Blue Nile has long been in the business of selling diamond rings online, but now the company says it’s well on its way toward opening a line of brick-and-mortar stores as well.
The company started experimenting with the idea in 2013, first with kiosks inside two Nordstrom stores, in Seattle and New York. When that experiment went well, it opened a full-fledged storefront in a New York mall in June.
Now, the Seattle company says that store is also producing the results it was looking for, and actually doing better than the company expected. A full rollout may be right around the corner.
“Those sales specifically have exceeded our expectation and have us well on our plan to have this be a profitable extension of the business,” Blue Nile CFO David Binder said during the company’s quarterly investor call on Friday.
The company isn’t alone in this quest to bridge the gap between digital and in-person sales. Clothing e-commerce company Bonobos has also been taking a crack at physical locations, and even Macy’s is looking for ways to better align stores with its e-commerce platform.
Of course, Blue Nile’s store doesn’t work like most. The company doesn’t even call it a store, but rather a “web room.”
It looks like a standard jewelry store, with cases of diamonds and rings. But those are just for display. The point of the location is to let you see and try rings in person, but then order online when you’re ready to checkout. The web room has iPads you can use if you want to make the purchase on the spot, or you could just do it from home.
The idea is that Blue Nile gets the benefits of a brick and mortar store, but without all the headaches like maintaining inventory.
Two months after the web room launched, Blue Nile tells investors the numbers are already adding up. Even after covering costs like rent and employees to look after the physical location, the web room’s margins are turning out to be about the same as the online store.
“The objective is that we can have these points of presence and it doesn’t fundamentally change our cost structure, so it doesn’t change the value proposition that’s inherent in the business model,” Binder said. “And so, when we get to our full scale that we expect to be at, those ratios would be in line.”
The web room update came as part of a solid Q2 earnings report from the company. Blue Nile inched out analyst expectations as revenues climbed nearly 7 percent from this time last year to $113.7 million. The company reported a profit of 20 cents per share, compared to 19 cents analysts were predicting.
