>>Chuck Ciuba just spent $16,000 on a 1.6-carat diamond ring he'd seen only on a Web site. The price was about half of what a bricks-and-mortar jewelry store wanted, he saved $1,000 on sales tax, and the ring came with a 30-day money-back guarantee, no questions asked. Retail stores rarely do that sort of thing. "The guarantee was the clincher for me," says the Las Vegas operations manager.
Hopeful Romeos like Ciuba (and indulgent Juliets) are boosting the fortunes of In-ternet jewelry retailers. While dot coms wallow in post-bubble blues, and conventional jewelers log anemic growth, online jewelers are soaring. Blue Nile, for instance, saw record sales of $15 million last quarter–and record profits.
It's easy to see why. If you know nothing about the four C's of gemstone quality (cut, color, clarity, and carat weight), sites like Blue Nile offer a thorough tutorial, along with a huge inventory and grading reports certifying authenticity. And while consumer ad- vocates warn people to beware of tempting Internet deals, fraud experts aren't worried in this case. "We haven't had any fraud cases for on- line jewelers in recent years," says Robin Rosen Spector, an attorney with the Federal Trade Commission. Industry trade groups keep members in line, she notes. "We like to think it's a successful self-regulation story."
Like Amazon.com and other virtual retailers, Internet jewelers can offer lower prices, in part, because operating costs are lower. To cover rent, sales commissions, and other overhead, conventional retailers mark up offerings as much as 100 percent, while limited space keeps inventories to a minimum. By contrast, most Internet retailers don't pay commissions and can draw upon huge wholesale databases with tens of thousands of gemstones and hundreds of settings. "We don't keep diamonds in stock, but we can get them within a day," notes Jim Schultz. His DirtCheapDiamonds.com site claims an inventory of 50,000 gemstones.
Dirt Cheap says it marks up its jewelry a mere 8 percent. That's why Peter Bertling could buy a 2-carat pair of diamond earrings for $5,000, less than half of what he'd pay at a conventional retailer. "I even called one big local jeweler that advertises on TV that they'll beat any price," recalls the Santa Barbara, Calif., attorney. "But they wanted $5,200 more than Dirt Cheap did, and their diamonds had more flaws." Wiring $5,000 in cash to a stranger didn't faze Bertling. (He could have paid by credit card, guaranteeing the purchase in case of problems, but that would have cost 3 percent more.)
Bidding for trouble. Auction sites aren't quite as secure. Bertling once tried to buy a diamond ring on eBay. "It was a fiasco," he says. He won the auction, then received an E-mail that said, "This guy's a fraud." So he canceled the order. Mike Pollitt wasn't as lucky. He found a "too good to be true" eBay auction deal and ordered a bank transfer of $15,000 to pay for a 3-carat diamond solitaire ring. It never arrived. The tech-savvy information systems manager tracked down the culprit. "She was convicted of 20 counts of theft and forgery," says Pollitt, who now receives a monthly $125 restitution.
Then again, flesh-and-blood sales clerks aren't perfect. "The marked price was never what they'd actually sell it for," says Patrick Piccininno, an information technology director. "They'd say, 'Oh, I can give you a better deal.' Or if they didn't have what I wanted for the right price, they told me, 'Well, you're going to have to pay more to get that.' "
By contrast, Blue Nile's price was right for a platinum bracelet he had spied on the site. When the package arrived, however, the bracelet was "too thick and bulky." So he packed it up and sent it back. "Five days later they credited my account, which gave me the trust to go back and pick something else out," recalls Piccininno, who has since purchased a diamond ring and a pair of 1.6-carat earrings for his girlfriend.
As for Chuck Ciuba, the big spender says his fiancée was bowled over by his gift. "She's been married twice before, so she already had an ensemble of diamond rings," says Ciuba. "She told me she'd marry me with a cigar band." But his sparkling Internet purchase didn't hurt. His latest purchase from Blue Nile: his-and-her wedding bands.
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