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Every day, we receive emails from readers asking for help buying a diamond. One of the most common questions we receive is whether it’s better to buy a diamond online, or locally in a city with a diamond jewelry district.
Recently, a reader emailed to ask the following question: Is it better to buy a diamond from the wholesale jewelry district in Los Angeles, or to shop online?
The answer is that you’ll get a much better deal by buying online, even if you’re in a city with a “wholesale” jewelry district like Los Angeles.
You can view the reader’s full question, as well as our more detailed diamond buying advice, in the section below.
Let’s start with what the reader’s looking for:
“My question concerns potential vendors.
I live in Los Angeles where we have a wholesale jewelry district downtown. An acquaintance, who actually picked out her own engagement ring, swears that I would be a fool to not use one of these local vendors.
Is she right? (And if so, would you happen to have anyone here that you recommend?)
I love to buy online but I’m still not entirely convinced that buying a diamond online is the wisest option. Especially with the local options reportedly being so great. Ultimately, of course, I just want the best deal. Perhaps better deals will, in fact, be found online?
I intend to go in soon to see for myself and have some basis for comparison, but I’d love to know what to expect. Any insight here would be very welcome. And I thank you in advance.”
The reader later mentioned that they anticipated buying a round cut diamond in the 1.25 carat range, with a target budget of $8,000 to $10,000.
We get a lot of emails like this, and our answer is almost always the same: buying online won’t just get you better pricing — it will also give you access to a much larger range of diamonds and settings to choose from.
In this case, we recommended a stunning H color, SI2 clarity round cut diamond engagement ring from James Allen, which the reader was able to buy for several thousand dollars less than their original budget.
So, given that this reader lives in Los Angeles — a big city with a well-known jewelry district that attracts lots of shoppers looking for bargains — why did we recommend buying online instead of looking for a wholesale deal in person?
There are several reasons. The first is that the economics of purchasing a diamond online make it a far better option for 99% of customers, at least from a value for money perspective.
The second is that the inventory available in a brick-and-mortar store, even in a popular jewelry district like the one in LA, pales in comparison to what’s available online.
The third is that buying offline, like the reader intended, can be a minefield of misleading advice, bad deals and sketchy sales techniques that leave you with a subpar deal as a consumer.
And the fourth and final reason is that lots of “wholesale” diamond vendors are, to be frank, not wholesale at all. In many cases, they’re sharks aiming to fool consumers into assuming they’re getting a good deal on a diamond that might actually be subpar.
Let’s go through these one by one and discuss why each reason makes buying online a much better idea.
Much like with other product categories, the internet has radically changed the economics of the diamond industry.
Right up until the late 1990s, the only way for a consumer to buy diamond jewelry was to visit a jewelry store in their city and compare products in person. This could mean visiting a local shop or one of many branches of a chain jewelry store, such as Shane Co. or Helzberg.
Then, in the late 90s and early 2000s, companies like Blue Nile and James Allen started to sell loose diamonds and engagement rings online.
Just like it’s cheaper to buy products from Amazon than from most local stores, the economics of e-commerce mean that in 99% of cases, you’ll save money by shopping for a diamond online instead of in person.
The reason for this is that brick-and-mortar jewelry stores need to pay rent, insurance, salaries for their salespeople and other expenses. They also have large financing costs for the millions of dollars worth of diamonds and settings that they keep on display for customers.
These costs are all incorporated into the price that you pay for a diamond as a consumer. In an expensive city like Los Angeles, rent for a retail store can be incredibly expensive. In fact, according to real estate investment service Matthews, retail real estate in Los Angeles is some of the nation’s most expensive.
This means that the cost of rent alone can require a jewelry store to charge a 30 to 50 percent margin just to be able to keep operating.
Online, the economics are different. Since companies like Blue Nile and James Allen don’t have a network of retail stores around the country (plus they also sell diamonds directly from wholesalers), they can sell diamonds on a razor thin margin and offer prices far below those found in local stores.
From your perspective as a consumer, this means that you can expect to pay anywhere from 20% to 50% less for a diamond ring when you shop online than what you’d pay for an identical stone from a brick-and-mortar store.
Because pricing is lower online, you can either save your money for something important, like a luxurious honeymoon, or put more of your budget towards a larger diamond or a more beautiful setting.
Our guide to buying diamonds online discusses the price advantage of shopping online in more detail and provides more advice on why purchasing online is almost always the best option.
The second reason to shop online is that you’ll be able to choose from a much larger selection of diamonds than you can find offline, including in a major city like Los Angeles. Physical diamond stores have several constraints on their inventory.
The first is the cost of stocking lots of diamonds. The typical diamond retailer can only afford to keep a certain amount of inventory at any one time. This means that outside of very large chain stores, most diamond vendors are limited to carrying a few hundred diamonds, at most. In order to maximize the performance of their inventory, most retailers stick with diamonds that a lot of people are looking for.
This means that your options are limited as a consumer. Not only will you pay more to purchase a diamond than you would online, but you may only have a handful of suitable diamonds to pick from in each store you visit.
Compare this to the experience online. If we take the reader’s specifications and use the search feature on James Allen to view GIA or AGS certified diamonds in the G to I color range and VS1 to SI2 clarity range with a weight of 1 to 1.50 carats, we get more than 7,000 results. — That’s a lot of diamonds to choose from, which gives us many more opportunities to locate great deals.
Inventory size matters because a lot of brick-and-mortar diamond vendors are more concerned with maximizing their profit from each diamond sale than offering a large selection. This means that when you’re in a store, you’re more likely to be directed towards diamonds that perhaps don’t exactly match your criteria, but do match what the diamond vendor is interested in selling to you. We’ll touch on this in more detail in the section below.
The third reason to shop online is that you’ll be able to make careful, informed decisions on your own, without the “help” commonly offered by diamond salespeople.
Before going into more detail, we should point out that many diamond salespeople offer helpful advice. They listen to your needs, find appropriate diamonds and make what can be a stressful process much easier.
However, there are also lots of sharks out there, especially in popular diamond shopping areas like the jewelry district in LA. This often means that you’ll receive misleading information or just bad advice when you shop for diamonds in person.
We constantly see the following issues when we secret shop diamond jewelry retailers:
For the most part, these issues can be avoided if you’re well informed about the diamond buying process. However, they can make shopping for a diamond ring in a place like LA much less of a pleasant process.
Finally, since the reader mentioned the wholesale aspect of the LA diamond district, this serves as an excellent opportunity to clear up some popular misconceptions about how the “wholesale” diamond industry works.
When it comes to signaling that you offer excellent value for money, few things look as good on a retail store’s signage as the word wholesale. Diamond vendors are aware of this, and they throw around the word wholesale to make their jewelry look like a great deal. The idea is to make consumers view their store as similar to an outlet mall for diamonds — a place where you can get high-quality goods at a low price.
The problem with this is that diamonds are not at all similar to handbags, polo shirts and other designer products that you can normally buy at a discount.
These products are all relatively inexpensive to produce but costly to market — for example, it’s common for most designer brands to spend a huge percentage of their operating budget on ad campaigns, rather than on raw materials and manufacturing.
In the diamond industry, the diamond itself is the main cost. This means that profit margins are much slimmer and the opportunity for vendors to give large discounts is very limited.
When you see vendors throw around words like “wholesale,” what you’re generally seeing is a marketing tactic. Many of these vendors sell diamonds at the regular retail price, but create the image of being a wholesaler to draw in customers looking for a deal.
There are diamond wholesalers in places like Los Angeles and New York, but they operate out of upstairs offices, not the stores you can walk into on street level. They also usually won’t offer large discounts unless you’re buying loose diamonds in bulk.
As tempting as the word wholesale can look, you are almost always better off buying online and saving yourself the time and hassle.
Window shopping for diamonds in the LA jewelry district can be a fun experience, largely thanks to the area’s impressive Art Deco architecture. However, even if you stick to “wholesale” stores, you’ll still end up overpaying for an engagement ring.
In our detailed review of the Los Angeles jewelry district, we found that prices were generally 30% to 40% more expensive than comparable rings online. We also saw a lot of bad diamonds with unreliable certificates and noticeable quality issues.
After receiving our advice, this reader ended up buying a beautiful H color, SI2 clarity round cut diamond and engagement ring setting from James Allen. By buying online, they saved several thousand dollars and avoided all of the common LA jewelry district hustles.
If you’re located in Los Angeles or another city with a diamond district, we recommend taking a look at what’s available online first.
We also recommend reading our diamond education guides, which explain what to look for in a diamond and how to avoid common pitfalls.
If you need personalized help choosing an engagement ring or other diamond jewelry, you can also contact our experts for assistance.
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