Blue Nile’s chief executive officer Sean Kell is steering the company’s ship at a time when jewelry e-commerce is seeing significant growth. With this new wind in its sails, Blue Nile — which claims it is the biggest online retailer of certified diamonds and fine jewelry in the world — is now angling for $1 billion in annual revenue, a goal that Kell is convinced the company can meet within two to five years.
“We really think we are trying to be a billion-dollar fine jewelry destination. The shift is trying to make a company that started as an engagement ring website transition to a billion-dollar fine jewelry brand and that is the big change — that’s the long-term goal,” said the executive, who has also held senior management roles at Expedia and Starbucks.
The Seattle-based company is on track to hit $600 million in revenue for 2021 and is growing in the mid-20 percent range each year — a considerable jump that has only been helped by the pandemic’s virtual shopping climate. Blue Nile was delisted from the stock market in 2017 with a $500 million buyout from Bain Capital — at which point the company was clocking around $500 million in annual revenues.
In order to further accelerate growth, Kell has plotted a holistic twofold overhaul of Blue Nile’s operations, with the aim of drawing in new shoppers while retaining its core clientele. Scaling at this rate will entail a considerable doubling-down on product design; a redesign of the company’s site; a revision of its branding and marketing plans; a considerable roll out of new physical retail spaces; a strategic expansion in global markets, and keeping up with important social movements like sustainability and transparency.
View Gallery
Related Gallery
Pitti Uomo: The Mecca of Men’s Street Style
To pull it all off, Kell has brought on board a new group of C-suite executives. Jason Moss has joined as chief operating officer from Amazon Web Services, where he was a director; Ben Abitol is the new senior vice president of supply chain, having joined from Timex, where he ran the company’s supply chain; Dominique Bourgault is the new chief financial officer, joining from Expedia, where she was the CFO of retail business units, and Anita Natarajan is Blue Nile’s new SVP of international business, joining from Uber, where she was general manager of global airports.
Kell himself had prior experience in the world of e-commerce, but not within the jewelry sector. “It’s been a lot with a new industry and then throwing the pandemic on top of it. It’s hard to imagine a year when I have learned more or experienced more change. I have never worked in jewelry, but I’ve been a longtime jewelry consumer — a power consumer, if you will. My mom and dad loved jewelry and loved gifting jewelry to my mom so I grew up with jewelry boxes around the house and my wife is an artist and loves creative things and jewelry as well,” he said of the leap into a new category.
Blue Nile’s Spring Collection Courtesy of Blue Nile
“The [jewelry] global supply chain is quite different from other industries for sure. The other big difference for me was the branding and lack of branding at the same time in jewelry. There are amazing brands in jewelry like Tiffany, Cartier but the product itself isn’t generally branded — there is no logo on a diamond. Some brands create iconic designs but the branding has generally been around the retail experience and not the product itself, which is different from many other industries like travel, auto and banking, where the whole experience is branded,” he noted of his observations of the jewelry retail market.
During the pandemic, consumers’ well-documented shift toward shopping online was of particular help to companies like Blue Nile. The jewelry category had seen a notably sluggish adoption rate of consumers willing to shift their spending online — particularly with higher-ticket items like fine jewelry and engagement rings. But when global lockdowns hit, Kell said: “Consumers discovered en masse, it had been there a little bit, but that you can buy great jewelry online and find a great assortment and great prices — it’s awfully convenient.”
“At Blue Nile, we generally ship our jewelry overnight. If you shop today, you will have it tomorrow. That’s the number-one massive discovery for our shoppers,” he added.
The executive said engagement ring spending has picked back up from its early pandemic days low. Additionally, the sale of “Zoom jewelry” — such as earrings and pendants worn to catch on-screen attention — have further bolstered the company’s numbers during this time. “Diamond earrings have been an amazing growth story for us, we’ve seen people buying them for self-gifting and occasion gifting. We have see it in Europe and Asia as well which haven’t traditionally been diamond earring markets,” Kell said.
Blue Nile’s direct-to-consumer model and high volume have allowed the company to keep its diamond prices lower than many competitors and attract value-driven consumers. But during the pandemic, Blue Nile saw shoppers purchase pieces of a generally higher value — with the site seeing its average purchase price jump by between 10 and 20 percent. This has inspired Kell to push Blue Nile’s assortment “upward.”
“We are definitely seeing consumers buy more expensive items in fine jewelry. So in our diamond jewelry we are adding to our assortment and trying to walk up the quality scale. While we still have great everyday prices and smaller [diamond] sizes, we are adding that quality and assortment at a higher price point. Consumers have really reacted well,” he said.
De Beers’ Ten/ten collection by independent jewelry designers. Courtesy/De Beers
In January, Blue Nile introduced Ten/ten — a line of fashion-forward engagement rings created by independent designers in collaboration with De Beers. Pieces by cult indie designers like Wwake and Bea Bongiasca received an “amazing reaction,” according to Kell.
This success inspired him to push for more fashion-forward product in Blue Nile’s assortment that will help swing the company’s profile more upscale.
In an ideal world, the site will feature trendier styles like those in the Ten/ten collection, balanced with the kind of commercial pieces it currently features. An expansion of the company’s engagement ring offering will come later this year, featuring colored stones and an expanded custom design experience.
“We have consumers that are relatively affluent jewelry lovers that we can help find some amazing designers that they would not find otherwise. We want to be friendly to these designers. So you’ll see us both with conservative kind of product that’s less fashion-forward and then also see us really pushing into incredibly fun, fashion-forward jewelry as well with external designers. We will have some of our own internal designs as well,” Kell said.
One product that did not perform as expected this year is Blue Nile’s tie-up with Lightbox, the lab-grown diamond subsidiary owned by De Beers. “We honestly thought it would sell much more with the combination of a lower price point and some messaging around what lab stones are, that it would resonate. I was surprised — they sold well, but I thought they would sell really well,” Kell said.
He chalked it up to how Blue Nile’s consumer base is devoted to the romantic notion of natural stones. “Our consumers just haven’t really embraced that product. You can come to our site and look at the difference between a one carat lab-grown stone and a natural diamond and consumers are favoring to pay extra for the natural stones. They are not giving up on it. But I think the lab-grown stones are a good proposition and a great product — so we are not giving up on it,” he said.
In the next five years, Kell has plans to open at least 50 Blue Nile physical retail spaces across the U.S. The stores are similar to other d-to-c retail concepts, in which locations function more like showrooms — clients can try on product samples, but the store does not hold inventory. Rather than package product in the store, sales associates help shoppers make an educated decision and then complete a purchase through the company’s site — which is overnighted to shoppers’ homes.
Kell has hired Jennifer Licata, formerly of Louis Vuitton, Marc Jacobs and Moncler, to lead the charge in Blue Nile’s new retail rollout as the company’s vice president of stores. Currently Blue Nile operates 12 units in cities including Philadelphia, Portland, Newport Beach and Austin with plans to operate 18 by the end of this year. Licata’s work will also lay the blueprint for Blue Nile stores in key international markets, including China.
Blue Nile’s Century City showroom boutique Courtesy of Blue Nile
Sustainability is also high on the company’s agenda. Kell has spearheaded the design of new sustainable Blue Nile packaging that will roll out by the holidays this year. He is also looking to take a page from Tiffany & Co.’s book and implement greater traceability to the raw materials that Blue Nile uses for its jewelry.
“We only source 100 percent conflict-free stones that are supported by the Kimberly process. As we work with suppliers and miners we understand that we are really there to support the most environmentally sustainable practices in the procurement of diamonds, gemstones and metal,” he said of the company’s current standards.
With a global nudge for jewelry to have greater sustainability and traceability, Kell said Blue Nile has to work on “a traceability effort. It’s a tough one — it’s conceptually not that hard but tracing a piece of jewelry and diamond from the earth to a setting can be very complicated. We are working on it and watching what Tiffany & Co. does. De Beers has projects under way that we are dabbling in trying to understand what they are.”
But in order to stake a larger claim in the global jewelry market, Kell realizes that Blue Nile’s main interface — its website — is in need of an overhaul. The company’s e-commerce site, visuals and logo are set for a zippy update to increase public interest. “The site is seeing a bit of an evolution — not a revolution — and we have been looking hard at the brand as well. We will not be changing the name of the company but we have been taking a hard look at the iconography. If you see the photography and imagery on the site now versus a year ago it’s pretty dramatic — more luxurious and aspirational,” he said.
This overhaul will be applied to Blue Nile’s business in the U.S. as well as abroad, with international business currently representing about 20 percent of company sales — half of which come from China. Blue Nile currently ships to 45 countries.
The Chinese market is a key focus for Blue Nile under Kell’s management. Currently, he said Blue Nile is the second biggest U.S.-based diamond distributor in China behind Tiffany. There, Blue Nile is marketed as a Western jeweler with a focus on engagement rings, which are a rapidly growing tradition for young couples across the region.
“It’s really fun, the Chinese consumer base is very exciting and incredibly energetic and just I think there’s this kind of effervescent bubbling within consumers there. They love jewelry, the social platforms there are so big and so incredible — there’s new ones it seems everyday and our team does a great job to provide great service to consumers,” Kell said of the company’s response in China.
Now he is looking for the company to refine its place in the market there with a localized “customer assortment and messaging and advertising. We have been investing in WeChat and JD.com and RED in China — Tmall, of course. And we are further investing in our relationships with key opinion leaders across social platforms there,” he said.
Most of Blue Nile’s engagement rings are set near the company’s headquarters in Seattle. Other products meant for U.S. consumers are held there as well, while product for Europe is shipped out of Ireland and product destined for Asian markets is drop shipped out of Shanghai. The company manufactures its product across a network of providers in nations including the U.S., India, Thailand and China.
As Blue Nile continues on its growth trajectory, Kell said these distribution centers “will need to expand. We’ve already expanded our operations in Seattle a few times as we have grown. We will be expanding into a new, bigger office in Shanghai. And we are looking at growth in Ireland as our European business comes back after lockdown. We think those are the right three locations for us now but as we grow we will be looking at new options as well,” he said.
But for Kell, the biggest payoff is trading in a retail category that brings people — especially his friends — a bit of sparkle and happiness. “A good friend texted me late last night and said, ‘Sean, my 15th wedding anniversary is tomorrow — can you help me?’ I said, ‘Hey, you’re cutting it a little close but of course.’ It’s really fun to be in a company, an industry that makes beautiful things that consumers love. We get to be part of helping people celebrate moments and occasions. It’s busy for sure, but it doesn’t feel too busy — it feels fun busy,” he said.
Source: Read Full Article
