How much can I save buying an engagement ring online vs. in-store?

Buying online will save you 15-20% compared to buying in-store.  A GIA certified diamond is a GIA certified diamond, no matter of where you buy it.  Buying online will maximize the bang for your buck.


Financials

Let’s examine some financial statements to understand why buying online will save you money. The sources for the data below are:

Defining some terms used below:

  • Gross Profit Margin: The amount of money left after subtracting the cost of the goods sold (COGS) from total sales. It represents the average markup applied to all of their merchandise
  • Operating Expenses:  Costs that occur during the daily operations of a company. It represents the overhead necessary to keep the company in business (stores, employees, etc.)
  • Operating Profit: Gross Profit Margin – Operating Expenses
Online In-store
Blue Nile Signet (Kay, Zales, Jared) Jeweler's Association Tiffany & Co.
Gross Profit Margin 19.2% 37.3% 48.2% 60.7%
Operating Expenses 15.9% 30.4% 42.5% 42.2%
Operating Profit 3.3% 6.9% 5.7% 18.5%

Translating into words, let’s say a wholesale diamond costs $4,000. Based on the gross profit margin:

  • Blue Nile would sell this diamond for $4,678
  • Kay, Zales, or Jared would sell this diamond for $5,492
  • Local in-store jewelers would sell this diamond for $5,928
  • Tiffany would sell this diamond for $6,428

The average markup is 20-40% less if you buy online. Converting that to actual prices, buying online would save you 13% compared to Kay, Zales, or Jared; 19.6% compared to a typical local jeweler, and 25.8% compared to Tiffany.

The reason why an online store has lower markup is because their operating expenses are lower. They do not have to hold inventory, employ salespeople, or lease physical store fronts. Additionally, online stores have lower operating profit, so they are not taking as big of a cut as an in-store jeweler. All of these savings are passed on to the consumer in the form of a lower price, which means you get more diamond for your dollar when buying online.