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Blue Nile's Blinged-Out Bargains

By Rick Munarriz - Updated Apr 5, 2017 at 8:05PM

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The online jeweler has a markdown gun, and it's not afraid to use it.

Desperate times call for desperate marketing. So upscale jeweler Blue Nile (NASDAQ:NILE) is rolling up its discounting sleeves and launching a Daily Gem promotion. Every night at 6 through Christmas, the online retailer will feature a daily deal on a high-end item.

First up: a three-carat diamond eternity bracelet, sale priced at $1,900. While that's certainly not cheap, it's a 36% discount off the regular $2,950 price. If you'd like a piece of those savings, you'll have to act before 6 tonight, when the next deal takes its place.

Blue Nile would probably prefer to promote itself the old-school way. Web-savvy romantics already know that the site offers choice engagement rings at fair prices. However, after watching domestic net sales dip in each of its three latest quarters, the e-tailer doesn't want to come up empty over the holidays. It has to market creatively to keep sales coming in, even if that means channeling the daily-deal spirit of sites like Woot and Amazon.com's (NASDAQ:AMZN) Gold Box. Even Overstock.com (NASDAQ:OSTK) is getting in on the daily-deals bandwagon with its "12 Days of Christmas" promotion.

Blue Nile must also compete with low-end jewelers who aim to make the process more exciting, like Bidz.com (NASDAQ:BIDZ). A visit to Bidz' front page plunks viewers right into the middle of a dozen time-sensitive jewelry auctions, each counting down to its final seconds.

The Daily Gem is a near-term positive for Blue Nile, since the site had to do something to win back traffic. When a bricks-and-mortar chain like Tiffany (NYSE:TIF) is growing more quickly than you are -- or at least shrinking more slowly -- you need shake things up. This sort of marketing push could help make Blue Nile a daily visit for deal hunters on high-end jewelry.

My fear, of course, is that Blue Nile will never be able to return to its former higher-priced ways. Will shoppers still come once the daily deals depart in January, or will the 6 p.m. sales have to become a daily staple, like Amazon's Gold Box? Twenty-three days of deals are enough to spoil just about anyone.

Other proposals to ponder:

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Blue Nile is a Motley Fool Rule Breakers pick. Amazon.com is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz proposed to his eventual wife 19 years ago, before there was an Web from which to buy engagement rings. He does not own shares in any of the companies mentioned 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.  

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Stocks Mentioned

Blue Nile, Inc. Stock Quote
Blue Nile, Inc.
NILE
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$142.10 (-1.85%) $-2.68
Tiffany & Co. Stock Quote
Tiffany & Co.
TIF
Overstock.com, Inc. Stock Quote
Overstock.com, Inc.
OSTK
$32.10 (-5.95%) $-2.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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