Anyhow…this is a great article. We (physical jewelers) have incredible overhead so people can come in and touch and feel the product before they buy. I believe we offer a distinct advantage for the money:
-We don’t charge our customers to look before they buy. Imagine if I hid every diamond I had and simply presented the AGS cert along with the price. If he/she is interested in seeing it…they would need to pay me upfront…at which point I would give them the diamond. Then the buyer can take it around and comparison shop. If they find a better “deal”…I’ll refund the money w/in 30 days…but they have to pack it up and ship it back to me. Each time they want to look at another diamond they need to pay me first. How would that be? I’ll take a slimmer margin if I can do that. Not gonna’ happen.
-Our customers get a real, live person to talk to. We don’t hand them a printed page of information and tell them to read it to find the answers.
-That same salesperson/associate often times helps the buyer whittle down the countless choices to one or two that fit their situation the best.

OK…I’ll get off my soapbox now. I meant to just tell you how great this article is…and how great this site is.

Keep it up. I’m a follower!

I agree with just about everything you wrote, except for one small detail. Online diamond stores that list virtual inventory (like Blue Nile & James Allen) markup (profit divided by cost) their diamonds more like 15-18%. So the correct margin (profit divided by price, as you mention) is more like 13-16%, not 8-12% as you wrote.

This comes from the experience of working for one of Blue Nile’s largest vendors for about 7 years.

Otherwise, kudos on a great article!
Ira