Digital Bling: Diamonds For Sale Online

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A variety of diamonds scattered on a table. i

The allure of diamonds has led some consumers to start buying certified precious stones online. But some people still feel more comfortable seeing and touching precious stones before making a purchase that can cost thousands of dollars. iStockphoto.com hide caption

itoggle caption iStockphoto.com
A variety of diamonds scattered on a table.

The allure of diamonds has led some consumers to start buying certified precious stones online. But some people still feel more comfortable seeing and touching precious stones before making a purchase that can cost thousands of dollars.

iStockphoto.com

Valentine's Day isn't just a celebration for lovers. It's also a time when jewelers step up their advertising for precious stones like diamonds.

Traditionally, consumers have gone to jewelry stores to purchase engagement rings and other fine gems. Now, a small but growing number of people are buying diamonds online and spending thousands — even tens of thousands of dollars — to buy something they have never seen.

Alok Kapur proposed with champagne, chocolate and a diamond ring. It was classic and romantic. But he bought his ring in a much less traditional way. He purchased it online from Blue Nile — the nation's largest online seller of diamond engagement rings.

Diamonds 101

Not every diamond's sparkle is equal. And that's why it makes sense to do some research before making a purchase. Here, some tips on what to look for before you pull the string on some bling.

Get Certified

Buy a diamond that has been certified by insisting that the diamond is accompanied by an independent grading report from either the Gemological Institute of America or the American Gem Society Laboratories. Both labs are known for their consistency and unbiased diamond grading systems.

Remember The Four Cs

The New York Diamond Dealers Club outlines the four Cs when considering a purchase: cut, color, clarity and carat. The only factor that is influenced by man — not nature — is the cut. And when it's done right, you get the most bling because the diamond has the best potential for reflecting light.

Shy Can Be Fly

A diamond's weight is measured in carats, and prices for these precious stones rise dramatically at the carat and half-carat marks. But if you buy shy — slightly under these markers, you can save money. For example, instead of purchasing a one-carat diamond, consider a .95 carat diamond. This small size difference won't be noticeable, except to your bottom line.

Finding Value

Fancy colored diamonds are typically the most expensive because they're so rare. But when it comes to color, the highest quality and more pricey rocks typically have none. It's the same with clarity: The fewer the imperfections, the more valuable the diamond. But the naked eye can't detect many subtle differences in color or clarity grades. So to find the best values, Blue Nile suggests considering a near-colorless diamond (graded G-H) instead of a colorless diamond, or a Very Slightly Included (VS2) clarity grade instead of a flawless stone.

-Joshua Brockman
Sources: New York Diamond Dealers Club, Blue Nile

Initially, Kapur was skeptical. Buying such an expensive item sight unseen required a leap of faith. But his concerns were put to rest.

"They answered all of my questions — explained everything about the diamonds," he says. "The transparency was great."

Buying Sight Unseen

At Blue Nile, there is no "romancing the stone" as the industry calls it. That's an emotional approach in which customers are encouraged to buy the diamond that speaks to them. Instead, the company provides educational information, including grading certificates for all of its conflict-free diamonds.

Independent groups such as the Gemological Institute of America grade diamonds for quality. That industry standard means that a certified, one-carat, princess diamond of a specific cut, clarity and color should be almost identical in appearance no matter where you buy it.

Diane Irvine, Blue Nile's chief executive officer, says the company's philosophy is that consumers will buy diamonds sight unseen if you provide honest, complete information and have a liberal return policy.

Traditional jewelry retailers often sell from the inventory on hand. Blue Nile works differently. Its Web site lists about 55,000 stones offered by different suppliers. Once the consumer selects a diamond, it's cut and then sent to jewelers in the company's Seattle facility to be set into gold and platinum, and turned into an engagement ring.

Because of the way the publicly traded company does business, its operating costs are significantly lower than traditional retailers. It has no brick and mortar stores, hardly any inventory, and it doesn't pay commissions to its sales staff. As a result, it's able to offer prices that are often less than those of a traditional retail jeweler.

"I was able to essentially benchmark different stores against Blue Nile for exactly the same diamond," says Kapur. "And I found Blue Nile was about 15 to 30 percent less. "

A jeweler at Blue Nile sets and polishes a diamond i

A jeweler from Blue Nile sets and polishes a diamond engagement ring at the company's facility near Seattle. Wendy Kaufman/NPR hide caption

itoggle caption Wendy Kaufman/NPR
A jeweler at Blue Nile sets and polishes a diamond

A jeweler from Blue Nile sets and polishes a diamond engagement ring at the company's facility near Seattle.

Wendy Kaufman/NPR

Pressure On Traditional Retailers

Although Blue Nile and other online sellers represent just a tiny sliver of the overall market for diamond rings, they are exerting enormous downward price pressure on traditional retail jewelers.

Rob Bates, a senior editor at Jewelers' Circular Keystone (JCK), a jewelry industry publication, says that in order to remain competitive, retailers have to demonstrate that buying a diamond is about more than just price.

"They basically have to say: Here's why it's better to buy from us than from a machine on your desktop," says Bates. "We offer the ability to see the stone close up, the ability to customize, [and] you can see what the ring looks like."

Bates adds, "There are still a lot of people who aren't comfortable buying a big, high-priced item off the Internet."

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