known as a “sight.” These “sights” are held 10 times a year in South Africa. To be able to buy at one of these “sights” Debeers has a rigorous approval process which includes financial and well as ethical, social and environmental accountability. As listed on their website, they currently have slightly over 100 “sight holders” worldwide. The “sight” in itself is a very interesting process which we will delve into in another article.
The remaining 10% are sold at auction to “registered buyers” who are also vetted for acceptance. According to their website, Debeers has only 950 registered buyers to bid to purchase the remaining 10% of rough diamonds. Now, the rough can be resold on the secondary marker or polished into the faceted diamonds we use in jewelry.
As you can see there are many levels of dealer to dealer sales. This is because stocking and inventory of goods takes buying from several suppliers. The diamond business is unique in that you typically cannot get all your inventory from one supplier. No one dealers has a selection of every size, shape and quality. Dealers and retailers typically need to shop several suppliers to be able to fill their inventory.
The diamond industry also has a secondary wholesale market. If a dealer or retailers has a customer that is looking for a particular diamond the don’t own, then that dealer or retailer will “find” a stone for their customer. This is done by calling or an internet search from dealers that post their inventory for sale. The diamond is then sent on consignment, or “memo,” to be shown to the customer. If the customer likes the diamond and agrees to purchase it, the dealer will paid. If for any reason the customer chooses not to buy the diamond, it gets sent back to the dealer.
This consignment or “memo” process is commonly done and prominent in the industry. Because a dealer or retailer cannot have every possible combination of diamond, getting a diamond on “memo” is how the industry works. One expects to pay slightly more to get a diamond on “memo” because they don’t have to invest the money to own and stock the diamond. This is how the secondary wholesale market works.
If you are buying a diamond from dealers in boxes, you can expect to get a wholesale price. They are buying high enough on the supply chain that they can sell to you and still make a profit. Look at it this way, you can buy a diamond from one of these dealers at secondary market prices much like a retailer get a diamond on “memo.”
Why don’t all dealers and retailers buy from sight holders? Bottom line is they don’t buy in the necessary quantity to make it worth their while. Sightholders and upper level dealers, as well as upper level retails, rely on their repeat business and orders. If an upper level dealer is going to buy in large quantities from the sight holders, sight holders will then let them sell in the next level of the wholesale market in lesser quantities so they both can make a living. They would be shooting themselves in the foot if they were to sell at the same prices to the next level of dealers.
Lets discuss retailers and their role in the industry. Retailers we can define as brick and mortar stores that have locations open to the public, typically with locations in malls and strip malls. Some retailers have more than one or several locations.
Retailers with several locations may be able to buy high in the supply chain because they are buying in large quantities to fill their stores. However, the overhead they pay for employees, rent, insurance and advertising is high. Those costs are taken into account when pricing their diamonds. Imaging the cost of a store in the mall, open 7 days a week with dozens of employees. That is significant when pricing the items they have for sale and that cost is added to the price of their diamonds.
Another reason retail stores are not the best place to buy a diamond is knowledge. Large retail chains employee 100’s if not 1000’s of people who may have taken a short course on diamonds. Even if you find a smaller retailer that employs a gemologist, that persons doesn’t have skin in the game. That person does not put their money into buying the diamond they are showing you. They may have a lot of understanding about diamonds themselves, buying from a dealer personally is definitely an advantage.
LOOSE DIAMONDS
Loose diamond are those that are polished and ready for sale but not set in jewelry. All wholesale diamonds are purchased loose. Having the diamond unmounted give you the opportunity see the diamond from all sides and be able to compare it to other unmounted diamonds. Many factors such as inclusions, cutting defects and color are not obvious in mounted diamonds. Many retailers mount their diamonds in rings and jewelry so those defects are hidden. Most customers, when seeing a mounted diamond in a retail store just see the shine and sparkle and are uneducated about the rest. Buying a diamond unmounted is always better.
Buy diamonds wholesale Houston
The best places to buy diamonds and get the best price is not a retail store. If you can find a mid level dealer like Houston Diamond Outlet where the owner, who personally chose the diamond you are contemplating buying, that is always the best option. At Houston Diamond Outlet we have well over 25 years experience in buying diamonds at the upper and dealer level. This enables us intimate knowledge of the market and industry. This experience enables us to make sure you get the best value when choosing your diamond. Call and make your appointment and experience the Houston Diamond Outlet difference.
