How to buy gems online

In an industry famous for high markups and perpetual closeout sales, diamond e-tailers have brought clarity and competition to pricing jewelry. Says Scott Devitt, a senior analyst at Legg Mason: "They expose diamonds for the commodities they are."

E-tailers' costs are lower than for local jewelers because they spend less on labor and leases, and they keep their inventories lean. As a group, e-tailers rang up about $340 million in engagement-ring sales in 2005.

When selecting an e-tailer, you want one with access to a wide selection of diamonds, as well as responsive customer service, generous return policies and low prices. We used those criteria to size up the leading sites: Amazon.com, BlueNile.com, Diamonds.com, Ice.com, JamesAllen.com, Overstock.com and Whiteflash.com.

Our overall bling-buying pick is Blue Nile. It can tap a pool of 60,000 diamonds and scores of settings, and the store lets you return an item 30 days from the day it ships. Most calls are answered within 10 seconds by an employee in Seattle. And its prices are among the lowest.

For example, it was recently charging $6,592 for a 1-carat round stone of good but not flawless quality, which beat other sites' prices for similar stones.

For custom work, Whiteflash.com is the lord of the online rings. Unlike many e-tailers, Whiteflash customizes nearly half its jewelry. Kevin Dolorico, a Web operations analyst in New York City, exchanged designs by e-mail with Whiteflash when he was shopping for an engagement ring last spring. Dolorico wanted to combine the head from one standard setting with the shank of another.

Whiteflash nestled a 1.34-carat diamond that was graded good but not flawless in Dolorico's ideal setting. His fiancee was dazzled, and he was pleased with the roughly $6,000 price. A gemologist who appraised the ring's value told Dolorico an equivalent piece from a local jeweler would cost about $9,000.

Whiteflash's return policy for custom work is that you can't bring it back unless there's an error (exceptions apply to partly customized work). For loose stones and standard settings, Whiteflash offers a full refund 10 days from receipt for any reason.

Whiteflash has less inventory (about 1,000 stones) and typically charges higher prices than Blue Nile and many other e-tailers. But Whiteflash trumps brick-and-mortar jewelers on price, and it offers a trade-up program that Blue Nile and most other online rivals don't match: Swap your rock for a higher-priced one at any time, paying the difference between your new diamond and your trade-in.