Blue Nile’s foray into brick and mortar stores has officially graduated from “experiment” to “initiative,” according to Harvey Kanter, CEO of the online diamond seller.
The company already has one physical location, and it plans to grow to about five stores in 2016. By 2017, Kanter says physical locations may be a central part of the company’s longterm strategy.
The move from “experiment” to “initiative” may sound like semantics, but Kanter says it’s an important distinction that’s representative of broader changes he’s seeing across the e-commerce industry. He said the first store has taught Blue Nile that millennials often don’t just want to shop online, but traditional stores also aren’t offering what they’re looking for.
Instead, they want that “online experience in a three-dimensional retail setting.”
Blue Nile calls its first location, which opened in a Long Island mall in June, a “web room.” Shoppers can look at, hold and feel about 360 different engagement ring styles, which is more than your average jewelry store. They can talk to Blue Nile employees to answer questions and figure out exactly what they want.
When it comes time to make the purchase, shoppers can either use computers in the store to order online, or take their lessons from the store home and click buy another time.
The company keeps its overhead low by not maintaining inventory, keeping the store space small and only staffing it with a couple employees. At the same time, it’s able to show off a wide selection and give personalized help to anyone who walks in.
Kanter said the first web room has been an overwhelming success, helping new customers discover the company and driving sales from others who otherwise would be too nervous to order a ring online. He said trust is a big problem Blue Nile and the entire online diamond industry needs to address, which is a big reason why that market has seen some of the slowest adoption of online shopping.
“We want to see if the one web room, which has really had great results, can be extrapolated to five,” Kanter said. “And if five web rooms perform even similarly, I think it would become part of the broader strategy and a major growth initiative in 2017 and beyond.”
We’ve already seen similar retail strategies from other online sellers, like Bonobos for clothing and Warby Parker for eyewear. Even Amazon, which has driven most of the innovation in the e-commerce industry over the past two decades, now has a physical bookstore in Seattle.
Kanter points to how Amazon used reviews and sales data from its online store to decide what it would carry in the physical location. He said that’s a perfect example of the way e-commerce retailers should bridge the gap between digital and online in order to give shoppers the kind of personalized experience they’re looking for.
“That’s really what we think the millennial customer is interested in. Having that holistic, compelling experience that’s memorable,” Kanter said.