A Wall Street Journal report (which I missed last week) brings up the spectre of some significant declines in traffic for Blue Nile:

The number of “unique monthly visitors” to its site dropped 39% in October to 281,000, compared with a year earlier, according to comScore. That took Blue Nile out of comScore’s top 10 jewelry and luxury goods Web sites. Over the same period, visitors to Web sites operated by offline retailers Zales, Kay and Tiffany saw declines ranging from 6% to 18%.

Blue Nile says comScore’s data are “completely wrong.” But data from another Web-measurement firm, Compete, also show a decline—of 17%—but growth in rivals’ traffic.

Here is Blue Nile’s response, via spokesman John Baird:

Only we know our traffic. Throughout our history, we have repeatedly cautioned investors that Comscore data is not representative of what we see internally. We believe that investors who use Comscore data as a way of gauging Blue Nile are likely to be misled. The most recent Comscore data is completely wrong.

So is traffic down? Baird wouldn’t comment. “We have never spoken to traffic,” he says, adding that the company expects “double digit revenue growth” in the current quarter, which he considers a better indicator of the company’s health.

True enough. And skepticism about Comscore is backed up by this Seeking Alpha article, which notes that 17% and 39% are pretty big discrepancies. I agree with that, but also wonder why Blue Nile doesn’t try to counter those numbers with its figures.

Traffic declines shouldn’t be surprising in this economy – Lord knows, traffic has been down at malls. What makes this report potentially significant is, for a long time, Blue Nile has been boasting its growth has been at the expense of “traditional” jewelers. At least judging from these figures – and in the absence of any better figures to go by – it seems the online action may now be heading in the other direction.

As I’ve written before, Blue Nile was able to get a significant market share because traditional jewelers weren’t active on the Internet. But Blue Nile has also been a very conservative company, spending (comparatively) little on advertising.  That is one of the reasons it is still around today – but it’s also given them (again, comparatively) low consumer awareness. If “traditional” jewelers with far higher name recognition can – finally –  capitalize on this, that could be a growth opportunity for them.

Rob Bates

JCK News Director