Wholesale Diamonds and the On-Going Changes within the Diamond Trade

In the United States, wholesale diamonds have been sold in the mainly in the New York and Los Angeles jewelry districts. Diamonds would trickle down to the consumer who would usually go purchase a diamond in a local mall. But that was then and this is now. The diamond industry has rapidly evolved since the dot com era first began in the late 90’s.

It wasn’t too long ago that diamond wholesalers would import rough and polished diamonds from overseas from places like Antwerp, Israel and Africa. They would then sell those diamonds to wholesalers in New York and Los Angeles, and those wholesalers would then sell to other smaller regional wholesalers in major cities all over the US. Retailers would borrow these diamonds on “memo” to show their customers and would fill their showcases with diamonds from other dealers they regularly did business with. A trust was built between the retailer and the local wholesaler.

From the time a diamond is dug out of the earth to the time it was sold to the consumer, a diamond would change hands 8-9 times between middle men. These included cutters, polishers, diamond graders, several levels of wholesalers, diamond traders and ultimately get to the retailer and then to the consumer.

It wasn’t even uncommon for diamonds to be graded by several labs, being passed from one to another in hopes of getting the best grade. Diamonds would be bought by one diamond wholesaler that had more influence with a certain lab and would get a higher color or clarity grade, thus would instantly get 10-20% more profit on their investment. Everyone in the industry knew EGL certified diamonds were not up to par with GIA graded diamonds with the same apparent color and clarity. That didn’t stop diamond dealers, however, from exploiting the public with massive profits involved. It was a shady game that over the years the consumer had little choice but to participate in.

The internet came along and changed the game forever. Consumers could now go online, search thousands of diamonds in the shape, size and specifications they were looking for, sort by price and simply buy the cheapest. And if they weren’t comfortable with shopping online, all they had to do was print out that list and shop around at their local malls. The mall retailers of course would try to sell their IGI or EGL graded diamond for the same price as the online seller’s GIA graded diamond at first, but that game didn’t last long either. Consumers have become more aware that GIA is the industry standard and no other lab comes close to their reliability and prestige.

The result? Many retailers have had their business model turned upside down. They have shuttered their doors in the malls as more and more people opt to buy online. All the middle men that were typically involved in the wholesale market have also closed up shop. The diamond wholesalers in Los Angeles and New York now buy directly from the source, and some of them even sell directly to the public. Where is the diamond market going? We don’t know. But we do know that the consumer can not be deceived and you must sell an honest product for a competitive price. That is why Luxe Wholesale Diamonds is committed to brokering the best diamonds for our customers.