Blue Nile Reviews
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The History
Bluenile.com was founded in 1999 by Mark Vadon. The story goes that around that time Mr. Vadon was shopping for an engagement ring and was fed up with his options. He felt that diamonds were essentially a commodity, and that all he needed to do was learn about this commodity and then shop for the best price. He discovered a site online called internetdiamonds.com and was intrigued. He contacted the owner, formed a partnership, and shopped around his idea to the venture capital circuit. The rest, as they say, is history.
The Facts
Blue Nile’s business model (speaking now only of their engagement ring business which is overwhelmingly their primary source of revenue) is a fairly simple one. Blue Nile signs exclusivity agreements with diamond wholesalers all over the world that stipulate that these wholesalers can only list their diamonds on Blue Nile and no other online retail site. The reasons for the exclusivity are simple – Blue Nile doesn’t want their customers comparing prices for the same stone that they’ll find on 3 other sites, and they also want to maintain an edge over their competition in terms of how many diamonds they list as their own at any given time.
Figure 1 - The Invoice - Click to Enlarge
Blue Nile takes lists of diamonds from their vendors and uploads them into their database and presents them to customers as if they were their own. Since these diamonds are located all over the world, it seems likely that Blue Nile would never actually see the diamonds they sell – not before you buy and not after you buy. My experience working for one of Blue Nile’s vendors for about 7 years suggests this as well. Based on my personal experience with Blue Nile conducting research for this article, it would also appear that they (at least occasionally) don’t use their own people to mount the diamonds into settings – the setting work appears to be contracted out (see below).
People report that they can call Blue Nile and ask them to inspect diamonds listed on their site to get gemologists’ reports about whether or not a specific stone is eye-clean. It would appear that all that Blue Nile’s gemologists do in such a case is call the specific vendor who owns the diamond in question and ask them for their opinion of the diamond. The flaw in the system is that since each vendor is motivated to sell his diamond over his competition’s, he’s always going to push his own stones. From the vendor’s perspective, the worst that can happen is the customer won’t be happy and he’ll return it – but if the vendor doesn’t push his stone, he knows he won’t stand a chance of closing the sale.
Figure 2 - The Packaging - Click to Enlarge
The Test
For purposes of this review, I ordered an engagement ring from Blue Nile using a pseudonym. Figure 1 is a copy of my invoice. As you can see in the invoice, I ordered a 1.01 carat J color SI2 clarity diamond mounted in a simple solitaire engagement ring setting. I couldn’t find any Blue Nile coupon code, so I bought it as is.
Figure 3 - The Packaging - Click to Enlarge
Since I’ve already reviewed Blue Nile’s customer support in my Diamond Earrings Review article, I decided this time to place the order online. Their check-out system was very elegant and easy to use.
The Package
Blue Nile’s packaging was average at best. See Figures 2 & 3. They ship the ring in a custom-made brown cardboard box with a special cutout in the center for the jewelry box which contains the actual ring. On top of this is a blue paper envelope with the various documents accompanying the purchase (invoice, appraisal, and diamond certificate). In Figure 3, you can see the actual jewelry box removed from its cover. I feel that if you’re paying several thousand dollars for a product, you shouldn’t open up the shipping box and see your jewelry box perched in the middle of brown cardboard. Your initial impression of the importance of a package is how well it is wrapped and presented, and this presentation does not befit the significance of this purchase.
The Product
As you can see in my articles on diamond color and diamond clarity, the best value for a round diamond set in a solitaire diamond ring setting can be achieved by going for a J color diamond and a clarity grade as low as possible that’s clean to the naked eye. Since with Blue Nile, it’s not possible to review a magnified picture of the actual diamond, I couldn’t choose a clarity grade that would be too low (like an I1), otherwise it would be unfairly likely to have eye visible inclusions. On other sites that have pictures (such as James Allen), you can shop around and cherry pick the one I1 clarity diamond that is still clean to the naked eye. On Blue Nile, however, that’s not possible. Therefore, I decided to go with an SI2 Clarity Diamond since most of these are eye clean and this is usually where you find the best mix of value and visual appearance. As for how I chose this specific stone, I did what I felt most Blue Nile customers would do – I selected the cheapest Ideal Cut J SI2 1 carat stone they had available.
Figure 4 - The Diamond - Click to Enlarge
Figure 5 - The Cert - Click to Enlarge
Figures 4 and 5 are images of the diamond itself and the GIA certificate, respectively. As you can see in Figure 4, this stone has an easily noticeable icy white inclusion in the center of the stone. This inclusion was easily visible to the naked eye from the very moment the lid was lifted from its presentation box. This is not a stone I would ever recommend, regardless of budget, but I didn’t have the option of seeing a magnified picture in advance to rule it out.
My Impressions
My research for this article exposes several problems with Blue Nile’s business model. Remember, that the very founding of the company was based on Mark Vadon’s premise that diamonds are a commodity. The definition of a commodity is that all you need to know is its price to make a purchasing decision (ie, a bar of gold is a bar of gold and a bushel of wheat is a bushel of wheat – the only variables are quantity and price). But can diamonds really be evaluated by price alone? Yes, it’s true that if you’re dealing with VVS clarity round ideal cut diamonds, then all you really need is the diamond’s price to figure out if it’s a good deal or not. But for just about every other category of diamond, that just isn’t the case. You need to see at least a photograph of the diamond to evaluate its cut (primarily in the case of fancy shapes) and, just as importantly, to evaluate the diamond’s clarity. Blue Nile treats SI2 clarity Oval Cut diamonds just as they do Flawless Ideal Cut Round diamonds. Anybody with any experience in the diamond business knows that this is absurd since the vast majority of Oval cut diamonds are very poorly cut and there’s no way of identifying the nice ones using a certificate alone – not to mention the problem of potentially ugly eye visible inclusions.
You see, if I had tried to order this same stone from a vendor with physical access to, and magnified pictures of, their diamonds (like James Allen), there would be two major roadblocks preventing me from shooting myself in the foot:
1) I wouldn’t make the mistake of ordering this stone because I could see very easily in the picture that the stone has a noticeable inclusion dead center, and
2) Since other companies personally set the diamonds they sell, prepare their own shipments, and perform their own Quality Assurance, they would have seen my selection and before they even set it they would have contacted me to let me know that my choice might not have been the best one. I’m not claiming they would do this in a case where the stone is borderline (probably because they assume you’ve seen the picture and have decided to take the risk upon yourself), but in a case where the stone is this bad, I believe they would warn you – no store wants to deal with costly returns.
Figure 6 - Shipping Origin - Click to Enlarge
On the other hand, it would seem that Blue Nile doesn’t have first-hand knowledge of what your diamond looks like. In my case, as confirmed by the Blue Nile customer service agent I dealt with, my diamond was shipped straight from New York to their jewelry contractor in Kentucky.
How did I even think to ask about the ring being put together in Kentucky? Well, take a look at Figure 6. That’s a screenshot of the tracking information for my shipment from Blue Nile. Blue Nile is based in Seattle. The diamond was from New York and the ring was shipped from Kentucky. It would seem that the Jeweler in Kentucky is not owned by Blue Nile – they are a contracted company. The reason it appears this way is that Blue Nile does not charge sales tax in Kentucky. To the best of my knowledge, then, it would seem that no Blue Nile employee ever touched the diamond or the completed ring at any stage along the process.
And that brings me to my final concern about Blue Nile: Their appraisals appear to lack credibility. Here’s what I mean:
Figure 7 - The Appraisal - Click to Enlarge
My total bill for the ring at Blue Nile was $4262. For comparison’s sake, for my review of James Allen, I ordered a very similar diamond and ring (almost identical on paper, but far superior in actual quality). My total bill from James Allen was $3994 (Including the TAD0611 coupon code). Blue Nile appraised their ring at a value of $7800 while James Allen appraised their ring for $5600. The purpose of the appraisal is to let the insurance company know what a full retail replacement value of the ring is. You want a higher appraisal than what you paid because it’ll make your life easier if it gets lost or stolen and needs to be replaced. But you don’t want too high of an appraisal because then that’s just going to make your insurance premiums needlessly higher. In my opinion, Blue Nile is going way overboard.
Unfortunately, it would seem that the problems run even deeper. Take a look at Figure 7. This is a copy of the appraisal provided by Blue Nile. Notice the arrows I have added for emphasis. The appraisal states that this Blue Nile employed gemologist, who, according to their customer service rep, works in Blue Nile headquarters in Seattle, has signed off on the valuation given in the appraisal. Listen — if Blue Nile believes that you, the consumer, can buy a diamond ring without ever seeing a picture of the diamond or the actual ring, then, in theory, it should be OK for a gemologist to appraise a diamond ring without ever seeing it as well (of course, I wholeheartedly disagree with such an assertion). But Blue Nile appears to actually make the claim that the ring was inspected by the person signing off on the appraisal. This doesn’t appear to be possible if the stone was never sent to Blue Nile’s Seattle headquarters, but rather went straight from the wholesaler to the jeweler.
I was deeply concerned about this issue, and didn’t want to make accusations about a company without fully investigating the issue, so I decided to contact Blue Nile as a concerned customer regarding this specific issue. Blue Nile’s customer service representative confirmed that the diamond was shipped from New York to Kentucky – never having passed through Seattle. She confirmed that their contracted jeweler’s employee actually prepared the appraisal, not a Blue Nile employee. She confirmed that the gemologist who signed the appraisal (or, more accurately, whose signature was printed on the appraisal) sits in Seattle and not Kentucky, and had never seen this ring.
When I questioned her on the propriety of this, she said, “well, this is what’s printed on all the appraisals. She is our head gemologist and has many people who work beneath her.” When I challenged her on the fact that the gemologist who actually did examine the ring wasn’t her employee, she said, “Ok, but I don’t understand why that’s a problem.”
Then I questioned her on the size of the appraisal. Her response was very surprising. She said to me, “there is no right or wrong when it comes to appraisals. And appraisal can be anything. This is what the person in Kentucky felt the ring was worth. Many companies will tell you that they’ll appraise the ring for double of what they sell it for. Our appraisal isn’t even that bad. You’re welcome to get it appraised again, if you wish, to a number more to your liking.”
After this conversation with the customer service rep, I find it hard to believe that the jeweler in Kentucky even looked at the ring while preparing the appraisal. If he had, I highly doubt he could have given it such a high valuation, because for what it is – an ideal cut 1 carat J Color SI2 clarity solitaire – it’s about as bad as it can get because of the terribly visible center inclusion.
The Conclusion
Blue Nile is clearly a powerhouse of a company. They are the leader in online diamond sales. Nobody can compete with them when it comes to the size of their inventory of loose diamonds, and nobody has nearly as deep of an inventory of engagement ring settings. It happens often that readers will contact me saying they want to buy a diamond at one place or another (not Blue Nile), but they feel they have to buy from Blue Nile because they’re the only ones who sell the particular ring they want. In that regard, they are very much in tune with the likes and dislikes of the bulk of diamond consumers out there.
But aside from those two points, there are a number of problems with Blue Nile as I detailed in this article. Here’s a summary:
- Blue Nile is no longer the cheapest online diamond seller. They’ve become so large that they need to make a slightly higher margin than their competitors in order to cover all the expenses related to being a very large public company.
- Blue Nile doesn’t have pictures of their diamonds. This means you can’t reliably evaluate cut and clarity before you buy.
- Blue Nile didn’t handle the diamond ring that I bought – not before setting and not after. They were not involved in the QA of my ring at all.
- Blue Nile doesn’t have physical access to the diamonds in their “inventory.” So when you ask for a stone to be examined by a gemologist, all they do is call the stone’s owner and ask their opinion from afar. A diamond’s owner can’t be trusted to give an objective opinion since they want to push their stone over a competitors.
- Blue Nile’s high appraisals cost you more money through higher insurance premiums. Blue Nile gemologists sign off on these appraisals even though they, at least in my case, never actually see the rings themselves.
- In my opinion, Blue Nile’s packaging is low-budget and cheap looking.
Hi Ira,
anyways, i would highly appreciate any help.
Thanks a lot for a wonderful article, it is very much helpful for first time buyers like me..
I am looking at the following BN diamond and looking for a setting which can be used every day (do not want to keep removing every now and then), can you please give your inputs?
Also, I was originally interested in three stone ring and but it is out of my budget
Thanks
Shruti
http://www.bluenile.com/build-your-own-diamond-ring?action=remove&forceStep=DIAMONDS_STEP#diamonds_forceStep=DIAMONDS_STEP|builder=BYOR|pid=LD02126522
Your Diamond:
Ideal-cut, G-color, VVS1-clarity, Round, 0.45-carat Diamond
Stock #: LD02126522
Your Setting:
Classic Six Prong Engagement Ring in 14k White Gold
Stock #: 19787 Size: 7
Hi Shruti. You’re wasting money going for such a high color and clarity. See this video I made in NY last week: http://www.youtube.com/watch?v=G_y44frw9I0
Hi Ira,
We have a $5k budget for an engagement ring. I originally located a 0.9ct I SI2 Ideal cut Brilliant round ring, with a halo setting on BN (~6.25mm by 6.22mm)for about $4400, and I am very worried about inclusions. Any comparable suggestions on James Allen?
Hey Maggie. here are two amazing stones:
http://www.jamesallen.com/diamonds/I-SI2-Ideal-Cut-Round-Diamond-1438958.asp
http://www.jamesallen.com/diamonds/I-SI2-Ideal-Cut-Round-Diamond-1447318.asp
What do you think szul? Is it reputable? Return policy? I m looking at 1.8 k f vs1 for under 28,5k? Thanks a lot . Steve
Hi Steve. I’ve never worked with szul, so I can’t really say. This is 28.7:
http://www.jamesallen.com/diamonds/F-VS1-Ideal-Cut-Round-Diamond-1336423.asp
Hey Ira,
I feel I’ve been fairly educated regarding diamonds. Where my hesitation lays is buying through a local retail chain such as Spence Diamonds, vs an online whole seller such as Blue Nile or James Allen. Sounds like the “accepted” grading system can vary slightly between jewelers/resellers.
What are you thoughts when it comes to value, authenticity & quality considering product, service, delivery and customer support? Online vs. physical store?
I’d be looking for a 1c solitaire in a Tiffany setting of white gold. Highest quality and value under 10K. If you have any recommendations I’d be happy to take a look. You also seem fairly pro-James Allen. Do you have any concerns or objective comments on their services & products?
Thanks!
Hi Thomas. See this article here: Truth About James Allen & Blue Nile. That should answer your questions re: buying online.
As far as JA is concerned, I believe all of my comments about them are objective. I simply think they’re the best engagement ring store online.
If you’d like our help picking a diamond, please send us a message using the contact form and let us know your budget and shape diamond you want.
Hi Ira,
Would you recommend a diamond that is I color, ideal cut, VS1 clarity, with medium fluorescence on a 18k yellow gold solitaire ring from Blue Nile? Would it also be best if the depth and table were both as close as possible to 60%? I know you would recommend James Allen, but the reason I am choosing Blue Nile is because it is closer to my budget. Also, what would be the best choice, in terms of bigger diamond size, on anything between a 0.30 and a 0.40 carat? Or are they all so closely sized that it wouldn’t matter? Thank you for your time and advice.
Hi Oscar. Don’t worry about Table and Depth – just make sure the stone is graded Excellent in cut (or Ideal if it’s AGS). If it’s going in yellow gold, use J color, not I. And I promise you I can find you a better deal on James Allen because with JA, I can help you find a great value SI1 or even SI2. You can’t do that on BN because they have no pictures!
Hi Ira,
My finace and I have a $25,000 budget and would love a stone over 2 carats. Do we spend 20K on a better but smaller stone and set it with a ring of smaller diamonds around it or do we buy a bigger but lower quality stone and set is in a simple platinum 4 prong ring?
Hi Angelique. Sounds like you’re a lucky gal! Unfortunately, there is no easy answer to your question. The only real answer is that it’s all up to you and what you want! Forget about the size difference for a moment – I don’t think you’ll be able to get such a different sized stone between 20K and 24K. First thing you need to do is ask yourself what style of ring do you like the best. Do you like the settings with smaller diamonds, or do you like the plain solitaires? Answer that question first, without regard to the diamond. Then when you’ve figured that out, you’ll know exactly what you have left in your budget for the diamond, and then we can help you find the best, largest stone possible for the money.
At that time, please contact us using the Contact Form and let us know what your diamond budget is, and we’ll get back to you asap with some great recommendations!
Hi Ira,
Great article has really helped me with my research. I’m looking for an engagement ring budget around £1500 sterling. Either platinum or White gold round diamond with diamond shoulders.The descriptions of the rings I have liked so far include pave channel set and cathedral. Please can you help me?!
Sure thing, Michelle. Please go to James Allen and find a setting you like, and then contact us via the “contact us” form at the top in the black menu bar and let us know your budget and which ring you like.
Ira,
Honestly I have a few problems with your article. Let’s get one thing out of the way, I am a Gemologist (GIA) and I worked for Blue Nile.
You say that the packaging is cheap looking. Well what would you expect a huge box that says “BLUE NILE” on the side? That only leads to someone getting the great idea of stealing it in transit to your house. I doubt that the typical customer is going to wrap the brown card board box and hand it over to the woman he loves. The outer packaging is not indicative of the contents to avoid theft. I would prefer innocuous packaging.
Now concerning the head gemologist at BN being the person who signs off on the appraisal. Well, you have to have someone’s name on it. I can’t tell you how many companies don’t have anyone that is qualified to sign off. Many insurance companies require a Graduate Gemologist (G.G.) from the GIA to sign off before it can be insured. A printed signature is typical and legal in so many instances, your paycheck probably has a printed signature on it.
Now about the valuation. The valuation is based on a price guide listing of the diamond market value, Rapaport (rap) diamond price sheets are the industry accepted valuation. The price to replace or buy is usually a certain percentage back (off) of rap. This is how insurance replacement is done and the valuation is replacement cost of a fluctuating price of a commodity that changes daily. Appraisals have to take all of this into account and will always be slightly higher than the actual cost.
You seem unhappy about the inclusion in the center of the stone, but it is clearly on the diamond report from the GIA. If you don’t like it you can send it back, but to pretend like it shouldn’t be there is being a bit ridiculous. Your criticism of them not having pictures is unfounded, a picture is not going to be any help to the average person. Only evaluation under lab conditions by an expert is going to be valuable. A layperson is not going to be able to accurately grade a stone. They will be able to evaluate beauty, and that can’t be done by a picture.
If you want to know if the inclusion is visible, you can ask BN to check the stone. Yes, they have many of them on hand there. Most are at the vendor’s business, but you can always send it back.
To critique BN for manufacturing in Kentucky or anywhere else is much like expecting the BMW dealership to assemble the car on the premises, a bit unreasonable. Especially in light of the fact that most mall jewelers don’t have any idea where their product was manufactured or assembled. Additionally their appraisals are handed to you by some minimum wage employee that has less than three months experience in the jewelry field. Debra at BN has been in the industry longer than most of the sales people at the mall have been on earth. Although, she looks fantastic for her age.
As far as BN appraisals costing you more in insurance premiums; insure it for less. If you loose it you will find out how well that works. Insurance companies are notorious for being cheap and not paying the full price. Better to be over insured by a little than under-insured in my opinion.
In summary, no BN may not be the best for every buyer but you really can’t beat their return policy. In the end if you don’t like it you can send it back with little trouble. Try finding that at the mall.
One can’t, and shouldn’t try to, evaluate a diamond from a diamond report or a photo. It must be done in real life, ideally with other diamonds to compare.
sincerely,
Aaron
Graduate Gemologist (GIA)
Oh, I don’t work for BN anymore. I just stumbled across your review by chance searching online for something else.
Hi Aaron. I appreciate you taking the time to write this well thought out response. I will respond to you piece by piece and show you why I believe you’re wrong.
I wasn’t referring to the outer packaging. Compare BN’s total packaging look to that of James Allen’s and you’ll see a massive difference in quality. James Allen ships everything in a Fedex Box, by the way, so clearly I’m not talking about the outer box.
My problem wasn’t with the head gemologist signing off on the appraisal. I understand that it’s not feasible to totally customize each appraisal they print out. Signing off on something means that at the very least the person doing the signing has some level of authority over what’s being signed on. My problem was with the head gemologist signing off on something which she had no chance of ever seeing because it was in a different state. Beyond that, the person inspecting the ring wasn’t even a Blue Nile employee in all likelihood – they were an employee of the contracted jeweler. So while it would be fine with me if she would sign off on an appraisal done at BN headquarters by one of her subordinates whom she trained, I think it’s very problematic for her to be signing off on the work of a non-BN employee in a different location.
Obviously, I’m aware this is the case. The problem with BN’s evaluation was that it was so off the charts, that it wasn’t realistic at all. Furthermore, it didn’t take into account the nature of the actual stone. You’re a GG, which means you know how to describe a diamond using all of it’s physical characteristics. You can measure color, clarity, cut and all other physical dimensions of a diamond. But as a GG, you have no idea what the value of a diamond is. At Leo Schachter, for half-caraters, for example, we had 3 assortments for H/I SI2s with values from 1200 to 1700 per carat. To you, they would all be the same diamond because they could all be described as H or I SI2. “Looking up a price on rap” is the part of the process a monkey could do. The part that takes the subtle understanding of the supply and demand of the diamond market is the hard part. This comes in to play with figuring out the appropriate discount from rap. In the example in my review, it was a very ugly SI2, so it should have had a significantly higher discount from rap. BN’s outsourced Gemologist in Kentucky clearly didn’t take this into account.
GIA inclusion plots have no correlation to eye cleanliness. All they tell you is location and type of inclusions. They tell you nothing about color and opacity of an inclusion, which are the most important factors in determining if a stone is eye clean. In fact, I actually believe that the busy-ness of an SI1 or SI2 inclusion plot is usually inversely correlated to eye cleanliness. If an SI2 takes up the whole face of the stone, then it’s got to be something very fine and subtle. But if an SI2 is concentrated in one spot, then it’s most likely a heavy black pique.
And anyway, I made my methodology very clear in the review. Since there are no pictures on Blue Nile, I did what most people would do. I decided to buy a 1ct Excellent cut J SI2 and then just went with the cheapest one I could find. When I reviewed James Allen, I also did what most people would do – I used their pictures to make an informed decision.
I think this statement is crazy. You want a diamond to be evaluated in the same way it will be viewed on someone’s finger. You don’t need a lab to determine if a stone is eye clean or not, you need a pair of EYES. Again, you’re a GG, so you don’t understand this. You’re obsessed with measuring and mechanically describing a diamond, but you have no clue what it’s worth. In lieu of a pair of eyes, a high res picture is the next best thing. I agree, though, that most people don’t know how to translate a magnified photo to a decision about whether a stone is eye clean or not. But that’s where I come in – I can do that since I’ve seen probably over a million diamonds in my career both through a loupe and with my naked eyes.
Either way, you can’t trust them. If it’s in house, the probably own the stone and want to sell it. If it’s not in-house (which I’m guessing is easily over 90% of their inventory), then you can’t trust them because they’re simply calling the owner of that stone for their opinion. It’s like asking a parent if they think their child is beautiful.
BMWs are manufactured by BMW, not by an outsourced car factory. The factory might be in a different location from headquarters, but it’s still managed by BMWW. The contractor in Kentucky is not Blue Nile. That in and of itself is not such a problem. The problem is that the ring is shipped directly from the contractor. I don’t like that BN is selling rings which they never actually see. James Allen, on the other hand, QCs every ring they sell personally.
Hello Ira,
I have a 5K budget for a princess cut diamond. I want something that is at least 1 carat. It is to be set in a plain solitaire platinum ring. What do you recommend?
Hi Jamie. If you don’t mind the cut corners, I think this is a fantastic stone:
http://www.jamesallen.com/diamonds/H-VS2-Ideal-Cut-Princess-Diamond-1408017.asp
Thanks very much for you prompt reply Ira. I have just purchased the above diamond and am now eagerly awaiting it’s arrival. Your help has been greatly appreciated.
Sounds great! Please let me know what you think when it arrives!
Hi Ira,
Simple and objective, I have a 7,000 USD budget for a round stone, which one would you buy?
Hi Carlos. What kind of setting is the stone going into? Plain solitaire or side stones? White Gold, Platinum, or Yellow gold?