Any online business globally has disrupted the existing business model in its industry and changed the game altogether. However, it seems that the path of disruption has taken a divergence – a U-turn and is going reverse, at least in the case of Online Jewelry Business.
Online Jewelry businesses had a huge impact on the traditional brick-and-mortar jewelry retail stores that were operating since decades. Not just they added a sales channel for customers but also influenced the way customers bought jewelry. Leading among such online jewelry businesses is Blue Nile, which recently reported 4% YoY sales increase to USD 109.9 million and 19% increase in operating income to USD 3 million in the third quarter.
Even though Blue Nile is a dominant player in the online jewelry space, it opened its first brick-and-mortar store in New York last year. Extending its success, Blue Nile is planning to open 3 – 4 more such physical stores, which it calls ‘webrooms’. Customers can try on jewelry and browse online selection of Blue Nile on in-stores iPads.
The initial industry model disruption by introducing online stores and then doing a reverse disruption through parallel sales channel of physical stores with some integration to the online medium, is what Marc Andreessen, a VC and Internet pioneer, describes as cycle of unbundling and bundling. Similar phenomenon has also been noted in other industries including music industry.
Though Blue Nile has not made any official announcement of diverging or creating another sales channel of physical stores, the trend suggests ‘rebundling’ because of presence of demand and compelling business case. Though in developed economies like US, such reverse disruption has begun, many emerging countries like India are yet to fully witness the ‘unbundling’ phase. Despite mushrooming of several online jewelry startups in India, most of Indians still prefer to buy jewelry at their ‘family’ jewelry stores chiefly because of trust factor perception. Even when many of the citizens of New Delhi have taken online shopping with gusto, jewelry is not yet included in their online list.
In the Online vs. Physical tug-of-war, many management gurus have already suggested that the future of retail will be omnichannel and Blue Nile’s decisions rightly points towards such hybrid models in the future.