June 09, 2015

Blue Nile - Omnichannel

It's called a "webroom" (click here).

The omnichannel community sees this as the sunset of true e-commerce.

Might we think about things a bit more strategically?

Have you read the Blue Nile 10-K (click here)? You read this stuff, don't you? You don't just trust trade journalists and research brands and consultants ... you actually read what the company says, right? Right?!!

Growth is slowing (at a fast pace) ... gross margins are in perpetual erosion ... marketing costs are increasing ... and profit is 4th lowest in the 5 years displayed. This business struggles to generate profit at a rate better than 2% of net sales. Heck, if you exhibited that kind of performance, you'd be fired. Be honest!!

In other words, one can generously say that this is a business at a crossroads.

We need to continually ask an important question, one few are willing to ask.
  • "How will we acquire a new customer in 2020?"
Actual financials tell us that this business has hit an inflection point. Remember, somewhere between 80% and 95% (depending upon who you listen to) of all commerce happens offline, not online. So when online financials begin to lag, is it not natural to consider testing ideas offline? Wouldn't you do that, if you were smart? (and you are smart, so yes, you'd consider it).

This is reflective of the fact that all of the easy e-commerce growth is over. Done. 

Now the hard work begins to find new customers, anywhere. Blue Nile has been around long enough to have a loyal customer base that should be printing profit ... and that's not happening. So they have no choice but to find new customers in new ways. You'd do the same thing.

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...