What is a Diamond Wholesaler?
What is a Diamond Wholesaler?
Posted by Sharif Khan on 13th Feb 2021
In the diamond industry, diamonds are called raw or rough stones because they are either extracted from the earth or grown in labs. But, whether natural or lab-grown, the finished product (a cut and polished stone) needs to reach the end-user in a timely fashion. How did that shiny loose stone or engagement ring get to the retailer before it was made available for purchase? The simple answer: the diamond supply chain.
From one organization or individual to another, this movement starts from the source of the stone. From the labs or mines, the uncut diamond is sold to wholesalers and then to cutters (some of whom are jewelers) before it finally gets mounted onto a ring or pendant.
Several players feature on both the upstream and the downstream diamond supply chain, including miners and human-made diamond producers, diamond manufacturers, distributors, wholesalers, and retailers (jewelers). The typical definition of a diamond wholesaler is an enterprise or individual who buys and sells diamonds in bulk. But what about diamond wholesalers who buy and sell in bulk as well as in smaller volumes (or single units)?
Also, what about the diamond wholesalers who have premises, develop raw stones, and serve walk-in customers or run ready-to-wear jewelry e-commerce businesses? The bulk purchase and sales aspect form part of the nitty-gritty that must be considered in deciphering whether a diamond dealer is a wholesaler or not. To conclude, carefully examine the factors such as the subject’s business model, partnerships, and their affiliations in the diamond industry.
The Basic Characteristic of a Diamond Wholesaler
All other factors aside, a diamond wholesaler is a diamond retailer’s supplier, and significantly contributes to the value addition of the diamond supply chain. Typically, diamond wholesalers make large purchases of both rough and cultivated diamonds. Such transactions can happen directly with individual alluvial miners and could also take the shape of a situation where diamond exploration companies source from small scale miners and fulfill pre-orders of a wholesaler.
Other wholesalers have their mines, for instance, the Canadian diamond producer Dominion Diamond. The kimberlite pipes, amounting to more than 150, at the Ekati mine and its other subsidiary mines enable it to produce tons of rough stones. It clocks right behind De Beers and Alrosa in terms of global diamond wholesale transactions. Cutters get their rough diamond shipments through raw diamond wholesalers such as Dominion Diamonds through an elaborate network of distribution.
Exclusive Distribution Brokers: The Diamond Wholesale Brokers
The business connections between a diamond wholesaler and bigtime miners create another category of a diamond wholesaler; the type that broke rough or cut and polished stones to other diamond wholesalers.
Case scenario: Assume that a diamond wholesaler sources rough diamonds from a diamond producer (kimberlite miner or alluvial/paleo-placer deposit sifter or lab-grower). Upon classification and packaging, the wholesaler A unloads the uncut stones to the local wholesaler B—a process that makes the diamond wholesaler A an intermediary, hence a wholesale diamond broker. B is the local wholesaler who supplies regional cutters and jewelers, some of whom have in-house cutters.
Cultured Diamond Makers
Similar to natural diamond miners and wholesalers, cultivated diamond producers are also wholesalers in their own right.
Unlike natural geological processes, gemologists use chemical vapor decomposition (CVD) and high-pressure, high temperature (HPHT) to create these imitations. As a result, the cultured diamonds emulate the God-given stones in both appearance and crystal composition. They are also made relatively faster compared to earth-mined ones. The controlled process makes it possible to produce both colorless diamonds and fancy colors. Cutters and jewelers can provide for their customers a wider variety of diamonds thanks to CVD and HPHT diamonds.
The persistent opposition to human-made stones has since toned down. Much of that change comes from responsible jewelry purchasing on the part of the clients who want conflict-free stones and a greener environment. The regulatory actions taken by the Federal Trade Commission (FTC) have also elevated lab-grown diamonds to a newer height. The FTC recently adjusted its definition of a diamond to include artificial stones, further suggesting that the “synthetic tag” be dropped because lab-grown stones are 100 percent crystallized carbon, which fact makes them real diamonds
The mining industry is shifting. Miners are getting depleted and the global diamond industry prices are increasingly becoming more volatile than ever. De Beers has had to reduce its rough diamond prices by 5 percent due to the shrinking demand in its top consumer markets. Besides, the Jewelers Vigilance Committee has acknowledged the rising preference in cultivated diamonds. De Beers itself has followed suit and launched a synthetic diamond line under the subsidiary brand LightBox.
Moreover, cultured diamonds have been 100 years in the making and continue to improve in terms of both industrial and gem quality. Resultantly, there has been a 3 percent increase in their diamond market demand: a win-win for wholesale lab diamond manufacturers.
Diamond Wholesalers with Novice and Hybrid Business Models
While a majority of diamond enthusiasts are in the market to make a purchase, some flock to it either for reselling their stones because they are inherited and hence not required anymore, or for selling a diamond engagement ring out of necessity. Diamond wholesalers such as De Beers and Abe Mor make that process easy. Abe Mor is a diamond wholesaler that also makes it easier for private sellers to resell their diamonds. Longevity and experience in the diamond industry and economies of scale enable Abe Mor to offer the best resale prices.
It is a known fact that De Beers is the world’s largest rough diamond producer and wholesaler—large enough to hoard raw stones and affect global prices. What, however, is not widely known is that the De Beers Group has diamond industry-related partnerships. For example, De Beers’ collaboration with Circa (global pre-owned diamond jewelry dealer) enables wholesale purchase and resale of vintage natural stones.
Additionally, Lightbox (online artificial diamond jewelry store) and De Beers Group Auctions (a digital auction portal) are two of its latest ventures. The move marks nuance income streams for the diamond magnate. Its customers now have an array of customer benefits, including convenient bidding and buying and price protection.
It is evident that the traditional definition of a wholesaler, particularly a diamond wholesaler, can no longer be universally accepted. A section of diamond wholesalers now doubles up as diamond developers, retailers, and consultants, while others specialize in the production of both earth-mined diamonds and artificial ones. The bulk buying and bulk selling notions do not suffice. Today, diamond wholesalers do not necessarily buy diamonds in multiple quantities; instead, they buy at much lower prices compared to what they offer retailers.
As far as the diamond wholesale business is concerned, retailers are not the exclusive wholesalers’ customers that they once were. Wholesale dealers such as Abe Mor can be easily contacted for purchasing a single loose stone. Circa can also help find the perfect vintage diamond ring to match preference for antiquity: remember this option while shopping for a diamond.
A quick search of GIA and government accredited diamond wholesalers is important. Look for competitive pricing, favorable terms, and conditions such as free shipping and flexible return policies, and try and find a credible wholesaler who also runs an online jewelry store. Doing so will result in the perfect combination of both diamond variety and customer experience minus the keystone pricing (exorbitant retail prices).