Tiffany vs. Blue Nile

Both Tiffany (TIF) and Blue Nile (NILE) sell diamonds. Tiffany, however, is a high end brick and mortar retailer, against Blue Nile’s scrappy online play.

Let’s look at how their stocks have done, ever since Blue Nile became public in the spring of 2004:

The graphs show a dramatic similarity, raising the question: Does Online versus Offline matter when it comes to diamonds? It appears that their fortunes are tied more to external market factors, rather than online versus offline!

So far, that is.

What happens when generation Y goes shopping for engagement rings? Are they still going to pay a premium for the blue box from Tiffany, or are we going to see a dramatic shift in Blue Nile’s direction?

And International, a big part of Tiffany’s expansion strategy, includes China. As far as I know, it’s a bargain hunter culture. If Blue Nile can offer a serious price advantage in China, I suspect, that culture will reward them abundantly as well!

As for the beautiful blue box from Tiffany, the Chinese can comfortably get a fake approximation …