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Almost 80% of Diamonds Are Sold in the US
I have always been fascinated by diamond markets outside the US. While Ira spent some time selling overseas, my focus was always on the US market.
Given that almost 80% of diamonds are sold in the US, I am curious how the shifted supply and demand curve affects the price and overall shopping experience.
When I joined Ira and started to help readers on a daily basis, my fascination grew exponentially. Not only am I an avid traveller (I currently live in the Czech Republic), but I started to receive emails from our international readers.
Ordering Online: UK vs US
As I started out, my gut feeling was that readers from the UK (and other countries, but I will focus on them as I will explain below) would get far better value ordering online from a US based site such as Blue Nile, James Allen or Brian Gavin Diamonds. Blue Nile has the advantage here as they have operations in Dublin. Not only do you save an extra couple of percent on the import duty, but on the off chance you need to return something, it’s much simpler. Both of these are decidedly small advantages, but advantages nonetheless.
After a couple of years and thousands of readers emailing me, I can’t imagine a scenario where it made sense to buy in the UK. Since August is a bit of a slow month, I decided to take a quick trip to London and see for myself.
Besides, its a good excuse to have dinner at Gordon Ramsay’s Maze Grill.
The Different Shopping Experiences
I wanted to experience Hatton Garden as our readers would. So earlier this week I hopped on a quick flight to meet my friend, Christine, who lovingly pretended to be my fiancé for a little secret shopping. I also wanted to see for myself how much of a “hassle” it was ordering from the US.
I should start by saying we obviously feel online retail offers better pricing than a store can ever match. That said, I understand people may want a level of service they feel they can get from a brick and mortar retailer.
Tiffany & Co charges (at least) double what you would pay from a site we recommend. But there is no question about the level of service they provide and the added mystique of the “Little Blue Box.”
Recognizing the Value of the Premium
The trick is to recognize just how much extra you are paying and what, if anything, you are getting in return for that premium.
Shockingly I found that, despite the serious premiums paid, Christine and I felt like we got less service than the online retailers provide – not more. As we’ll highlight below, the sales staff ranged from barely knowledgeable to barely ethical, and we were rarely offered personal service that justified any premium.
The few locations that had knowledgeable and helpful staff charged insane premiums for it. You can read all about it below, but I just couldn’t find a single diamond that justified the price they were charging.
After a quick coffee, Christine and I set out for the day. I let her take the lead, so we’d have a more authentic experience. Shop after shop, two themes came out.
1) The prices were as exorbitant as I expected them to be, and
2) The level of service and knowledge was severely lacking.
It is common to find people that dance around the truth because they want to upsell the diamond they own. Sadly, that is not surprising.
What was surprising though, was that salespeople in many of the stores (even upscale ones) showed less knowledge than the average department store salesperson.
We came across four types of stores during the day.
Christine chose our first shop based on the elegant look of the shop and the two rings she liked in the window. The first was a Princess Cut 0.40ct D VS1 (far above the color/clarity we recommend, but nicely cut) in a simple platinum setting with 2 small sidestones (about 0.03ct each) on each side .
He never told us the details of the ring, but it was similar to this Blue Nile ring, which costs about £1,110.
The price for the whole ring was £3,995. If you would put an identical diamond (actually, slightly better quality) in the similar Blue Nile ring, the price came in at £1,800.
The Unconvincing Salesman
He really lost us though, when he showed the second ring. It was a Round 0.60 H VS1 in a white gold simple solitaire setting for the same price. Again, it was very overpriced (you can get an identical ring for under £2,000 without a problem).
But Christine asked him why the GIA cert for the round said “Cut: Excellent” and there was nothing for the princess cut. The salesman claimed he had been working there for 20 years and had extensive training.
He explained that only round diamonds have cut grades (true), and the cut grade showed “how round” it was. Not only is this absurdly incorrect, it makes no sense (if that were the case, a princess cut would have a poor cut grade instead of nothing).
No Effort, No Alternatives
His explanation confused us more than it explained things. What really bugged us was that he provided no insight into what we were buying and no effort into educating us. He also made no effort to offer alternatives (be it a better option for a ring or diamond).
What is the point in overpaying if you are getting inferior service?
A little while later, we went into another store. The prices were seemingly more reasonable, but Christine felt a little bit uncomfortable with the salesperson. I tried not to hammer the salesperson (as I obviously know a lot more than I was letting on), but I was appalled by her behavior.
A perfect example was when she showed us a round 0.40 F VS1 in a vintage style halo setting. The ring was a cheap imitation of the Tiffany Legacy design. The price was £2,400 which on the face of it didn’t seem so bad.
A similar ring and diamond from Blue Nile with this diamond and setting costs £1,850. The premium you were paying was (theoretically) “only” 30% (roughly), seemingly more reasonable than the 100% premium at most stores.
Unethical Sales: Disregarding the Certificate and Sales Talk
The thing is the diamond didn’t look very sparkly as Christine noticed. We asked to see the cert and (as you can see) it was not a well cut diamond. When we asked why it wasn’t an excellent cut, she threw every bit of sales talk she can think of at us.
“Who cares what the certificate says, you look at a diamond with your eyes” and “I’m in the business for 40 years and this is why I never bother reading a GIA certificate.” Well, I only have 12 years in the business but I can tell you what my eyes saw.
The diamond had a terrible fish-eye look that is common in diamonds with shallow cuts and/or large tables. It didn’t refract light as it should and it was completely dead in the center. So here we were paying a 30% premium for a far inferior product being peddled by an unethical salesperson.
The worst case scenario was dealing with the real slimeballs. They would offer illegitimately certified or non-certified diamonds. We had one show us a diamond they claimed was GIA certified (I asked three times because I could see the grades were way off).
After insisting on seeing the certificate, she showed us an appraisal by a GIA gemologist a few stores down. This is a common scheme people use (they understand most people have only a superficial knowledge of diamond buying).
You should know that it is very rare that one of those stores is actually independent. Usually one company owns five or six of them. So that ‘appraisal’ was likely written by the same company trying to sell it (at best, its just a friend doing a favor).
They claimed it was a G VS1. It looked more like an J SI1 to me and it was poorly cut.
Unfortunately there are millions of different tricks people like this use. It’s difficult to remember everything you are reading on sites like ours and may fall for a trap.
We managed to find one store with excellent service. The saleswoman met our requests and offered options based on Christine’s feedback and her own intuition. It was the first time we felt we were going to find what Christine wanted.
We settled on a nice 1.09 D VVS2 round in a 3-stone setting (pear sidestones). The salesperson, with very little prodding, explained how HRD is a weaker certificate than GIA and that it looked like an E VS1 to her.
The specs were nice and the ring was brilliant. The problem? The price was a whopping £21,500. Using this diamond (the one she showed me had identical specs) and setting as a comparison, you would be paying a 115% premium.
While I am singling out four particular stores, they were in line with everything we saw on the street. These were not exceptions to the rule.
I won’t get into the specifics of why online shopping is so much cheaper (we have covered that thoroughly in this article). I tried to find a decent UK site to secret shop but they were either too overpriced or a merely mirror of a US site.
So I stuck with sites that have gotten excellent feedback from our readers (and offer good pricing, photos, etc). Both of these sites offer free shipping to the UK.
I used the live chat feature at jamesallen.com to purchase the 0.40ct D VS1 ring mentioned earlier in the article. As we’ve had so many customers from the UK purchase from James Allen with nary a complaint about the service, I didn’t actually complete the purchase.
But I did have a long chat with Christina (I secret shopped her). She was very helpful with her guidance on the diamond and setting. She also explained the shipping process and how I would need to pay, through Fedex, the VAT and taxes.
Our Reader’s Feedback
Many of our readers have done this and I have never heard of a problem.
The total price for the ring would have been £1,933 and it would have taken two weeks to have the ring delivered (since it wasn’t in stock, they needed to make it up). Shipping takes 3-5 business days. The only potential for added cost would have been if I returned the ring.
I would have had to pay £48 for the return shipping. Considering that less than 1% of our readers end up returning a ring we help them pick out, risking that £48 of potential cost for a savings of £2,000 seems like a no-brainer to me.
Of course, this article wouldn’t be complete without actually ordering something from overseas to get the full experience. Killing two birds with one stone, I ordered a pair of earrings from Blue Nile (which I wanted to do for our Diamond Stud Earrings Review).
I chatted with Nicollete on their live chat. She was helpful picking out the right pair for my budget and handled the processing perfectly.
As we explained above, one advantage you receive working with Blue Nile is that they have operations in Europe. Everything to do with the taxes and shipping was super easy.
Return Shipping and Customs Fees
As beautiful as the earrings were, I wasn’t planning on holding on to them (despite Christine’s pleas), so I shipped them back. Blue Nile sent me a return shipping label for 30 pounds. They received the package the next day and I received the cash return the next week (we paid by bank transfer).
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