USA Country Report

Presented by

Discovery Reports - US

Blue Nile: Founded on education, polished by ingenuity and passion

Reports by Mia Daughenbaugh, Krystin Chu, Christina Liedke, Jessica Ryan and Yujia Wen

PUBLISHED : Monday, 06 October, 2014, 12:56pm
UPDATED : Wednesday, 10 June, 2015, 3:44pm

Behind every proposal, engagement and wedding is a story worth retelling for generations. Many start with a diamond - each undeniably priceless for the occasion, yet historically overpriced for their worth.

To understand Blue Nile, which has played a part in more than 400,000 engagements worldwide, one needs to start with its first engagement ring. In the autumn of 1998, Mark Vadon, then a 28-year-old management consultant, was on a frustrating search as he went store-to-store in search of the perfect engagement ring. Instead of a ring he found a lack of product education, arrogant service and high prices.

Vadon realised that a lot of consumers were similarly confused, intimidated and discouraged by the traditional jewellery-shopping experience. He subsequently acquired Internet Diamonds - renaming it Blue Nile - which was built on the premise that there was a smarter way to buy a diamond.

Today, Blue Nile is the world's largest online retailer of certified diamonds and fine jewellery, offering consumers high-quality products at compelling values through an empowering shopping experience.

The Nasdaq-listed company occupies about half of the United States' online market for engagement rings - and has roughly a 5 per cent share of the country's overall engagement market. Net sales reached US$450 million last year.

In the jewellery industry, Seattle-based Blue Nile carved a name for itself by foregoing the traditional bricks-and-mortar presence and relying entirely on the internet for its marketing, sales and customer service through

Beyond its size, global recognition and revolutionary disruptive model, Blue Nile's greatest achievement goes back to fulfilling everything that Vadon wanted to find in a luxury jewellery store: excellent service, transparency and reasonable prices. The company also takes pride in delivering a great experience for customers, who are able to take control of their shopping process with the help of in-depth educational materials and specialised tools provided by the site.

"Finding the perfect ring does not have to be complicated. That is the founding tenet of Blue Nile," says chairman, CEO and president Harvey Kanter. "The key is educating yourself, then finding a reliable retailer and getting the piece you want at the right price - and Blue Nile is the only place you can find all of these elements."

Empowering the consumer with knowledge and choice

Taking the mystery - and often overwhelming confusion - out of the quest for diamonds and jewellery is Blue Nile's mission. From loose diamonds to engagement rings, wedding bands and designer jewellery, every piece is selected for exceptional quality and value.

"What makes a piece worth US$4,000 and a similar one worth US$10,000?" Kanter asks. "Many traditional stores may not be able to give you a straight, honest answer, but Blue Nile will go to great lengths to put you through a transparent, educational process so you know exactly what you are paying for."

Complementing Blue Nile's thousands of ready-made pieces is its "Build Your Own" feature, which allows buyers to customise rings, pendants and earrings by selecting one of the more than 150,000 diamonds and choosing their favourite setting to complete a jewellery piece that is right for them.

Using the site's educational tools, customers can learn how to distinguish one diamond from another by its four Cs - cut, colour, clarity and carat weight - and maximise the quality of diamond for their budget.

Blue Nile diamonds are available in 10 shapes and range from colourless to near-colourless with clarities of FL-SI2 grade. Each diamond comes with a grading report from an independent diamond grading laboratory, either the Gemological Institute of America or the American Gem Society Laboratories.

Platinum is Blue Nile's most popular choice of metal for engagement and wedding rings, and the company uses only 95 per cent pure platinum in its jewellery. For those seeking traditional gold jewellery, the site offers 14ct and 18ct white, yellow and rose gold.

Combining durability and shine, Blue Nile's silver jewellery is crafted from 92.5 per cent sterling silver, and features intricate designs. For added variety, the site also offers a range of Akoya, Freshwater, Tahitian and South Sea cultured pearls across a variety of different price points.

Blue Nile's transparency, education and low-overhead model translates to hundreds or thousands of dollars in savings for customers, but the company considers this advantage only one of the many reasons why it is increasingly becoming the brand of choice for smart jewellery buyers.

The company strictly abides by the Kimberley Process, which tracks diamonds from mine to market, and guarantees that each diamond is conflict-free. Blue Nile also offers a diamond price match guarantee, a lifetime diamond upgrade programme and a 30-day return policy, no questions asked.

In addition, the company ensures that it is in tune with the latest trends, and offers a specialised mobile application for iPhone users. Released in 2010, Blue Nile's app allows users to research, compare and purchase high-quality diamonds, connect to Blue Nile's jewellery consultants, and browse a catalogue of other customers' creations through its one-of-a-kind Dream Box feature.

Such commitment to ingenuity, quality, value and respect for customers has made Blue Nile an important partner to equally renowned names such as acclaimed bridal designer Monique Lhuillier, who designed a collection of engagement rings, wedding rings and diamond jewellery items sold exclusively at Blue Nile.

Other designers who have contributed to Blue Nile's designer collective are Boston-based Bree Richey, who brings a modern twist to classic designs; and third-generation jewellery artisan Robert Leser, who combines gemstones and diamonds into bold designs.

Blue Nile also partnered with Seattle-headquartered high-end fashion retailer Nordstrom for a limited "clicks-and-bricks" experiment. Select Nordstrom stores have begun displaying special Blue Nile showcases since November last year, allowing engagement rings to be "seen, felt and touched" by potential customers, who can then complete their purchase online.

"We believe that commerce and revenue growth will come out of a holistic experience for the customer. Look at our website and you will not see us boasting that our prices are 20 to 40 per cent below traditional stores," Kanter says. "This is because cost savings are but the icing on the cake when it comes to the Blue Nile experience."

Bringing the Blue Nile experience to China and Asia

Valued at an estimated US$80 billion, China's wedding market is quickly catching up to the US, which remains the biggest wedding market at more than US$161 billion.

Blue Nile is excited by the opportunity to bring its unequalled experience to the rest of the world. Shipping to more than 45 countries, Blue Nile is focused on the opportunity presented by the growing market in China.

The company is treading the waters carefully, however, taking into account the market's different culture and business landscape.

"We are trying to balance how much investment we make to ensure we are growing sustainably - with the knowledge and belief that we have to be there when the customers are ready, not when we are ready," Kanter says.

Blue Nile was the seventh-most recognised luxury jewellery brand in China even before the company had any presence in the country. The company is rapidly gaining traction - thanks to its steady investment in infrastructure development and local partnerships.

The company initially partnered with a Chinese business with store fronts in Beijing, Shanghai and Guangzhou, before launching a direct-to-consumer business earlier this year.

Since the launch, Blue Nile has also stepped up its marketing efforts by participating in local wedding shows. One show attracted more than 60,000 people, some of whom waited for hours just to purchase engagement rings from Blue Nile.

Blue Nile has also partnered with leading Chinese luxury shopping website for third-party online distribution of its products on the mainland.

"We are actively building our infrastructure to realise our long-term vision, which is to bring Blue Nile's unsurpassed quality and value to the China and Asia-Pacific markets," says Jon Sainsbury, Blue Nile's president of international.

Blue Nile