Blue Nile is a typical business-to-customer (B2C) model e-commerce company. Around our live, most people will not buy luxury goods (like vehicle, jewelers or expensive accessories) from online retailing. Because there will be a very big risk when it purchased and transport. But just 8 years shortly, Blue Nile had become the world’s largest online diamond sales companies. And to be well-known jewellery brand same as Tiffany&Co. Blue Nile does not have any solid stores. But they had sold out thousands of diamond just rely on online marketing.
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Blue Nile is a best case of e-business. Unlike some of its competitors, such as Tiffany’s and DeBeer’s, who have a brick-and-mortar stores as well as an online presence, Blue Nile generates all of its sales via the Internet. Addition there are some extremely competitive online jewelry industry include mondera.com, ashford.com, denmans.com, diamond.com and kirabo.com. But Bluenile.com received the “Best of the Best” award from Forbes in a survey of the Internet’s top sites among all categories. So the Blue Nile,Inc have to has a unique aspect of sales and management to attract customers. The simple way lead to success, Its position very clear, and has a much specific benefit market. It is aimed at those who want to buy diamond wedding rings for men.
Therefore the Blue Nile product line including the diamond, the marriage abstains as well as the jewellery freely and so on, but its host hits the product to be very explicit – -diamond, occupied above its selling operation 70%.On the other hand, Blue Nile primarily as a business-to-consumer (B:C) model. However, bluenile.com also generates revenues from affiliate programs, where companies can earn commissions by generating sales of Blue Nile’s products on their own websites. The affiliate programs represent a type of business-to-business (B:B) model. In addition, Bluenile.com provides links to consumer-to-consumer (C:C) sites such as yahoo.com that feature comments from customers who have purchased jewelry online by Blue Nile.
1b ) In what ways, does the Blue Nile influence in changing the jewelry industry? Explain.
General, sales of diamond is not very specially. But Blue Nile is fully transparent sales for diamond. Diamond sales industry has always been a huge benefit industry. But the general consumers don’t know how many profits when the diamond is purchased. Then Blue Nile post details and pricing of 50 000 diamond over the Internet. This behaviour has attracted a large number of consumers.
In addition, in order to increase the e-business purchase of luxury’s trust, creating his own Blue Nile expert; image, website more content length is all about diamonds and jewellery selection of in-depth introduction. And this, in the transactions of both sides of asymmetric information.
Blue Nile attract customers not only a comprehensive and transparent consumer guide, and more importantly its price competitiveness. Prices of their products than other retailers for approximately 40% lower, though the price is extremely competitive. At the same time, Blue Nile keeps the high quality of the diamond. Every diamond has to undergo a rigorous selection process, the quality is excellent, every diamond has been an independent quality assessment and certification to ensure quality, the guarantee of purity in a colour, as well as the cutting process on industry standards. Furthermore, Blue Nile is also provided the diversity of choice to customer that can’t be offered in any jewellery store. It has 52000 dimensions, colours and shapes vary nude diamond. There are various types of ring bracket for customers to choose, and customer can view the virtual collocation test practical results. At the same time, it also has excellent service and security to discourage customers purchase online diamond worries
In addition to specific competitors, there are two other large objections to Blue Nile’s business model. Blue Nile has to remember that the main program is purchasing jewelry by online store that consumers cannot actually see and touch the product. So the company must realize that its potential customers are heavily exposed to influence by offline marketing. “The use of the Internet is solely a matter of execution-nothing more than a tactic a business uses to meet its strategic objectives.”
1c) what are the critical success factors of Blue Nile Company?
Bluenile.com has several success factors including definite marketing target, brand recognition, low and transparent pricing, enough capital support etc.
Blue Nile’s customer base is relatively easy to define. There are approximately 70% of the $50 billion jewelry industry is male customer. Each year approximately 500,000 males wanted to engage in the United States. As a result, Blue Nile’s specifically targets those men between 20s and 30s who are searching for an engagement ring. The Blue Nile use direct online sales approach to match target market, which is preponderantly web-savvy. There are several characteristics and issue for Blue Nile needs to detect when marketing to potential customer. First, men always ignorance about the jewelry industry. According a survey of 1,200 people conducted by market research firm, 75% of men said they do not consider themselves knowledgeable when they purchasing jewelry. The customer spends average three hours on the site before the actual purchase. However, Blue Nile is keenly aware that many visitors just gather information by the website before purchasing a piece of jewelry offline. The male cannot be underestimated in the online jewelry business. Men definitely want to impress their significant person when they purchase engagement rings and other jewelry gifts. Although 56% of men will pay more to make sure their significant person will be pleased with her gift, men are still concerned with getting the most discount. Yet another statistic, Blue Nile needs to consider is that 59% of adult males enjoying surprising their girlfriends or wives with exquisite gifts of jewelry. This presents both an opportunity and a threat for Blue Nile, which recently began adding more product offerings such as watches and earrings to the website.
Blue Nile understands how to reach its target consumer. The best online jeweler has placed ads on male-oriented television shows such as CBS Market Watch and Monday Night Football. In addition, Blue Nile has joined other firms, such as Lexus and Mercedes-Benz, pushing products to affluent consumers on RedHerring.com. Blue Nile has also secured placement on AOL jewelry category. In another strategic, bluenile.com maintains a premier position on Microsoft’s MSN shop.
Content: the information and options available at bluenile.com, which provides a huge amount of educational material that even the most inexperienced jewelry customer can understand. General, men lack of knowledge about jewelry, the educational content provided on bluenile.com is a definite source of value. Visitors to the site can learn how to determine quality of diamonds, the guide also include peruse charts and illustrations, view images of various jewelry products, study a glossary of terms and technical explanations as well as learn how to care for and take care of jewelry. The educational information provided is definitely important to Blue Nile’s target market, especially since 45% of all men conduct no research prior to purchasing an engagement ring.
The layout and graphics at bluenile.com were clearly designed with a male audience in mind. The use of blue on the website welcome page, a clear interface and easy to use menus that will help visitors obtain information quickly and feel more comfortable at bluenile.com.
The website provides the education is designed to help visitors make an objective, logical choice when purchasing a jewelry item. The website also provides a configuration plan to help customers choose the best diamond for their wife or girl friend. In short, bluenile.com helps eliminate customers’ anxiety and eliminate the adverse selection inherent with buying a product when a little prior knowledge for the product. Other content features that add value for the consumer include gift suggestions, registration to receive a free Diamond Buying Guide, links to fashion guides and satisfied customer requirement.
1d) Follow the performance of Blue Nile’s stock since 2004 (go to http://finance.yahoo.com/) and make comments.
BlueNile.com has implemented an aggressive growth strategy, There are raising $42 million in funding. Notable investors include Kleiner Perkins Caufield & Byers, Bessemer Venture Partners and Vulcan Ventures. In addition, Blue Nile received a $14 million revolving line of credit from GE Capital. $50 million revenues in 2000 enabled Bluenile.com to capture approximately 7% of the online jewelry market, which is expected to grow to $2.2 billion in 2005.
The graph shows the fluctuation of share price of Blue Nile Company from 2004 to this day. The numbers on the horizontal axis represent the years and those on the vertical axis represent the share price of the company.
As can be seen, the share price was at about $35 at the beginning of 2004 and then there was a slight increase until end of 2005 with a little fluctuation. From this year on, there was a gradual growth in the share price of Blue Nile. Because of the effect from the increase price of international crude oil, the share price soared to a record high ($100).
As is illustrated in the graph, the share price of Blue Nile decreased year by year after it reached the peak at the end of 2007. The considerable decrease occurred for the reason that it was affected by the housing price in U.S. and subprime crisis. This situation did not stop until it hit a trough at about $18 at the beginning of 2009. However, afterwards, the situation changed and there was an upward trend in the number of the share price which reached a plateau until 2010. After 2010, the share price declined slowly again whilst it was between $40 and $60.
2a) Amazon.com makes only a 15% margin on the jewelry products it sells. This enables Amazon.com to sell diamond earrings for $1,000 (traditional jewelers charge $1,700 for the same). Do you think that Amazon.com will succeed in selling this type of jewelry as Blue Nile did in selling expensive engagement rings?
NO
Amazon even though it was a very successful online marketing companies, he has a huge chain of suppliers and funds to ensure that its product quality and after-sales service
But the model of Amazon.com is an aggregate e-business model where the main value is selection and convenience. Amazon aggregates the products of many suppliers in a sing location.
It sold a wide variety of goods, but not targeted. Although Amazon has a powerful price advantages, jewelry products only 15% of profit. For example, this diamond earrings, Amazon’s price is almost the traditional jeweler of 70%, this is a very attractive, but will have a very good sales, but it is not possible as the Blue Nile to sell expensive engagement ring. Because the Blue Nile’s success is not just a simple price advantages, there are many places, including market positioning, product quality and choice Web site points to, etc.
Amazon Diamond Earrings while the price is cheaper than traditional jeweler, but is not selected and the earrings have a clear market orientation. Therefore, this ring sale can only rely on the Amazon brand effect or other factors, because he does not have a complete set of value system
2b) Competition between Blue Nile and Amazon.com will continue to increase. In your opinion, which one will win (visit their web sites and see how they sell jewelry)?
Competition between Blue Nile and Amazon.com will continue to increase, but in online jewellery industry competition, Blue Nile still retains the absolute advantage. Although the two companies have many advantages, but compared to Amazon and Blue Nile, there are many shortcomings.
Blue Nile and Amazon are the best of ebusiness industry. They owned the more common advantages; for example, they have a huge amount of financial support, the best servicer after sales and transport.
But Amazon is more like a huge online shopping centre, it has a wide range of goods for people to choose Customer need everything that can be found here, and it is also the supplier of choice, be comparison then select the appropriate item.
So Amazon is an online sales website, but is not the producer. For example jewellery product, through the Amazon website, it has the cooperation with several traditional jewellery producer and the seller, this has also guaranteed Amazon’s ample supply and prompt delivery, moreover Amazon has the splendid transportation service and the post-sale service, these are Amazon become the most famous online sales website the successful factor.
But compared with the Blue Nile, Amazon or some deficiencies on jewellery sales
1, Blue Nile’s target of market and sales is clear, There are 70% of customers who want to purchase price quality diamond who dedicated purpose to enter this site and select their merchandise, but the Amazon customer goals are those who like Internet shopping people, some of them have their own purpose and buy merchandise, but others just go shopping-browse, which significantly reduces people to Amazon’s purchasing behaviour, and even if you want to purchase jewellery product, tend to be more professional website.
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2, Blue Nile’s products are high quality, from Blue Nile initially established, Blue Nile strict choose suppliers, but also has its own designers, creator of diamond, and product validation. Blue Nile on their own to sell of each piece of diamond are carefully selected by their professional, because online shopping the biggest difficulty is that consumers see real goods, but the Blue Nile customer nipped this concern, they guarantee they sell for each product same as the site and 30-day returns guarantee, to make customer satisfied. And Blue Nile product line is very rich, and even can make a unique product, which will attract more customers.
3, BlueNile.com is not just a diamond sales Web site, is also a professional Diamond brand, including the production and sales, but it did not have an entity shops, but it just spend a few years sales surpassed the other competitors. It is a company specializing diamond business, customers could said the brand of the diamond is Blue Nile, but Amazon is more like a broker, Amazon is not brand for anything.
4, Blue Nile has significant price advantages. Because there is no entity shop, all the cost of the Blue Nile are only diamond itself and transport costs, as it significantly reduces the amount spent on rent and sales staff, Blue Nile’s pricing of online is basically the traditional stores 50% for same commodity. Although Amazon has similarly price advantage, but since Amazon is the role of intermediaries, the supplier remains the traditional jeweller, so the price is still less than the Blue Nile
5, Website interfaces. Blue Nile Web site is easy to understand, notably for male clients. The home page shows the main products and information, it immediately you can find what they want to save time, while also speeding up the Blue Nile consumer purchase frequency. Don’t let customer have any time to purchase the products. In this regard, Amazon as Blue Nile as reproducibility is a comprehensive sales website, it is not possible to include all products listed on the home page, It only connect to the individual product categories, making the customer’s operation was complicated and it is not clear, for the first time, I find the jewels of the link, it is one of the many directories that I did not find him.
These differences reflect the Blue Nile in online jewellery diamond sales of absolute advantages, which is why it can deter intense competition
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