June 7, 2009
Buy diamond online? It's not as risky as you think
The sparkler of your choice can be shipped to your doorstep, with grading report, insurance and money-back guarantee all thrown in
By Gabriel Chen
You may have bought books, CDs and various paraphernalia over the Internet, but what about shopping online for a diamond ring?
Over a decade ago, only the most risk-tolerant consumers would consider making diamond purchases online.
Today, many of my friends are buying diamonds online.
That they are doing so during the financial crisis is significant. Timing-wise, now could be just the time to pick up that bling you have always coveted.
Prices of diamonds have sunk by nearly 30 per cent from their peak in August last year as the global economic downturn strikes fear in the hearts and wallets of investors and aspiring bridegrooms.
About half of the world's diamonds are retailed in the United States, where recession has crimped spending in the world's largest economy.
To sceptics, buying a diamond online is not the same as shopping for your favourite bedtime read on the Internet.
'Surely you'll cry if the brilliance of the diamond on the Web is less than in the one you bought,' says a friend who thinks I am crazy to broach that idea.
Others scoff at online sales, saying that buying a sparkler requires you to touch it and to get the 'right' feeling about it. 'It must speak to you,' they coo.
But those who have snapped up these precious gems online have nothing but praise for the process. It was not a hastily made decision, said my cousin, who bought a diamond earring for his girlfriend.
To begin with, he did some research.
He spoke to consultants, traded notes with smaller jewellers here, and visited traditional brick-and- mortar shops including Tiffany & Co, Larry Jewelry, German jeweller Charlotte Atelier and Lee Hwa Jewellery.
After dozens of hours of 'homework', he concluded that shopping on the Internet can actually be a very safe way to buy a beautifully cut stone.
His diamond was from Blue Nile, a Seattle-based company with diamond ring sales that rank only behind Tiffany & Co.
The firm was founded in 1999 by Stanford Business School alumnus Mark Vadon and offers over 60,000 diamonds on its site.
This is how Blue Nile works.
First, you can use the website's material to acquaint yourself with the traditional 'four Cs' guide to size up a diamond - carat, clarity, colour and cut.
If you are unsure of what to do, you can dial a number to reach a Seattle-based sales representative, who will guide you through the purchase. You can even chat with him online.
Once you have placed your order, Blue Nile buys your rock from a New York cutter, who ships it overnight to the firm's warehouse in Seattle. There, a jeweller will do all the hammering and pliering needed to marry the diamond to its setting.
If you are afraid the ring will not fit the intended finger, you can download a 'printable ring sizer' from the Blue Nile site to help you determine the ring size.
The diamond is then shipped out in a box via registered mail. Payment can be made by credit card, bank wire or by PayPal.
My cousin received the package as well as a diamond grading report from the Gemological Institute of America (GIA) a week after placing his order. There was no shipping charge since the order was over US$750 (S$1,085), but a fee of 1 per cent of the value of his order was automatically applied during the checkout process.
This fee is for insurance to protect his order from the time it leaves Blue Nile to when it arrives at his door.
Blue Nile's website (www.bluenile.com), I discovered, has easy-to-use search features.
You can search by the criteria most important to you and you can search for multiple diamond shapes simultaneously.
What happens if you change your mind? Blue Nile has a return policy. You can return any item without custom engraving in its original condition within 30 days of the date of shipment for a refund or an exchange.
What's so great about buying diamonds online?
Think top quality deals at a good price. For sure, you will need to pay 7 per cent goods and services tax when it goes through Customs - the fee is included in your bill - and you have exchange rate fluctuations to think about since the diamond is denominated in US dollars.
Still, the savings can be quite substantial - as much as 25 per cent to 30 per cent - in some cases.
Online jewellery purveyors spend less on leases and labour while keeping their inventories lean. As a result, they can keep their costs lower than physical stores.
According to Kiplinger's Personal Finance magazine, for every dollar that Blue Nile pays suppliers for stones and settings, it sells finished baubles for US$1.25.
But for every dollar that US jewellery retailer Zale Corp hands suppliers, it sells items for US$2.
How about the argument that jewellery retailers here often give juicy incentives to consumers? You see this all the time - a 50 per cent discount off engagement rings, or even better, a storewide 70 per cent price reduction as they are 'moving out'.
But think carefully. Assuming these shops increase their mark-ups every year, then how would you, as the consumer, really know whether you are getting a 'true discount'?
Surely this raises the question of how much clarity and competition there is to pricing diamonds among traditional retailers in an industry famous for high mark-ups.
Putting the issue of price - and value - aside, I have another friend who tells me that the best thing about buying diamonds online is the huge array of choices. In other words, he is not restricted to the selection in the stores.
Certainly, there are principles about buying these lovely rocks that will not ever change - whether you go online or to a traditional brick-and-mortar vendor.
Don't hesitate to ask about a vendor's credentials if you cannot find them on his website.
Also, make sure that the diamonds you are considering come with a diamond grading report from an impartial laboratory such as GIA or the American Gem Society (AGS).
Ultimately, how you pick your diamond is very much a personal choice that cannot be branded as 'right' or 'wrong'.
You can decide to bypass glitzy jewellery shops and give their Internet competitors your monetary blessings, or you can still head to your nearest jewellery outlet.
Don't fret about choosing the right rock or getting the best deal. At the end of the day, it is the act of stumping up the cash that counts.
As the saying goes, diamonds always make the best gifts because diamonds are forever.