Executive Summary Blue Nile is the largest online retailer of diamonds in the United States.

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Executive Summary

Blue Nile is the largest online retailer of diamonds in the United States. The company offers

more than 60,000 diamonds on its website. Blue Nile targets men to come shop to its site for

engagement rings. The national average for an engagement ring is $3,200 but Blue Nile

exceeds this number by having a $5,600 average price1. Using the B2C EC model with no

physical stores, no intermediaries and offering products four times cheaper than rivals, Blue

Nile has proven to be a successful online retailer.

Blue Nile is directly competing with both online diamonds retailers and physical stores

diamonds retailers. Physical stores selling diamonds have tried to persuade customers that

buying a diamond is an exciting experience that can only be realized in stores (and not

online). They have emphasized the idea of seeing, touching and comparing diamonds that is

exclusively possible in a store. Blue Nile has many dangerous competitors such as Tiffany

and Co, Diamonds.com, and Zale Jewelers Stores.

After doing some research on Blue Nile, I thought about different ways the company could

improve its online business. I observed some opportunities for the company that could be

developed to raise their competitiveness in the diamond retailing sector. Blue Nile is not yet a

well recognized brand in the United States. The company could raise its brand awareness

through advertising for instance. The company mainly sells rings. It could expand its business

by offering more diverse diamonds products such as sunglasses, purses, wallets, etc…

Few years ago, many people believed that jewelers will never be able to sell any products

online because of the difficulty to assess the virtual jewelry. Many companies have proventhem wrong and Blue Nile is a successful example. By adopting a differentiated strategy,

Blue Nile has become the largest online diamond retailer around the United States.

1

History

Everything started in 1999, when Mark Vadon, a consultant at Bain and Co. went to a Tiffany

and Co. store in San Francisco, looking for an engagement ring for his future fiancée. He was

a casual man wearing casual cloth. Vadon said that Tiffany and Co. salesperson ignored him

and did not help him finding a ring because he did not look like a potential and interesting

customer. After this unpleasant experience, Vadon decided to buy a ring online at

InternetDiamonds.com. Being impressed by his online experience and very interested by this

uncommon business model (selling diamonds online) Vadon bought the company in 1999

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and renamed it Blue Nile. Vadon realized at this time the potential of creating an online

diamond jewelry store. Over the years, Blue Nile became a successful pure-play online

retailer by primarily selling diamonds engagement rings.

Blue Nile’s Current & Future Profile

Blue Nile started in 1999 with a huge campaign to promote its company. The company

mainly used the television and the Internet to advertise their products and services. Attracting

customers to buy a diamond online without seeing and touching it was a real challenge for

Blue Nile. The company succeeded over the years by offering an outstanding ...

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