Is It Ethical To Sell Diamonds Wholesale & Retail??

loose diamondsWith the evolution of the diamond industry and the revolutionary impact of the Internet, profit margins on the sale of loose diamonds and jewelry have been steadily shrinking.

Today’s diamond marketplace is incredibly competitive and profit margins are razor thin. Just look at websites like Costco and Bluenile who sell in volume at extremely low margins.

In this climate of “survival of the fittest”, an increasing number of companies are looking for a niche for the simple sake of surviving.

The Internet, which lures savvy diamond shoppers assured by maximum quality and value, has attracted the attention of many diamond wholesalers and manufacturers who are struggling to stay financially solvent and competitive.

Some of them have decided to give up selling diamonds through retail “bricks & mortar” jewelers who have no allegiance to their specific product and who simply sell “whatever moves”.

These diamond wholesalers were disillusioned with the fact that they were at the mercy of the retail stores with respect to shrinking sales, lack of timely payments, and lack of commitment to their specific product. As a result, they decided to cut out the middleman and took their merchandise directly to the public (end consumer).

With their exclusive commitment to their own product(s), they do the best job of promoting their merchandise and increasing conversions while cutting out the “overhead” and inherent liability of the middleman.

Indeed, the industry has seen some of these wholesalers and diamond manufactures alter their entire business model and bring their diamonds and jewelry directly to the consumer via an Internet (e-commerce) presence or a flagship B&M store(S).

However, there have also been a few diamond wholesalers who have decided to “play both sides of the fence”. Unwilling to give up the wholesale sales of loose diamonds through various retail stores, they opted instead to create an e-commerce diamond and jewelry website under a different name/address (disguise) in an effort to snag the retail diamond shopper on the Internet.

They wish to have their cake and eat it too.

They continue to sell wholesale diamonds through B&M establishments across the Country. Of course these retail stores attach a (healthy) profit to these loose diamonds in order to make a living.

At the same time, the very same wholesaler is offering the very same diamonds via his e-commerce website and directly competing with (and undermining) his retail accounts who are completely oblivious!

A customer who finds the very same diamond listed on the Internet for considerably less than what is being asked in the stores, will (unknowingly) circumvent the retail middleman and buy the same diamond for less directly from the same wholesaler!

Of course the wholesaler attaches a “retail” markup. However, he makes sure to be significantly cheaper than all of his retailers.

The companies who engage in these practices shall be left nameless since it is this writers personal opinion that what they are doing is completely unethical and it is not the purpose of this blog entry to expose these people.

The fact is, you are either a diamond wholesaler to the trade, or you are a diamond retailer to the end consumer.

To make an underhanded attempt at being both, is simply unethical and is in direct competition with your own retail customers.

In fact, if these retail B&M jewelers knew they were being undermined and undercut on the Internet by their own suppliers, they would in all likelihood immediately terminate their accounts (and long standing relationships) with these wholesalers.

These wholesalers are well aware of this inherent risk and therefore look to create a completely separate e-commerce diamond and jewelry website in the hope that it will not be linked to (or associated with) their own company.

What do you think?

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