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Another Option: The In-Store Internet

"Stop running scared from the Net!" St. Paul jeweler Mark Moeller yelled to jewelers and diamantaires assembled in a New York Waldorf-Astoria ballroom for the third annual Rapaport Conference.

"If someone comes in my store with an Internet printout, asks for my opinion, asks if I can beat the price, you know what I tell them? Fine, give me your credit card. They look at me. I'll ship you that stone at that price. No problem. No service. No opinion. Just give me your credit card. Ten times out of ten, they balk, and they get the point, and look at my diamonds. What I'm asking is exactly what they're being asked for on the Internet. Except, I'm here, and I'm a specialist. That's why I command a premium."

"I loved that he said that out loud," recalls Harvey Rovinsky of the Philadelphia-based Bernie Robbins stores. "I've been doing just that for two years. If it's nothing but price, give me the credit card. I can compete. If it's there on Polygon, I know the vendor, and I can go out and get it. But now I have the customer in front of me, and with it the opportunity to sell. It's not just a $3,000 one carat at issue or that the stone in their printout is an EGL cert. My diamond's GIA, and now I get to tell them the difference. His stone is a 63 percent angle, mine's a 60-60, and so on."

Hearts On Fire CEO Glenn Rothman echoed both jewelers' impatience with Internet sales panic, driving straight to the bottom line at the Couture Conference. "Are Net sales increasing year to year? Yes. Is it an impressive business model? You bet. Is it the end of the world? Well, let's see." At both Blue Nile and Amazon, he showed on charts of the publicly-traded companies, growth has already slowed to industry level standards, and in several cases is already lagging the leading players. Net of total diamond and diamond jewelry business is still well in single figures, with no signs of significant market share increase.

So is the Internet threat a thing of the past? Hardly: "Diamond engagement rings, even if they cost $25,000, are a commodity. Their value is defined by cut, color, clarity, weight (carat), and shape. There are no other distinguishing features. Since they don't require after-sales care or a warranty, it makes no difference where you buy a diamond ring from."

The above paragraph is from a May 10 Business Week article on Internet diamonds, chronicling one fiancés decision to buy not from Tiffany but Blue Nile, $6,000 cheaper. No distinguishing features? We'll have to pardon Business Week's ignorance of angles, depths, facet placement, proportion, polish, symmetry, etc.

As the dust begins to settle, three things about Internet diamonds are clear: 1. Even when it's all about price, if it's a 5 to 10 percent difference, diamond shoppers will buy brick and mortar almost every time; 2. The Internet shopper/buyer values shopping the vast on-line inventory for its rationalization of a blind-item purchase; and 3. Whether the final purchase is made on-line or in-store, the average consumer today will consult the Internet, and once there, he will begin to look at a diamond as a commodity, until shown otherwise.