When learning about diamonds – specifically the purchase of diamonds – you may be confused about the difference between diamond retailers and diamond wholesalers. So, what is the difference between wholesale diamonds and retail diamonds? This is an important elucidation to make, because the diamond industry is in a bit of tizzy over some retailers that are falsely advertising themselves as wholesalers. This is false advertising and it can get you, the consumer, in a bit of a pickle. Here is what you need to know about the false advertising of wholesale diamonds.
Understand The Chain Of Command
The chain of command usually goes like this: a wholesaler will sell a diamond to a retailer for a tax-free, pre marked up price. From there, the retailer will add the sales tax and mark up and sell to the consumer. This is done in order to protect pricing, organize taxation and to allow wholesalers to sell multiple diamonds to retailers. You can think of it like the cycle of capitalism – from raw goods to the polished product on your finger.
Beware Of Retailers Offering Diamonds At Wholesale Prices
For one thing, in order to sell a diamond at wholesale prices, you need to follow the industry standard for valuation and pricing. Moreover, a wholesaler needs a license to sell items to retailers. In most cases, wholesalers are not allowed to sell to the consumer, which further complicates things. If you see a retailer advertising wholesale prices for the establishment’s diamonds, you may want to shop elsewhere. A lot of diamond dealers are getting in trouble for advertising themselves as wholesalers. Even if they were willing to sell your diamond at cost, they are legally obliged to charge the tax. So no matter what, the law is being broken, and you don’t want to be the one held accountable.
You May Owe Big Taxes For Your Wholesale Diamonds
Some diamond dealers promise to cut out this middleman – the retailer – and sell the diamond to you without all the fuss or the taxes. However, you may wind up paying these taxes anyway when you go to sell your diamond. You want to be very careful not to fall into this scam, because it could hurt you in the long run, especially if you are purchasing diamonds for the sake of investment.
How Do You Protect Yourself?
The best way to protect yourself is to find out if a diamond retailer really is a wholesaler. Moreover, you want to make sure that you follow a diamond’s provenance. A true diamond wholesaler will have vast connections with diamond cutters and mines, so that they can get you the best deals. If you want to purchase wholesale diamonds, you want to apply for a resale license, which lets you deal in wholesale diamonds legally. If you are a consumer, though, searching for a diamond engagement ring, you want to look for a legitimate and highly rated diamond retailer in your area.