Overview
Founded in 1999, Blue Nile had grown to become the largest online retailer of certified diamonds and fine jewelry, with sales of $203.2 million in 2005 (up from $169.2 million in 2004).
According to Internet Retailer Magazine, in 2006 Blue Nile was larger than the next three largest online jewelers combined; the magazine had ranked Blue Nile No. 48 in its Top 400 Guide to
Retail Web Sites; in its December 2006 issue, the magazine went a step further and named Blue
Nile an Internet Retailer Best of the Web 2007 company (one of five companies cited).
In 2006, the market for jewelry in the U.S. was an estimated $55-$60 billion industry. Annual sales of diamond jewelry were in the $30-$35 billion range, with diamond engagement rings accounting for sales of $4-$5 billion. In an industry famous for big markups, frequent closeout sales, and myriad judgments of value that often mystified consumers, the marketing challenge for online jewelers was to convince understandably skittish shoppers to purchase fine jewelry online.
It was one thing to shop for a diamond in a reputable jewelry store where one could put on a ring or other jewelry item to see how it looked, perhaps inspect a stone with a magnifying glass or microscope, and have a qualified jeweler describe the features of various stone(s) and cuts, compare the character and merit of various settings, and explain why some items carried higher price tags than others. It was quite another thing to commit to buying expensive jewelry based on pictures and information provided on an Internet Web site.
Blue Nile’s strategy to attract customers had two core elements. The first was offering high quality diamonds and fine jewelry at competitively attractive prices. The second entailed providing jewelry shoppers with a host of useful information and trusted guidance throughout their purchasing process.