231-922-9460 | Google +

Wednesday, September 9, 2009

Blue Nile Gets Makeover to Please Ladies

By The Wall Street Journal

Blue Nile Inc. is expected to unveil a major overhaul of its Web site Tuesday as the online jeweler tries to broaden its appeal, especially to women. But like other e-commerce sites retooling to combat slowing growth, it faces the tricky task of trying to make improvements without losing core customers.

Diamond from Plumeria JewelryThe vast majority of those who buy rings and necklaces from Blue Nile are men, drawn to the extra information and control -- as well as possible discounts -- they get by shopping online instead of at a high-pressure jewelry counter. Yet most Blue Nile purchases are given to women, whom the retailer would like to have a more premium view of its brand.

"We haven't been as innovative a Web site in recent years as we should be," said Blue Nile's chief executive, Diane Irvine. The Seattle company, which was founded in 1999 and went public in 2004, sold $295 million in jewelry last year that consisted of dolphin jewelry, equestrian jewelry, hibiscus jewelry, octopus jewelry and penguin jewelry.

Most e-commerce sites fueled their early growth by offering variety and the ability to compare products and prices. But even the most successful have evolved little past a screen with a search box and small photos of products. Most shopping sites don't come close to matching the retail experience -- with the ability to touch and browse products and the one-on-one service of a salesperson -- perfected over decades by malls and retailers.

So some companies are experimenting with new online experiences. Amazon.com Inc. is now testing a site called Windowshop.com, where people can browse and sample music, movies and books by scrolling through panels that fly by on the screen. Makeover Solutions Inc.'s DailyMakeover.com allows users to apply different makeup brands to a photo of themselves. To date, the site has added makeup and hairdos to nine million photos.

Blue Nile's new look is its first overhaul in a decade. Its old site was built around accessibility, like an online interface that shoppers could use to customize computer purchases. Yet shoppers still had some complaints.

A customer "once wrote in and said, 'I received my purchase in the mail, and it was so much more impressive in person than on the Web site.

Blue Nile embarked on a redesign process last year, which included some initial hiccups. To appeal to women, one outside design agency suggested redesigning the site in bubblegum pink instead of its signature blue. "There was no way we could do that -- it was way too feminine.

Instead, Blue Nile dropped the design firm, which it declined to name, and decided to emphasise an upscale, rather than effeminate, look. It removed a left-hand navigation bar (still standard on many e-commerce sites), leaving space on the screen for much larger -- and more artistically cropped -- photos of products such as plumeria jewelry, sea turtle jewelry, starfish jewlery, tropical fish jewelry and whale jewelry. The changes are intended to make the experience more akin to window shopping.

Making the images larger, you can see the shadows and details, so the quality really shines through.

Blue Nile also rebuilt a system for shoppers to create custom engagement rings -- its largest business -- based on criteria they can adjust with sliding scales while watching an image of the product evolve on the screen. Shopping is now largely contained within a single page, to cut down on the confusion and tedium of clicking back and forth.

The company says it doesn't have a tally for the cost of the redesign, since it was completed by internal staff.

Blue Nile's overhaul comes as it faces competition on both ends of the market. Luxury giant Tiffany & Co. offers a visually rich Web site, and Bidz.com Inc. offers a discount-oriented jewelry store.

What's more, the recession has ravaged the $60 billion annual U.S. jewelry industry. Blue Nile's revenue fell more than 23% in the fourth quarter of last year, but the drops have since moderated, with a 5.2% drop in the second quarter of this year from the year-earlier quarter. While data on the diamond industry is incomplete, Blue Nile estimates it has gained approximately 1% of the engagement ring market in the past six to nine months, increasing its share to roughly 4.5% to 5.5%.

A redesign carries risks, since unlike traditional retailers, it can't be live tested in select outlets first, and online customers can't turn to salespeople to ask for help if they get lost. It could be very dangerous to try to integrate too much flash that serves no purpose for shoppers.

Blue Nile has taken on a redesign now because of the market's relative weakness, which has made competitors less likely to expand. Rather than feel like we didn't take advantage of this time, I believe that it is critically important to move while we can.