3.29.17 Online Shopping

How Blue Nile Disrupted the Jewelry Industry by Selling Online and Giving Consumers More Control Over the Buying Experience

By: Jon McDonald

The Crunch: Since its founding in 1999, online retailer Blue Nile has been a disruptive force in the jewelry industry, changing the way people buy diamonds from browsing a display case to surfing a website. The company has a wide variety of educational materials to help the consumer feel confident in picking the perfect piece of jewelry. With a focus on the customer experience, Blue Nile continues to serve consumers in the setting they choose, which recently meant opening a few small-footprint showrooms with zero-commission salespeople to ensure the same level of satisfaction found shopping from the comfort of home.

When a disruptive idea hits any industry, it challenges the established way of doing things and can be a turning point in an industry’s history.

Tivo changed the way everyone thought about watching television. No longer did a viewer need to be on his or her couch the moment a show started and be glued to it for 30 minutes to an hour. After Apple introduced the iPhone in 2007, no one thought of a cellular phone the same way again, and it spurred the term ‘mobile device’ as the iPhone represented much more than a phone.

In that same vein, Blue Nile has become a disruptive force in a trade that has been around much longer than televisions or phones — the diamond engagement ring and jewelry industry. The company managed to turn the entrenched business on its head with the simple idea that educating consumers well enough to buy jewelry online will pass massive overhead savings onto the customer.

“Blue Nile was founded on customer experience, democratizing diamonds and jewelry through the power of the internet,” Josh Holland, Blue Nile’s Director of Brand Experience, told us. “It is an old, traditional industry that we have turned on its head by educating the customer and providing the greatest possible transparency into the process, so they feel good about their purchase.”

Born in 1999 after its founder’s frustrating experience buying a diamond engagement ring, Blue Nile is now one of the largest online diamond retailers in the world. Customers flock to the site for its high quality diamonds, educational resources, and a no-hassle customer experience.

Blue Nile is steadily reshaping a centuries-old industry by giving customers the ability to control the entire process, and avoid being pressured by a salesperson trying to earn a commission.

High Quality Minus the High Price and Hassle of a Store Salesperson

Shopping at a jewelry store can be a high-pressure affair, especially if a customer wants a diamond engagement ring. That ring represents far more than just a stone and setting; it is a token of love that can be cherished for generations.

But with a small selection and salespeople working on commission, customers can often feel overwhelmed by the situation — and that is before seeing the price tag that often comes with a store-bought ring. Blue Nile is a complete departure from that long-held tradition, as no one is working on commission and there is minimal overhead, so those significant savings are passed on to the customer.

“Jewelry stores are typically not very customer-focused, from the layout to the prices,” Josh told us. “Traditionally a person walks in and associates size them up, but we have a unique business model that allows us to sell diamonds of the same quality as a major jewelry retailer but at dramatically lower prices because we don’t have that overhead.”

Providing those lower prices is important to Blue Nile, as is giving customers a far wider selection than any physical location could ever provide. As Josh told us, Blue Nile’s focus is on creating an incredibly personalized experience, not one that has an off-the-shelf feel.

“Blue Nile gives people the opportunity to select from nearly 150,000 diamonds independently graded by the Gemological Institute of America,” he said. “They can choose from more than 300 settings to make a combination that is truly unique to their relationship. And we actually build it, which adds to the special nature of the product.”

This new jewelry-buying experience is in large part due to the depth of knowledge and customization that is available on Blue Nile’s website. And the response to its customer-first approach has been so overwhelming that Blue Nile has opened a few physical showrooms that mirror the site’s no-pressure feel.

A Website and Physical Webrooms Provide a Customized Experience

Blue Nile’s personalized online experience enables customers to design the perfect ring from anywhere, including the comfort of their own home, with a mobile device. Each journey begins with Blue Nile’s in-depth educational tools because a little research goes a long way in determining the desired characteristics of a diamond.

“A good cut will have the biggest impact on brilliance — or sparkle — and even if a diamond has perfect color and clarity, a poor cut will make it appear dull,” Josh said. “Our customers don’t have to be diamond experts; they just need enough tools to know what they are spending their money on.”

Josh told us that most customers come into the process with a budget and an idea in mind of what they want, and Blue Nile helps them make the most of it. For instance, if a customer has a $7,000 budget and wants a 1-carat ring, he or she can use the site’s tools to manipulate the criteria — like carat, fluorescence, or girdle — to maximize that budget.

Blue Nile’s diamond selection dashboard makes it easy to start building a ring by entering all of your parameters.

Once a piece of jewelry is designed and purchased online, it is handcrafted and inspected to make sure it meets Blue Nile’s high standards before it is shipped via FedEx — free and fully insured — to a customer’s home.

“Our products go through a pretty robust quality assurance process,” Josh said. “We have 18 gemologists on staff — and our bench jewelers have an average of 25 years experience — to make sure every aspect of a ring is up to our standards before it ships.”

Blue Nile is also bringing its no-hassle, online experience into the real world with small showrooms it calls Webrooms. The idea is the same as with the website: to keep the customer relaxed and in control.

“We opened Webrooms as a way to further the client’s experience because that is the focal point of everything we do,” Josh said. “We want to give them tools to shop in their own way, whether it be through a PC, a mobile device, a tablet, or, now, a physical environment.”

Blue Nile has opened up a select number of Webrooms, like this one at Washington Square in Portland, Oregon, to give customers another way to interact with the brand.

The Webrooms have a small footprint, low overhead, and are meant to be a space to see, touch, and feel an engagement ring. Customers can even get help from jewelry consultants who are not working on commission and can use tablets to customize a ring.

The resulting experience is one customers appreciate, and Josh said Blue Nile’s jewelry experts actually find themselves downselling a lot of the time, which is talking to the customer about less expensive — but equally as gratifying — options.

“It is very common for someone to want a 1, 1.5, or 2-carat diamond. Those are natural linear benchmarks,” Josh told us. “But we inform them that the prices for diamonds disproportionately jump at those benchmarks. So if you buy a diamond just below those levels — like a 0.95-carat diamond — you are going to save money and probably never notice the size difference.”

Blue Nile is Focused on Becoming the Customer’s Jeweler for Life

Designing and buying a diamond engagement ring online was unheard before Blue Nile’s founding in 1999. But so was putting customers in complete control of the entire purchasing process and giving them the education to select the perfect diamond. With those offerings, Blue Nile disrupted the jewelry industry, much like Tivo and Apple changed television and cellular phones, respectively.

Blue Nile wants the ring-buying experience to be positive and offers a variety of tools to help make sure that the customer is happy. A feature in the company’s mobile app called “Dream Box” even lets a user see what a ring looks like on his or her finger by using augmented reality.

All of this is done to ensure satisfaction because, as Josh said, if Blue Nile makes it easy for customers to love the product, the company is building a lasting relationship.

“Diamond engagement rings are the bulk of our business, but we aim to be a customer’s jeweler for life,” Josh said. “If we can make it easy for them, we can build trust; then they will return for a birthday, anniversary, or any special occasion. They can trust Blue Nile to provide a high-quality piece of jewelry for the best price.”

By both valuing customers and providing customers with more value, Blue Nile has its sights set on growing its market share in an industry the company has upended.

About The Author

Jon McDonald is a contributing editor for DealCrunch with over 15 years of experience editing, writing, and designing at numerous publications. His passions include digging into emerging trends and seeking out the companies making an impact on the retail industry.

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