Is Blue Nile Cheaper Than Local Jewelers?

If you are thinking about buying a diamond, chances are you might have heard about a company called Blue Nile that became popular about 10 years ago. Blue Nile gives people an opportunity to buy a diamond, an engagement ring, and diamond jewelry completely online. The company provides all the specifications of each diamond and shows a range of values so that you can meet your intended budget.

Back in 2014, Blue Nile published a report directly stating that Americans are overpaying by up to 72% for diamonds. They claim that buying diamonds from local, mall, or high-end jewelers will end up costing you tremendously more money than if you were to buy from Blue Nile.

But actually, is Blue Nile cheaper? Although Blue Nile's argument is thought-provoking, the fact of the matter is, it's a sales pitch and not even close to the whole truth. As a local jeweler, we want to take this opportunity to explain some of the facts that Blue Nile is presenting in this report, provide facts that shed a true light and help you make an informed decision:

Blue Nile and many independent jewelers do not have the same quality standard

The diamonds that Blue Nile and local jewelers like ours sell are all graded by diamond labs like the GIA (Gemological Institute of America). When diamonds are sent to these labs, they are given a report and grades determined by each of the four Cs (cut, clarity, color, carat). This report helps price the diamond and makes it easier for consumers to compare different diamonds against one another.

However, it is important to understand that a diamond grading report does not tell the whole story. Each diamond is unique and diamonds with the same exact grades can vary in look, quality and price. For instance, a diamond that has a good clarity grade (e.g., VVS1 or VVS2) would mean that the diamond has very few inclusions, or flaws. Sometimes you can visibly see the inclusions with a naked eye while other times you can only see them under magnification. These two diamonds could have the same exact clarity grade but look completely different in person.

Here's an example of two diamonds with the same clarity grade that look very different. The diamond on the right has very visible inclusions that make the ring look dirty while the other's flaws are not as obvious to the naked eye:

Blue Nile is a marketplace that thrives on having a large listing of inventory on their website. By design, they want to have diamonds that are high quality and others that are at a lower quality to be at a lower price point. Although they have photos and videos in some cases, they put all of these diamonds in the same quality standard for a given set of 4Cs.

Local jewelers like ours, on the other hand, inspect and hand pick every single diamond in our inventory. We turn most diamonds away because they don’t meet our standard of beauty and excellence. We believe in offering and selling only diamonds that are beautiful in the real world and not just in a photo or video.

Let me illustrate. In the Blue Nile report, they compare prices based on the average price of a 1 carat, round shape, GIA certified stone with an ideal cut, VS2 clarity and H color diamond. Here is the range that they sell on their website for this exact stone:

The price range for Blue Nile's diamonds with these characteristics is $5,580 - $8,547, which is a 53% difference! How can that be? It's because the highlighted diamonds, that are identical in cut, clarity, color, and carat weight, are in fact very different and justify a big price gap. If all of these diamonds were the same quality, they would all have the same price. Local jewelers like Long's typically reject the bottom 1/3 of these diamonds because they aren't beautiful stones. Those cheaper stones look great on paper, but fail the eye test we place on every stone.

So, when Blue Nile compares their average diamond prices against the average diamond prices of local jewelers, it is not comparing apples to apples. That's like factoring in McDonald's when determining the average price of a meal at an upscale restaurant. Higher quality local jewelers focus on the upper 2/3 of the list, so of course our average price will appear higher.

Blue Nile claims in this report that "51% [of Americans] incorrectly believe a leading luxury jewelry chain provides the best quality diamonds." We can't speak for all jewelers, but we tend to disagree with this statement simply because we do believe our diamonds are better quality. We are more selective! While on paper they may have the same quality grade, the difference is in the way they sparkle and appear in person. That's where the quality grade comes from that you can't see on paper. Our experts are trained to identify the best diamonds and will only buy them if they are beautiful.

Can you buy a high quality diamond on Blue Nile? Absolutely, but it's going to be on the upper end of their price list! They don't mention that fact in their report.

Buying from Blue Nile means no local service or repair

In this particular report, Blue Nile is comparing buying a diamond online to buying a car. "After all, would you pay 72% more for the same car at a different dealer?" said Harvey Kanter, Blue Nile President and CEO. What Kanter is failing to mention here is that relatively few people buy cars online just as very few people buy diamonds online. And, there's a reason for that.

Buying a diamond, especially for an engagement ring, will be one of the biggest purchases in many American's lives. It's a huge investment. Like we've mentioned before, so much of a diamond's quality comes from what is not on paper. Seeing it in person is when you can really start to understand what drives the price of diamonds and the different factors that will affect its sparkle and beauty. Buying a diamond online is a huge risk without seeing it in person. Like a car, you'll know if its right for you once you see it in person and take it for a "test drive."

When you buy a diamond from a local jeweler, it is also about so much more than the diamond purchase. Your jeweler will forever be able to provide services like complementary ring cleaning, prong checks, warranties, appraisals RIGHT ON SITE and will help in the future with other purchases like wedding bands and ring upgrades. To get service from Blue Nile, you need to be parted from your ring for days or even longer! Any of our diamond customers can come in for the rest of their lives and get their ring cleaned and inspected immediately. Rings will need maintenance, just like cars, and having a place where you can physically go for these services will make a huge difference.

Seeing the diamond in person will also be the perfect time for your jeweler to educate you and answer any of your questions. Jewelers are trained to educate you beyond the basic four Cs of diamonds. They'll show you the diamond under magnification, under different lighting, and can show and explain the different characteristics of diamonds. For such a big and important decision in someone's life, there should be someone there who can guide you through the process. And, the process doesn't stop after a diamond purchase. A jeweler will be helpful to you in the long run as the years go by.

Local jewelers and Blue Nile have almost identical margins

In the diamond industry, there is a lot of transparency. It's no secret that diamonds are going to be marked up, like other consumer goods, in order to make a profit. Because Blue Nile is transparent about their margins (since they are a public company), we can tell you with certainty that the margins charged by Blue Nile are very similar as those charged at Long's. There is very little difference in the way that they mark up their diamonds.

In this report, Blue Nile is trying to get the point across that Americans are being tricked to pay more money for diamonds than necessary. As explained earlier, if a stone is terrible quality, we would sell it at the same low price as Blue Nile. But, we choose not to sell stones that are not beautiful. Again, taking the average price of stones sold at Blue Nile and comparing it to the average price of stones at local jewelers is not a fair comparison.

There are other ways to get the same convenience of Blue Nile

We hear from many people that the reason Blue Nile can be so appealing is because it is convenient and less intimidating than walking into a store. This makes sense seeing as many things these days are bought online. It's very rare that you would come across an item that you have to purchase in the store instead of online.

There are, however, other ways to get the same convenience that Blue Nile offers while still getting the help of a jeweler. Programs like the Free In-Store Preview by Ritani will allow you to custom build the ring that you want online. The distinction is that the ring will then be sent to a local jeweler for you to look at. This way, you can see in person exactly what you are getting before you choose to buy the ring.

By taking advantage of programs like Ritani's, you can still shop and find rings and stones that are within your budget online. But, you have the added benefit of seeing the rings in person before you have to purchase the ring. This can make all the difference when purchasing diamonds!