Jewelry has emerged as a bright spot of Internet retailing. The secret behind Blue Nile is its appeal to men. According to CEO Mark Vadon, the challenge was to "create a retail environment that would reassure men making one of the most confusing, stressful, emotionally wrought, and expensive purchases of their lives: the engagement ring." Blue Nile has certainly met the challenge. The company has annual sales of $72 million, a 40% annual growth rate, and a solidly profitable business.
Founder and CEO, Blue Nile Inc.
FROM MARK'S ORIGINAL ENTRY:
Tell us what you do (or what your team or organization does) and the specific challenge you faced.
Create a retail environment that would resonate and reassure men making one of the most confusing, stressful, emotionally-wrought, and expensive purchases of their lives--the diamond engagement ring--using a medium where they could neither see nor touch the product, and make it superior in every way to the traditional jewelry-shopping experience. In the process overcome the fear, skepticism, and hostility of the jewelry industry, analysts, media, and even VCs who reasoned the business was doomed to fail even during the boom years.
What was your moment of truth?
Barely one year after Blue Nile's founding, a quickly growing, publicly held company more than twice our size, made a sizable offer to buy the company. Complicating matters was the timing, which coincided with the peak of the dot-com bust. While Blue Nile had enjoyed great success up until this point, with so many high-profile Internet failures, we were forced to consider whether the business could survive the downturn. After much soul searching, meetings, and sleepless nights we declined. From a business perspective, it would be easy to argue that our decision was impractical given the business environment of the day. But building a successful business requires trusting your ability to execute an idea. We had faith in ourselves and believed we understood how to satisfy our customers and maximize the business opportunity. We declined the offer because we strongly believed we could change the way jewelry retailing was done; because we set out to create a business that would be here for the long term; and because we believed that Blue Nile could become a truly great business, giving back to the community, its employees, and its customers. (The exact date? 11/1/2000)
What were the results?
Blue Nile has become, not only the leading Internet retailer of diamonds and fine jewelry, but the largest luxury goods retailer online. The company is growing at 50 percent annually in the worst luxury retail environment in memory, while posting five consecutive profitable quarters. More importantly, Blue Nile owes its success to its culture of innovation: 1) emphasizing customer empowerment and education, rather than manipulation through product ignorance; 2) changing how and to whom jewelry is marketed; and 3) using technology to eliminate supply chain inefficiencies and improvise manufacturing choices, in order to pass accrued savings on to consumers.
What's your parting tip?
Innovate daily, but obsess over the details of implementation unceasingly.