Should I buy a diamond online?
Most of my friends know about my longtime gemology obsession, so several times each year I get a phone call that someone needs help purchasing an engagement ring and the diamond that goes with it. My friends know that I don’t deal in, invest in, or sell diamonds, nor do I make any money by assisting them in making the purchase. As a result, they feel comfortable knowing they are getting a truly unbiased and knowledgable opinion.
I’ve found that I start with the same two pieces of general advice every time.
- Don’t buy a diamond. I try to explain to my friend that diamonds are not really rare, are not a very good store of value, and are not a good investment except in some very special circumstances. There are many colored gem alternatives that are far more unique and valuable. That pitch only works 15% of the time. The rest of the time, the fiance-to-be just wants a diamond.
- If you insist on buying a diamond, don’t buy it online. Once it’s clear my efforts in #1 will not succeed, I tell my friend (who is almost always a first-time diamond buyer) that they shouldn’t even consider buying a diamond online at a website like bluenile or on eBay.
TOP 3 reasons NOT to buy a diamond online.
#1 – You can’t buy a diamond off of a certificate because it isn’t a commodity.
In the middle of the 20th century, the GIA conceived a standard and easy-to-understand system for communicating the quality of a diamond. These 4C’s of diamond buying were created to simplify an inherently complex subject so that consumers would be comfortable they had enough knowledge to make an expensive purchase. The problem is that the 4C’s is a dramatic over-simplification, and, as a result, most consumers assume that diamonds with the same grades for cut, clarity, and color are the same, so they can then just shop for the lowest price. It doesn’t work that way — especially when it comes to cut, which is where most consumers make critical mistakes when buying online.
For example, two diamonds, both of which have an identical cut grade of excellent, can be dramatically different in how they handle light (which is what makes a diamond beautiful). Round diamonds of the same cut grade can have huge variations in price (as much as 20 – 30%) based on their “make,” or the overall quality and character of the cut. Yet their certificates look identical. It takes an expert – someone who has looked at thousands of diamonds and truly understands diamond cutting – to distinguish a great “make” from an average or above average “make.” It can’t be captured in a lab report, even if you know the optimal proportions and percentages for a specific cut and/or shape. In fact, these consumers are known in the trade as consumers who are “buying off the numbers.” In my experience, for the most part, these consumers actually end up paying more than their less-educated counterparts for a diamond of comparable value because they are over-confident in their “research” and therefore end up paying up for things that don’t matter or that they don’t truly understand.
Here is another example: I just helped a friend who was convinced he got an “amazing” deal on a modified cushion. It was 20% cheaper than anything comparable, he bought it online, and he was super excited. When I looked at the numbers on the GIA certificate, two issues jumped out at me. First, the “make” of the stone seemed to be fair (not excellent). The GIA certificate indicated that the girdle was “very thick” (concerning for a number of reasons that are covered elsewhere on this website). Second, based on the weight (1.62 carats), the face-up size of the stone seemed small. Indeed, when I saw it in person, I found out why the diamond was such a good deal. There was at least 25 points of weight (0.25 carats) that the cutter left in the girdle to preserve weight, so the diamond weighed 1.62 carats “faced-up” but looked like/measured like a 1.30-ish carat diamond. The cutter did that because there is an inflection point in price above 1.50 carats, and if he left the girdle thick, eventually someone like my friend would pay more for it than a better cut cushion of the same face-up size that weighed 1.35 carats. A dealer, betting on that fact, stocked the stone and sold it to my friend at a “big discount” to comparable stones that he saw online. My friend literally paid for 0.25 carats of weight that can’t be seen, adds no value to the face-up size of the stone, and actually negatively impacts the optical performance of the stone. It still got a cut grade of Excellent from GIA, but by the time my friend got it and talked to me, he owned the stone already. On my recommendation he actually sent it out to be re-cut. Now he owns a fantastic make, and he learned two very valuable lessons: (1) a little bit of knowledge is a very dangerous thing, and #2 below…
#2 – You aren’t going to get a better deal buying online.
Most of my friends are convinced that they can get a “better deal” or a “great deal” by buying online. Look, I buy everything online (from diapers to clothes to groceries). And while I think it is reasonable to be value-oriented in everything one purchases, for the most part, there really is no such thing as a great deal. Dealers, including bluenile, buy diamonds from primary sources. Cutters will often re-work older diamonds to maximize their value (sometimes on their own, mostly on behalf of dealers or jewelers), and jewelers often make money buying diamonds “over the counter” from their customers and holding them to be re-sold to other customers at a profit or simply flipping them. These are people in the trade or business of buying diamonds, and they are largely agnostic as to any specific requirements. Their objective is to make money from people like you when you are looking to make a purchase. Why would they sell something of value to you for less than they could get elsewhere in the marketplace? They won’t and they don’t. This is precisely why there is an old saying that “there is no such thing as a friend in the diamond business.” The thing to keep in mind is that your objective is qualitatively different than a dealer’s objective: you aren’t trying to get a great deal to make money. You want to acquire a diamond for a specific purpose, and your objective should be to get the best value. You are buying something when you need to, and you have specific requirements, and they are buying something to make money.
#3 – Dealers don’t buy diamonds site-unseen and you shouldn’t either.
When someone who buys diamonds to make money won’t buy online, I don’t think it’s reasonable to assume that you should do so. I know dealers who have been in the business for 30+ years, and they won’t touch a diamond without seeing it.
What to do? Here’s what I recommend.
- Work with a jeweler you trust. If you need a recommendation, feel free to email us admin (at) gemsociety (dot) org and we can send you some names of IGS members we know.
- Don’t focus on a “great deal” focus on value (specifically cut, which is the real driver of value).
- If a deal is too good to be true, it almost always is.
- Consider setting a sapphire or spinel instead 🙂