Rare carat boasts on its homepage that you’ve found the site that diamond dealers don’t want you to see. That’s fair, I know a lot of retailers who dislike the site and have complaints about it, especially jewelers in NYC’s diamond district. But the complaints aren’t for the reasons that Rare Carat takes pride in.
Rare Carat touts itself as the kayak for diamonds. That’s great in that it shows awareness in that this is not an inherently new concept. The concept is as old as the internet itself, with numerous price aggregators out there for every industry. You could argue that Amazon’s entire website just one big price aggregator, putting together prices from hundreds of individual sellers, and serving in real-time the lowest price for the item you’re looking for.
I’ve heard multiple people mention over the last few years how they think there is bound to be a “Priceline for diamonds.” Rare Carat is the first to attempt to tackle this, and more power to them for being the first to actually take it from concept to reality.
Price aggregation by itself is harmless, and was bound to happen, since there are hundreds of individual diamond e-tailers out there, and it is daunting for an individual to check the same diamond specs on multiple sites like Blue Nile, James Allen, and the numerous smaller retailers. So in practice, it’s a great service for a website to come along and put all prices from different sellers in one place, making diamonds easier to compare and sort through. That sounds great, especially since its role model Kayak, and now Google Flights, has helped make finding and comparing flights and hotels much easier – which has personally helped me a great deal when buying flight tickets.
However, the issue with Rare Carat is twofold:
1) Its’ diamond recommendation engine is inherently flawed:
When searching for a diamond on rare carat, the user is prompted to enter a GIA certificate number, which rare carat then grades to tell you whether or not it is a good price, and then grades the diamond itself on multiple parameters and tells you whether their gemologist would recommend the diamond or not. This is great in theory, but anyone in the diamond industry will tell you that the GIA report is a good starting point but is far from the complete picture on a diamond. GIA has done a great job branding itself, and is arguably the most consistent large independent laboratory in the world, but even a GIA board member I spoke with recently admitted that they are not perfect.
While color grading is increasingly being handled by grading machines, diamond clarity is still graded by humans, and different graders have different ways of grading clarity. Especially for VS2 to SI2 grades, the ranges are pretty wide where two SI1 or SI2 diamonds can be vastly different, with one diamond vastly superior to the other. However, Rare Carat doesn’t have any way to know from the certificate itself whether one SI1 graded diamond is inherently better than another.
Further, for the cut grade, especially when looking for any shape other than round, which don’t have cut grades, their cut recommendation engine is dicey. For oval, pear and marquise diamonds, it’s important to look out for a bowtie effect, where the center of the diamond will appear dark in the shape of a bowtie in a poorly cut diamond. Rare carat mentions this phenomenon deep on its website in an article about selecting diamonds. However, when asking their recommendation on an oval diamond, their cut grade doesn’t factor in a bowtie effect or mention this at all. As a test, I submitted a diamond that to me had a very obvious bowtie effect, but even their trusted gemologists, who had access to a video of the diamond failed to mention this effect at all. When I brought it up, the gemologist on their site replied “I don’t think this one is as sever[e] as the image shows.” And another said “It doesn’t look so severe to me. I’ve seen much worse and of course much better.” When I told the gemologist that the bowtie seems noticeable and her advice contradicts what many others have said, she replied “my job is to not to tell you what to do, it’s to tell you what I would do.”
I think the issue here is that the gemologists that RareCarat employs are former GIA graders who know how to grade diamonds from a grading report perspective, but are not as well accustomed to what buyers really should look for and value from a buying standpoint. As a diamond wholesaler I know that when buying a diamond, the buyer always has to make compromises based on their budget. But rather than learn from the customer what they are looking for, and where they are more willing to compromise, RareCarat’s engine and gemologists push their own opinions. For example, if I were recommending a car to someone looking to buy a new one, I would want to learn about whether they are more interested in fuel economy or speed, or if they have kids and need additional space and want to go bigger with a minivan or SUV. It would not serve the buyer well for me to provide my own opinions on a tree-hugger by saying that I don’t mind lower fuel economy, I love driving big cars. The same way, it doesn’t serve the RareCarat user well to disagree with them by pushing their opinion that the bowtie isn’t noticeable to them, without first knowing how important this factor is to the individual user. This is only something a truly invested diamond consultant could do – the RareCarat gemologists don’t have the time to learn about the user and their personal preferences, and instead simply push out their personal opinions on the masses. They want to give you just enough information for you to make you confident enough to buy a diamond (preferably through their trusted retailers), even though it may not the complete picture. They are not incentivized to go too in depth since they make more money with a large volume of traffic rather than trying to make sure individual customers truly get the best diamond experience, like only a one on one personal interaction can provide.
I’ve also noticed that RareCarat grades every type of cushion modified brilliant diamond as the same as any other, even though most people in the industry know that there are many different types of cushion modified diamonds, some better than others. There’s a regular cushion modified brilliant, which has additional facets at the bottom of the diamond that makes it a bit heavier at the base, and gives the diamond a crushed ice effect similar to a radiant cut diamond, which are generally 5-10% cheaper than a hybrid or regular cushion brilliant. However, Rarecarat’s price engine and cut grade system fail to mention this, and will show a hybrid cushion modified diamond as not as good of a buy compared to a regular cushion modified which I know from a wholesale standpoint has much better light performance and has a much higher value. This is another area where RareCarat’s experience falls short of the real thing – working one on one with a diamond expert.
2) Biased partnerships with only select retailers.
While there are hundreds of online sellers for GIA diamonds and customized rings out there, Rare Carat only shows and compares listings from a few select e-commerce sites that it has partnerships with. This severely handicaps its ability to live up to its claim of being the “Kayak for Diamonds”, since Kayak includes a much higher percentage of the total market than Rare Carat. Kayak shows airline and hotel fares from every major online merchant, saving the user from clicking onto each individual site to compare fares. Rare Carat only currently shows results from less than 10 online retailers – those that are arguably very niche and small – and doesn’t include the top 3 largest and well known online sellers (Blue Nile, James Allen and Brilliant Earth). So while the concept is great, it’s still only offers access to a very limited inventory, and the user will still have to log onto Blue Nile, James Allen and Brilliant Earth in order to get the full picture of what’s out there.
I personally find it annoying that Kayak and Expedia don’t include fares from Southwest in their engine, but imagine if they didn’t include prices from Delta, American Airlines and United, and instead just showed fares from others like Jetblue, Alaska/Virgin Airlines, Spirit and Frontier. That’s where Rare Carat is right now. It’s likely that the list of retailers it includes will grow, but they might face push back since online retailers who already face stiff competition and slim margins are likely to loathe paying commissions to Rare Carat for every click, especially if those clicks don’t convert into meaningful sales numbers. Rare Carat states on the FAQ section on its website that “Instead of getting paid a commission when you buy, the online retailers pay us when you click on diamonds (this is how Google and Trivago work). This means we don’t have incentives to push you to buy anywhere, and can still pay our bills.” However, they’re smart enough to know that this really isn’t as clear cut as they make it seem. Even though they get paid based on click’s and subsequently may not care specifically which diamond a user ends up buying, they are still incentivized in the long run for their users to buy one of the diamonds on their partner retailers websites rather than elsewhere, because its pretty easy for these retailers to track how many visitors referred by RareCarat actually buy a diamond. If the retailers see that rarecarat users aren’t converting at a rate high enough to be profitable (with their already razor thin margins), they may drop their partnership and spend their marketing money elsewhere. So while it is technically true that the don’t have a (short term) incentive to push users to buy anywhere, in the long run they have every incentive to have you buy from one of the sites that offers them click based revenue.
Rare Carat has a visually appealing website and although it admittedly isn’t a very unique concept, it has great potential to make its mark on a still very old fashioned diamond industry. This case is especially strong among millennials who are now more comfortable than ever making big purchases online. However, since it’s still a very new website, there are still several kinks to the product that will need to be refined in order for it to really live up to what it promises. The website would be well-served to work closely with diamond industry experts who actively work with consumers to refine its recommendation engine to come up with more accurate price comparisons, recommendations and diamond rankings. And while I think it’s also inevitable that it will eventually open itself up to more diamond e-tailers, it is also very closed off in terms of suppliers, which currently limits the user experience and increases the likelihood of bias in its recommendations.
The internet has disrupted almost every industry and forever changed them, and the diamond and jewelry industry is no exception to this. One of the biggest disrupters in recent history has been Blue Nile, which while it has struggled to make a profit, has drawn a lot of ill will from traditional brick-and-mortar jewelry stores and wholesalers alike. Many complained it shrank retail margins down to unsustainable levels, but at the end of the day, it is just a middleman that lists diamonds for sale by other middlemen who list diamonds from large diamond manufacturers and wholesalers around the world. Neither RareCarat, nor the retailers it works with carry their listed diamonds in their own inventory. Diamond wholesalers and manufacturers set the prices for their diamonds, and these ecommerce sites list them for a tiny margin in order to gain market share and also because since they are not undertaking any inventory risk, they can work on tiny margins, unlike traditional jewelry sellers. According to Joshua Niamehr of Enchanted Diamonds, their margins are often less than what typical retailers charge as sales tax.
The internet brings greater transparency, which is bad for traditional sellers who have much higher fixed costs and overhead, but great for consumers who can get pretty much the same thing for cheaper. Uber gave users access to taxi rides with a better user experience at a cheaper price, and Amazon does the same with consumer products. The problem in this case is that while websites like blue nile and now Rare Carat help consumers get access to diamonds at a cheaper price than they could have with traditional retail, they don’t necessarily provide a better user experience. Blue Nile arguably made diamond buying even more confusing by laying out thousands of options for every budget, and Rare Carat also spreads a lot of misinformation by guiding users towards certain types of diamonds without proper justification, and providing just a limited picture on the diamonds they’re searching for, with nothing but a tiny disclaimer at the bottom of the page to warn users of this potential hazard. Yes, Rare Carat hopes to simplify diamond buying, but so far it’s pretty fair to say they still have a long way to go.