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 website
presenting their products and also by providing an outstanding customer service. In 2007, its
sales reached $319 millions, a 27% increase compared to 20062. For eight consecutive years,
Forbes has made Blue Nile its favorite online jeweler. While some online jewelries
businesses shut down, Blue Nile flourished his business by offering more luxury products
such as rubies, sapphires, watches and also by expanding their business to international
markets.
2 2007 Profiles. Beres, Glen, National Jeweler, May 2007, Vol.101
Blue Nile core business is selling engagement rings. The national average for an engagement
ring is $3,200 but Blue Nile exceeds this number by having a $5,600 average price3. 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 Unique Sales Strategies
Blue Nile offers more than 60,000 certified diamonds on its site. This makes it the largest
online retailer of diamonds in the United States. Internet magazine listed Blue Nile as the web
leader in the Jewelry category for 2007.5 Blue Nile targets mainly the men to come shop to its
site for engagement rings.
1. A Clear, User-Friendly and full of good Photography Website
Blue Nile's website is extremely easy to navigate and extremely clear, which encourages
customers to buy. The company offers a very interactive e-catalog with a virtual shopping
cart to buy diamonds and other jewelries. Something that I really liked on their website is that
they do not use a technical jargon when describing the products. They use plain English and
they give the right amount of information at each description. Every consumer is free to push
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its research deeper and deeper. S/he just needs to click and continue reading the information
provided. Blue Nile has also a very useful search engine that allows the customer to sort out
the diamonds listed, to narrow or expand the search, and it also gives complete details about
the diamonds selected.
2. Best Diamonds’ Price
The key success to Blue Nile is their margins. Common retail stores selling jewelries usually
mark up their diamonds 50% or more to cover expenses such as managing inventory, rent,
and commissions. Blue Nile does not have those costs since it is a virtual company. The
company usually takes a 20 to 30% mark up on it sales. For instance, you could go on Blue
Nile website and find a pair of diamond/silver earrings for $90 and you could find an
engagement ring for $6,000. They offer a large variety of diamonds with a wide range of
prices.
3. A wide Assortment of Diamonds and an opportunity for Customization
Blue Nile sells a lot of different jewelries including necklaces, bracelets, earrings, rings,
bridal sets, etc… It offers all kind of different diamonds and it also offers rubies and
sapphires.
Customers can get the opportunity to get their jewelry the way they want it by customizing it.
"Build Your Own Ring" is a service offered by Blue Nile that allows customers to choose the
shape, the clarity, the size, and the color of the diamond. Blue Nile has access to 7,000 loose
diamonds and can ship the final product within 48 hours.
4. Targeting Men and No Judgment about Appearances
Blue Nile found that men are about as fond of walking into a jewelry store as they are of
sitting in a dentist’s chair.6 The company targets men and advertize their products and
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services through television channels such as ESPN or TNT. They try to provide a maximum
of useful information to help the men easily find what they want. An interesting aspect of
selling online is that it is open to everybody. Not only wealthy people are nicely welcome
online. Selling online allows to get rid of the snobbism that certain stores can have. The
company cannot and do not judge people by the way they look like to offer them a specific
diamond and to provide them with good customer services.
5. Educating People on Diamonds: an Informative Website
Prospective customers can start by going to Blue Nile to learn about diamonds. The site
offers the commonly known 4 Cs information about a diamond – color, cut, clarity and carat -
but also information about the shape and certification of the diamond. Blue Nile wants to
make the purchase of a diamond an easy and fun experience for the customer. The company
offers educational pages such as types of jewelry, diamond characteristics, metal
comparisons, etc… that help customers to find what they are looking for.
6. OutstandingCustomer Service: Online Chats, 30-day money back guarantee,
Financing options, etc…
Many customers might think that buying goods online, such as jewelries, is not as convenient
as buying in a store. However, Blue Nile tries to serve its customers the best it can by
offering different features on its website. In addition to educational pages, the company offers
some unique characteristics to enhance the shopping experience of their customers on their
site. When going to the website, you have several options: you can either browse the site on
your own, or you can call a toll free number to get assistance on the phone, or you can email
the company to get more information. Blue Nile also provides a online-live chat that allows
customers to get assistance by instant messaging email with a customer service
representative. At anytime during the shopping process, a customer can get assistance. Blue
Nile also offers a 30-day money-back guarantee if the purchase does not fulfill the expectations of the buyer. Blue Nile also offers some financing and insurance options to help
their customer in the purchasing process and warranty. They have the "Bill me later" option
with no interest up to 6 months.
7. Minimal inventory
Blue Nile has a unique relationship with its suppliers that allow him to pay for their supply of
diamonds after a customer places an order. The company deals directly with original
suppliers such as Thaigem.com. With this special relationship, the company does not need to
hold a large amount of inventory in hand. It is also a great advantage for Blue Nile to limit
any risk of potential markdowns. Retail jewelers often hold onto rings, bracelets, and
pendants for as long as a year before selling them.7 According to Vadon, Blue Nile has a
turnover of 5 to 6 times in a year. Blue Nile also buys diamonds directly from jewelry cutters
in Israel rather than buying from wholesalers in New-York. This disintermediation is another
advantage for the customer that can get diamonds for cheaper.
Blue Nile Competitors
Blue Nile is directly competing with diamonds retailers since it primarily sells diamonds.
Physical stores in competition with Blue Nile have tried to persuade customers that buying a
diamond is an exciting experience that can only be realized in stores. They have tried to
prove that the price of the diamond is worse the unique and exclusive experience offered in
store. As D. Sternblitz, the treasurer of Zale said "The Internet business serves a target
customer looking for a commodity that's basically sold on price. There is still a large segment
of the population that wants to come into a store and inspect the jewelry and wants the extra
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services we provide like cleaning and repair." Blue Nile has many dangerous competitors
such as Tiffany and Co.,
Diamonds.com, and Zale Jewelers Stores.
1. Tiffany and Co.
Tiffany and co. has a strong brand awareness. The company founded in 1837 in New-York
City has proven over the years its success of selling precious jewelries such as diamonds. The
company has stores in all major cities around the world and satisfies million customers every
year. Blue Nile has the advantage of having very competitive price but unfortunately the
company is not as well-known as Tiffany and Co. Blue Nile does not yet possess the prestige
and elegance that Tiffany has. Everybody knows the brand Tiffany and receiving a ring or
any jewelry from one of its stores is definitely considered as very prestigious. The name by
itself gives a lot.
2. Zale Jewelers Stores
Zale Corporation opens its first store in 1924 in Texas. The company is the second largest
specialty retailer of fine jewelry in the United States8. The company has adopted a very
influential slogan: The Diamond Store. It has over a thousand stores all over the United
States. Like Tiffany and Co. they have a strong brand awareness (not as much as Tiffany
though) that make them a very dangerous Blue Nile’s competitor.
3. Diamonds.com
Diamonds.com was created in Las Vegas, NV in 2000. Like Blue Nile, many companies saw
the opportunity to sell jewelries online. Many of them do not exist anymore. Diamonds.com
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is very similar to Blue Nile. Diamonds.com is also an online diamond retailer. It offers many
online services such as customization of engagement rings, free shipping, online and phone
assistance, etc… It also wants its site to educate its customers by providing a lot of
information about the cut, color, carat, and size of a diamond. However, when going to
diamond.com site, it does not look as professional and elegant as Blue Nile does. Also, Blue
Nile has one great advantage over diamonds.com: customers payments are securely processed
by PayPal on Blue Nile. This security is not offered by diamonds.com, which gives a strong
advantage to Blue Nile’s customers that feel confident and safe when processing their
purchase through PayPal.