Blue Nile: Leading Online Retailer of Fine Jewelry and Diamonds

Blue Nile Inc. is one of the leading players of internet jewelry market. Since 1999, the company has been rapidly developing to become the leading online retailer of fine jewelry and certified diamonds. The company grew out of a simple idea and has been able to resolve the majority of issues consumers faced when choosing jewelry products. Mark Vadon, the founder of Blue Nile has combined simplicity of customer approaches with the sophistication of jewelry products. Now, with extensive business experience and promising future, Blue Nile Inc.

should be more than attentive to opportunities and threats, which characterize present day jewelry markets. Blue Nile Introduction Blue Nile Inc. is one of the leading players of internet jewelry market. Since 1999, the company has been rapidly developing to become the leading online retailer of fine jewelry and certified diamonds. The company grew out of a simple idea and has been able to resolve the majority of issues consumers faced when choosing jewelry products. Mark Vadon, the founder of Blue Nile has combined simplicity of customer approaches with the sophistication of jewelry products.

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Now, with extensive business experience and promising future, Blue Nile Inc. should be more than attentive to opportunities and threats, which characterize present day jewelry markets. Well known is the story about Mark Vadon, the founder of Blue Nile Inc. – the story, which has become the key to the company’s market success. Back in the middle of the 1990s, Mark Vadon first faced a serious personal problem, trying to choose an engagement ring (Blue Nile, 2009b). He gave up traditional jewelry retailers and took an opportunity to surf the net, trying to find the most relevant and the most effective product solution.

What Vadon found as a result of his detailed Internet analysis has later become the basis for his new company; and beyond being able to purchase the ring for an excellent price he has realized the unlimited potential, which online jewelry markets carried. The Internet Diamonds portal was the tool of Vadon’s business success. By the end of the 1990s, Vadon has gathered $6 million in funds and was willing to purchase Internet Diamonds with the aim to transform it into a new user-friendly internet business (Funding Universe, 2008).

In May 1999, he renamed Internet Diamonds into “Blue Nile”, which was followed by massive print and television advertising campaign (Funding Universe, 2008). By using television and print media, Blue Nile was actually shaping the new layer of customers, who would not be afraid of making expensive purchases online and would seek easy and cost-effective purchasing solutions. At the beginning of the new millennium, when dozens of companies were fighting to preserve their online market niches, Blue Nile Inc.

was still flourishing, being able to follow the increasingly sophisticated customer requirements, and expanding the range of jewelry products “to attract customers who would not spend thousands for jewelry” (Funding Universe, 2008). The items which were considered irrelevant by conventional retailers attracted thousands of women to Blue Nile, turning the company into the leading online supplier of jewelry. Vadon has also realized the role, which education and knowledge could play in the development and expansion of his business.

He tried to combine customer education with advertising. That an educated customer would be more likely to make a purchase from Blue Nile, Vadon was confident; as a result, the subsection “Education” has become the essential feature of the Blue Nile’s website, offering extensive and comprehensive information about all major kinds of jewelry (Blue Nile, 2009a). Blue Nile was the first to explain complicated professional terms by using the language, which was understandable to common consumers, making them aware of the best features and peculiarities of Blue Nile’s products.

Now, Blue Nile Inc. is a well-established brand name, which consumers associate with high quality customer service, fast delivery and user-friendly interface. “Every order is shipped free, guaranteed and returnable within 30 days, so you can be sure you made the right decision” (Blue Nile, 2009a). Regardless the difficulties which the company faced on its way to excellence, and despite the growing popularity of online jewelry products, Blue Nile should not neglect the opportunities and threats, which currently characterize the online jewelry market.

In this context, a detailed SWOT analysis may help identify and address the major market complexities. Strengths Well-established brand name Well-developed selling strategy High quality customer service Broad range of jewelry products Weaknesses Low profit margins Low-cost approach to sales Opportunities Developing actual network of retail outlets The increasingly sophisticated consumer needs The growing range of jewelry products in the market Threats Economic crisis in the U. S. The growing market competition The growing number of jewelry retailers Cheaper counterfeit goods

It should be noted, that even under the pressure of the growing economic crisis, Blue Nile has succeeded to keep its market niche, to expand its presence in the online markets, and to expand the range of its products. However, the low-cost selling strategy to which Blue Nile adheres (“instead of trying to push our gross margins as high as possible, we sell as cheap as we possibly can” – Funding Universe, 2008) may not work to promote the company’s profitability in the long run: the company’s net sales for the fourth quarter 2008 have fallen to $85. 8 million as compared to $111.

9 million in the fourth quarter of 2007 (Blue Nile, 2009b). Given the company’s well-established brand name, the availability of material and non-material resources, as well as the growing variety of jewelry goods in the market, Blue Nile can readily expand the range of its products to satisfy increasingly sophisticated customer needs; and by expanding its network of actual retail outlets, the company will be able to target the customers, who prefer making real time purchases. Certainly, Blue Nile should not neglect the worsening economic situation in the U. S.

; moreover, the jewelry market has always been characterized by high counterfeit product risks. The growing number of competitors may also threaten Blue Nile’s market position: Ashford. com, Diamonds. com, Tiffany & Co. , and Zale Corporation are fighting to expand their shares of market and may challenge stable market position of Blue Nile (Funding Universe, 2008). Nevertheless, the company’s emphasis on knowledge and customer awareness, as well as its openness to new products and services will help Blue Nile cope with the growing market challenges and maintain cost-effectiveness of its business operations in long-term periods.

Conclusion Blue Nile was started as the natural desire to improve the level of customer satisfaction in online jewelry markets. With time, the company has turned into the leading online supplier of jewelry products. The company’s stability is threatened by the growing economic crisis and the constantly increasing market competition, but given a well-established brand name, reputation, customer loyalty, and the growing range of jewelry products, Blue Nile is likely to retain its market position in the long run.

References Blue Nile. (2009a). About us. Blue Nile Inc. Retrieved March 4, 2009 from http://www. bluenile. com/about-blue-nile Blue Nile. (2009b). Company profile. Blue Nile. Retrieved March 4, 2009 from http://media. corporate-ir. net/media_files/irol/17/177247/bn_corpfacts_March_2009. pdf Funding Universe. (2008). Blue Nile Inc. FundingUniverse. com. Retrieved March 4, 2009 from http://www. fundinguniverse. com/company-histories/Blue-Nile-Inc-Company-History. html

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