Almost every day we hear consumers comment that they had found a local diamond wholesaler that they are also considering using to supply them with a diamond. It is no wonder that diamond shoppers are confused and frustrated as they attempt to find the best diamond at the best price.
Wholesale Diamonds versus Retail Diamonds
The simple truth is that if a business is selling to a consumer, they are a retailer regardless of what they advertise themselves to be. The exact definitions of "wholesaler" and "retailer" differ only by who is being sold to. A wholesale transaction is always with a party that intends to resell the item and not use it themselves. A retail transaction is to an "end-user", a consumer who will own and/or wear the diamond or the ring.
Online diamond retailers have helped eliminate much of the overhead costs typically associated with a traditional jewelry store. Most online diamond retailers are simply brokering the inventories of diamond wholesalers. Many traditional jewelry retailers can't buy diamonds for their stores at prices low enough to adequately cover their higher overhead even if they are willing to compete with online diamond retailers. Many jewelry stores refuse to compete and are simply mad because they have lost the easy money they made for many years. Some traditional jewelry retailers have lowered their prices to compete with online suppliers and are seeking out the right business model in these changing times.
Diamond Source of Virginia feels strongly that anyone claiming to sell wholesale diamonds to the public is misleading the consumer and hurting the reputation of the diamond industry. It is illegal to claim to be selling wholesale diamonds to the public but this claim is commonly made. The Federal Trade Commission simply does not have the resources to monitor and policy all the marketing and advertising in the diamond industry.
The confusion for the consumer arises in that they assume that someone claiming to be selling wholesale diamonds is a better value than someone selling retail diamonds. In the end the only thing that matters is the price that is paid, not the claim that is made. The online retail diamond market has become extremely competitive with single digit margins the norm rather than the exception.
Certainly, quantity buying allows lower costs. Retailers and wholesalers who buy diamonds in large volumes do not pay the same as buyers of one diamond at a time. So, there is some variation for consumers who generally only buy diamonds in small amounts. On the other hand, business that resort to claims of being diamond wholesalers to the public, often have the same or higher prices than other retail companies but try to sell lower quality diamonds to achieve cheaper prices.
Smart diamond shoppers will seek out diamond suppliers with the right price, the best service and the method of doing business that is most comfortable. Don't be mislead by these basically now obsolete terms of wholesale diamonds and retail diamonds when it comes to a solitaire diamond ring or a pair of stud earrings. The diamond business environment is quickly changing.
Wholesale to the Public is Illegal
The Jewelers Vigilance Committee says it is illegal to claim to be "Wholesale to the Public." This violates both the Lanham Act and the FTC Guidelines. If you see someone advertising in this manner, please forward a copy of their advertising to the JVC.
In Title 16 of the Code of Federal Regulations, section 233.5:
"[R]retailers should not advertise a retail price as a 'wholesale' price. They should not represent that they are selling at 'factory' prices when they are not selling at the prices paid by those purchasing directly from the manufacturer." The other relevant statute is in the Lanham Act (title 15, section 1125(a)(1)), the federal trademark/unfair competition rules:
"Any person who, on or in connection with any goods or services . . . uses in commerce . . . any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion, or to cause mistake, or to deceive . . . as to the origin . . . of his or her goods . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act."
You can never buy diamonds "below wholesale". Those unethical marketing claims are simply intended to deceive the consumer. A real diamond dealer rarely needs to sell diamonds for a loss. They surely don't need consumers to buy when then are selling for a loss. Their fellow diamond dealers are like vultures circling their prey. When a diamond dealer is really short of cash, his fellow dealers swoop in. They do not need, or want, consumers to buy their distress diamonds. It is a little like a closed, private club. Consumers are NOT members.
While it may be just semantics, when a retail consumer buys a diamond, it is a retail transaction. Don't fall for the sham deal due to misleading words or claims. If they are not honest and up front with their words, do you really want to be giving them your money and trusting their advice on a diamond?
At Diamond Source of Virginia we believe that honesty and integrity are keys to building long term clients and referrals. We shop the wholesale market for the best wholesale diamonds meeting your requirements but we are retailers selling you high quality diamonds at very low prices. By the way, we do have retail jewelry stores buy from us and we price the diamonds the same to them as we do to every other client. We think every diamond shopper deserves the best diamonds for a very low price.