Shares of diamond and fine-jewelry retailer Blue Nile (NASDAQ:NILE) closed higher yesterday. That's unusual for a few reasons.

  • It was a tough trading day for most stocks, with the NASDAQ Composite shedding 1.8% of its value.
  • American Technology Research analyst Tim Boyd reiterated a "sell" rating on the stock, noting that De Beers recently launched a high-end diamond jewelry store online.
  • Barron's columnist Eric Savitz followed Boyd's grim outlook, pointing out that Amazon.com (NASDAQ:AMZN) is a logical candidate to follow suit, using its standalone store strategy for upscale trinkets.

Like a determined fiance-to-be racing through a heavy storm to present his girl with an engagement ring, Blue Nile certainly weathered a cruel storm to close marginally higher yesterday.

Still, what if those puffy gray clouds are right? The DeBeers.com landing page touts "De Beers is pleased to announce that our diamond jewelry is now available to purchase on-line."

It's a new move. Sites for high-end jewelers like De Beers and Tiffany (NYSE:TIF) traditionally provide engagement ring information online, but ultimately direct prospective buyers to seek in-store consultations.

I was also initially impressed with Amazon's launch over the holidays of its Endless.com online boutique for shoes and handbags. "The real takeaway here is that if Endless is a hit, it truly does open up endless possibilities for Amazon to offer standalone experiences for most of its 36 Amazon.com shopping categories," I wrote at the time.  

So it wouldn't be a surprise to see Amazon go this route with jewelry, especially since Blue Nile is really the only key stand-alone player in cyberspace.

Still, it's not so easy to topple a giant. The same critics who feel that a market leader is doomed at the first whiff of competition, often discredit the possibility of a potential entrant making a bigger splash by acquiring the leader at a premium.

I'm not suggesting that Blue Nile is for sale. However, it is so deeply entrenched as the undisputed online source to get a fancy engagement ring, or other high-end jewelry, that any potential competitor would be nuts not to consider that buying the top dog eliminates its biggest obstacle.

So let's see how the next few quarters play themselves out. If Blue Nile keeps driving uphill in a rainstorm, there may be more ammo backing a buyout theory.

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Longtime Fool contributor Rick Munarriz thinks that competition is a great catalyst to a buyout theory. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.