As you probably already know, Blue Nile does not inventory any loose diamonds. All of the loose diamonds listed on their website are all sitting in tens, if not hundreds, of vaults all over the world belonging to just as many different companies.
These companies send Blue Nile a constant electronic feed of their inventory including all details of each diamond along with their wholesale price of the diamond.
Blue Nile adds on a standard markup (usually around 18%) and presents these diamonds to the web-surfing diamond consumer.
From Supplier to Consumer
When a customer purchases a diamond, the diamond is shipped directly from the supplier to the customer with a standardized invoice from Blue Nile that the supplier is able to print out.
I’m not sure exactly how long it takes Blue Nile to pay the vendor for the sale, but it is almost certainly not longer than 60 days.
From the perspective of the diamond wholesaler, listing their diamonds on Blue Nile costs them nothing. These companies anyway have a constantly high level of inventory.
Diamond Wholesaler Benefits
As long as the diamond is in their office, all they have to do is upload its details to Blue Nile and it immediately become available for sale. If the diamond wholesaler has a regular customer who wants the diamond, so they sell it to their customer, and simply remove it from their Blue Nile feed.
No opportunities are lost, only new opportunities are achieved. And since there are no expenses selling diamonds through Blue Nile, the diamond wholesaler is motivated to offer lower wholesale prices in their feed upload to Blue Nile.
Blue Nile’s Perspective
From Blue Nile’s perspective, they have none of the high inventory carrying costs of your typical bricks-and-mortar jewelry store, so they can survive, and thrive, on a significantly lower profit margin (18% versus 100%).
Also, Blue Nile provides live data to all of its suppliers of how their prices compare to their competitors for similar items. This creates a true competitive market dynamic that ultimately drives prices down to their minimum.
A good rule of thumb in choosing a diamond jewelry appraiser is if you don’t know where to go to get jewelry appraised…read your local jewelry appraiser reviews. If you only choose one item, a diamond ring appraisal would probably be your best choice. Also, if your purpose is to sell diamond jewelry, a current jewelry appraisal will help you decide a better selling price.