The Benefit Of Less: Small-Scale Labs Proving That Big Isn't Everything

By Ronit Scheyer

With the enormous amount of grading laboratories around the world – not to mention all the new courier services and drop-off windows being opened in remote locations around the globe – it’s worthwhile asking the question in regard to newer or smaller-scale labs of why. In short, what is the need for another grading institution when the industry is already saturated with so many?

Ask any of these smaller labs and they’ll provide a few very pertinent reasons as to why, first of all, they were established in the first place, and why, second of all, a diamond dealer would make the choice of certifying his or her stones through a less well-known institution.

One of the most important reasons that these small labs have not lost their relevance is a simple matter of geography, as in the case of the Diamond Certification Lab of Australia (DCLA). The island-country’s remote location created an opportunity for a locally based, fully equipped lab. The founders of the DCLA explained that, previously there had been very little awareness of certification in the Australian market – because most diamonds and jewelry were sold without certification, consumers were left to accept the valuations of retailer. Once this awareness began to increase, there was a need for an Australian-based lab that DCLA was able to fulfill.

Geography, in the case of Australia, has a lot to do with cost. Not only are plane tickets to and from Australia expensive, but postage is too. As Roy Cohen, managing director of the lab, explains, “The cost of sending stones for certification from Australia to GIA or HRD may be prohibitive. Using DCLA lowers cost and turnaround time,” factors directly translating to the lab’s unique selling proposition – the fact that it is a local lab, meaning lowered costs and time saved for its customers (the costs and the time involved in sending diamonds overseas for certification are considerably more than certifying locally), that it grades to IDC standards and that it has “raised consumer awareness of certification.”

DCLA provides diamond certification, along with laser inscription services. Its turnaround time is usually within 48 hours, and a priority same-day service is also offered. Diamond grading services range, based on the size of the stone, from A$65 for a diamond under 0.40 carats to A$500 ($62 to $477) for a 10 carat plus stone. The institution grades approximately 25,000 stones per year for local diamond merchants and retailers.

Geography is also a factor for Global Gemological Laboratory (GGL), based in Bellevue, Washington, strictly as it relates to cost. “Because we are not in New York, Los Angeles or other major high-rent areas, we can keep our report prices below the competition.” GGL’s full diamond reports begin at $35, and preliminary reports are $15, versus $53 for a 0.15 to 0.22 carat Diamond Grading Report from GIA; and $62 for an HRD Diamond Certificate for any size diamond up to 0.50 carats and $52 for a preliminary examination, also from HRD.

But that’s not all the GGL says is important about their lab – the institution’s services are also factors that draw its customer base – including grading loose and mounted diamonds, providing appraisals, customizing reports, tailored to the needs of individual clients and providing diamond reports for feather-filled diamonds.

 The 14-year old lab promises a general turnaround time of 24 to 48 hours. It produced more than 40,000 reports in 2007, for a client base made up of diamond dealers, manufacturers, major cutters and large and small retail and independent jewelers.

Mark Gershburg, CEO of Gemological Science Laboratory (GSI), an independent grading institution based in New York City’s diamond district, disagrees with the use of “small” to describe his lab. When asked about the benefits of coming to a smaller lab like GSI over one of the bigger, better known labs, Gershburg says, “If your definition of ‘small’ is the number of employees, then we are small, but I see this as an advantage – and a direct benefit of our streamlined operations. If ‘small’ refers to customer base or the number of stones graded or the number of offices, we are far from being small.”

GSI grades exclusively for large-volume merchandisers, and its annual certificate production ranges in the “low hundreds of thousands.” Its product offerings include standard diamond grading reports, with a number of add-ons. Its promised turnaround time is 2 to 3 business days for small quantities and no more than 5 business days for large quantities (hundreds of stones).

The institution’s unique features, says Gershburg, include dedicated and personalized service, a tremendous flexibility to accommodate any and all customer needs that is lacking in the major grading facilities and a resource for non-gemological information. The lab also specializes in creative customized services and products that offer “endless possibilities to customers.”

Gershburg explains that his decision to launch a brand new facility was a direct result of his 25 years experience running a large gem lab (EGL USA) and, with that, his desire to create a new, more efficient and modern business model to reflect both his experience and new technologies in the grading process. GSI is an attractive grading institution, he says, because the lab has decided to specialize in a very narrow segment of the jewelry industry – the needs of the majors – and has consequently built mechanisms that would directly address those needs.

 In addition, although Gershburg is hesitant to give details, he explains that GSI utilizes a number of “new technologies” that set the lab apart from its competitors. This, among its other qualities, has allowed GSI to compete with other major and better known labs. “Given GSI’s technical sophistication, we not only compete with ‘larger’ labs but our size and dedication to a very specific customer base allows us to better understand and serve them.”

Universal Gemological Laboratories (IGC), based in Ramat Gan, is another grading facility that prides itself on its ability to offer customized services and solutions to its clientele. CEO Miki Ben-Dor explains that, in the midst of a large number of diamond grading labs springing up throughout the world, there was a need for IGC because diamantaires wanted a laboratory that could give “tailor-made solutions for customers looking for a fast, professional and personal service.”

Ben-Dor describes the lab as “boutique” and says that the benefit of using its services, as opposed to, say, the IGI, GIA or HRD is comparable to the benefit of shopping in a small, mom-and-pop business versus a giant superstore like Wal-Mart. He admits, however, that this benefit is one that is hard to assess in monetary terms.

The lab provides a full range of “modern gemological testing services,” – to diamond dealers, jewelry manufacturers and dealers and end-users (private customers) supported by professional staff, up-to- date scientific equipment and personalized care and service that cannot be found in the larger institutions – with a uniquely rapid turnaround time of 3 to 24 working hours.

The Gem Certification and Assurance Lab (GCAL) offers a unique answer to the why question. President Donald Palmieri explains, the reason for the founding of GCAL had less to do with what special services they offer and more with how those services are offered.

 “There is a tremendous lack of transparency and industry responsibility in the global laboratory industry,” Palmieri explains. “GCAL opened in 2001 as the first and only laboratory willing to guarantee its work and open itself up to industry scrutiny,” and GCAL in 2005 became a wholly owned company of the publicly traded Collectors Universe, Inc., meaning that it agreed to adhere to full disclosure, transparency and financial reporting regulations.

 In short, GCAL sees itself as the answer to a great need among consumers for trust in their grading institutions. “With U.S. consumer confidence in the diamond and jewelry industry at about 50 to 57 percent, there is a great need for consumer confidence. GCAL’s Zero Tolerance Consumer Guarantee provides just what the consumer wants…confidence,” Palmieri says.

GCAL, located in New York’s diamond district, promises a turnaround time of five days or less guaranteed, with grading fees starting at $20 for pre-grading and $35 for full-scale grading.

Sometimes, size isn’t everything.