Blue Nile: Turning Newcomer Anxiety into Business Success

One type of newcomer situation that often produces lots of stress and anxiety is buying something expensive and important for the first time. For example, purchasing your first home makes you a newcomer to the complex, confusing and byzantine world of real estate. You have to learn about mortgages, points and closing costs, and interact with unfamiliar realtors, brokers, lawyers and building inspectors who don’t always have your best interests at heart. The typical first-time buyer walks away from the months-long ordeal mostly convinced they got screwed mainly because they were new and ignorant of the whole process.
But within that newcomer anxiety lies business opportunity. Imagine the competitive advantage you can create if you can remove most of the stress, doubt, and anxiety that comes with being new to a major purchase decision. Here’s a terrific example:

Buying Engagement Rings


Photo courtesy of Boykung at

Speaking for (mostly) all males everywhere, one of the most stressful newcomer situations we ever experience is buying our first engagement ring. We know we are neophytes to an industry designed to make us spend far more than we can afford on a product we have no clue about. We’re talking about tiny rocks whose cost varies wildly based on differences we can’t even see with the naked eye. Yet salespeople tell us that somehow our future fiancés will know, and how we’re supposed to spend several month’s salary on this tiny little thing.

Turning Frustration into Millions

Back in the mid-1990’s a guy named Mark Vardon walked into a Tiffany’s to buy his first engagement ring. They showed him a ring worth $12,000, and what appeared to be a nearly identical ring for $18,000. After trying to get an explanation as to why one was more expensive than the other, and getting a confusing mix of information about cut, clarity, color and carats, he asked the salesman which one he should buy. The salesperson said “Buy the one that speaks to you.” He walked out.
Completely frustrated, he went home and got on the internet, looking for information about how to buy an engagement ring. He found a tiny jewelry store up in Seattle, Washington that had a website named The site had a nice, clear, helpful explanation about the 4 C’s of diamond buying (i.e., cut, clarity, color, and carats) and how one might make trade-offs between these four variables to buy the diamond with the best value. He ended up buying a diamond from the Seattle jewelry store sight unseen with a credit card, and discovered that other frustrated first-time male buyers were doing the same thing. He ended up buying the internet site from the store, raised some venture capital, and started Blue Nile, which has since become the biggest engagement ring and diamond seller in the world.

One Reason Why Blue Nile is So Successful


Source: Blue Nile

According to the company, the average guy spends three weeks on the Blue Nile site learning about the buying process, and then searching for and comparing diamonds along the 4 C’s.

The average Blue Nile buyer spends over $5,000 on a ring they never see until it arrives in the mail. Blue Nile’s success is built on their ability to make the first-time engagement ring buying experience a less stressful one. Blue Nile customers don’t have to introduce themselves to anyone, or remember anyone’s name. They don’t have to ask any “dumb questions,” as the website is designed to answer most of the common questions a first-time buyer might have. No new relationships need to be started, and there is no “performing” in front of strangers. Granted, lacking an expensive storefront they can offer diamonds much more cheaply than a Zales or Tiffany’s, but having been a satisfied first-time buyer myself through Blue Nile, their newcomer buying process is a huge competitive advantage.

Turning Newcomer Anxiety into a Business Opportunity

If you’re an aspiring entrepreneur, one way to find a terrific business opportunity is to identify first-time newcomer purchase experiences that produce a lot of stress and anxiety. Typically these are situations where there are special or unusual buying processes, unfamiliar products and technologies, and ample opportunities to make costly “mistakes” through newcomer ignorance. The obvious ones are homes, cars, and major appliances, but also consider the following:

    • Buying stocks, insurance, and other financial products
    • Making funeral arrangements
    • Choosing a day care center for your child
    • Planning a wedding
    • Selecting a building contractor

Ask yourself (and others) what kinds of newcomer buying experiences have caused you the most stress and frustration. Then ask yourself how you could revise or reinvent the experience so that first-time buyers find themselves more comfortable, informed, and confident in their final purchase decision. I suspect there are many more Blue Nile experiences out there just waiting to be discovered.

Happy hunting,

Byron Achohido, “He turned Web site in the rough into online jewel.” USA Today, Oct 20, 2003.
Gary Rivlin, “When Buying a Diamond Starts with a Mouse,” New York Times, Jan 7 2007

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