Forbes has an interesting piece on the rise of Blue Nile, the popular internet diamond retailer. The diamond dealers, which made headlines when the sold a single diamond for $1.5 million earlier this year, has been a hit with male buyers seeking to avoid the hard sell and intimidation that can be found at some jewelry retail stores. One of the major appeals of the website is its user-friendly geek factor. You can read up on diamonds and what to look for and play around with the sliders, choosing cut, size, color and clarity watching the numbers rise and fall as you adjust the factors at different rates. It's a pretty engaging (pardon the pun) experience.

What the Forbes article doesn't mention is that that the folks at Blue Nile often don't actually see the stone. The rings are typically less expensive than traditional bricks-and-mortar stores which have a much higher overhead. Blue Nile has a network of dealers that work through a web-based diamond exchange. The stones are often shipped directly from these dealers without being inspected by Blue Nile. Most of the time this is not a problem but Judah Gutwein of Excel Diamonds writing for Diamond Vues profiled some of the potential risks of this situation describing a situation in which a customer did not receive the diamonds she had ordered. Buying through a middleman such as Blue Nile can lead to a more circuitous route of recovery when there are problems, although as far as I know, reports of such troubles are relatively small.

The future of the diamond industry does appear t o be a more open and honest one. I have been watching the moves of diamond man Martin Rapaport. He recently held his first of a monthly internet auction of stones. His goal is to bring open pricing to the diamond market and he has been working to create both a futures exchange and a fair trade system for diamonds. The future of diamond buying looks a lot more transparent and less shrouded in secrecy and mystery than it has been in the past.