Week 8 E-Portfolio: Blue Nile's Online Retail and Services

This report provides an analysis of Blue Nile, a leading online diamond and jewelry retailer. It explores the risks and challenges of buying and selling diamonds online, including issues related to pricing, transportation, and appraisals. The report examines Blue Nile's supply chain, its innovative business model focused on customer education and low prices, and its revenue drivers, which include media, electronics, and general merchandise sales. It also discusses the company's strategies for reducing consumer anxiety through fulfillment operations and co-branding. The report highlights the vulnerabilities associated with Blue Nile's geographically based operations. The analysis concludes with a positive assessment of Blue Nile as a reliable online retailer, emphasizing its established brand and commitment to quality.

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Online Retail and Services
Institutional Affiliation
Courses
Instructor
Date of Submission

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Buying or Selling Diamonds Online
Selling and buying diamonds online is a bit risky due to the fact that the process allows
access and exchanges to remote markets of diamond. The difficulty in this situation is that there
is a likely possibility of prices that are better for precious gems (Doc 2017). The aspect of having
safe transportation of these gems is also a major setback when it comes to online diamond
trading. Another aspect that is likely to prove troublesome is payment and appraisal when it
comes to online transactions (Amazo.com Inc 2017).
Blue Nile’s Supply Chain
Even at the time of its inception in 1999, Blue Nile was already disrupting the jewelry
and diamond marketplace. Over and over again, the company has “de-mystified” the experience
of the consumer through online engagement. The biggest and loudest idea in the mind of the
organization is to create a disruptive and innovative business model able to have what the
consumer requests delivered to them. Blue Nile also manages to provide education of diamond to
the customers. Apart from that, they also guarantee sales with low prices that they offer. Those
are some of the issues that has made the organization grow its supply. Currently, it has some of
its products advertized in Amazon.com Inc. Blue Nile is the leading online diamond and jewelry
retailer. It offers diamonds of high-quality and makes revenue of over $470m (Amazon.com Inc
2017).
Revenue Drivers
At the time of writing this article, Blue Nile happens to be the retail firm that dominates
the online e-commerce sector with regards to diamond and jewelry sales. As early as 2012, Blue
Nile’s product purchase value was at $51.7 billion. It should, however, be noted that this figure

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excludes the sales of services. The figure, by then, already surpasses whatever the firm’s closest
competitors like eBay and Barnes & Noble combined made. To add on the same, the value of the
revenue produced by the company increased by approximately 33%.
Consumer Anxiety Reduction
This year alone, the retail firm happens to have made a revenue growth. The firm’s
revenue happens to be obtained from three sectors which include media, electronics, as well as
general merchandise. However, such sales are obtained due to its ability to reduce customer
anxiety via:
1. Fulfillment operations
2. Co-branding of credit cards
3. Blue Nile Web Services.
On the contrary, it needs to be noted that increase of Blue Nile’s revenue is accelerated by the
EGM sector registering a forty-nine percent growth, the second sector boosting the firm is media
registering a forty-six percent rate of growth (Khoja 2017).
Vulnerabilities of Blue Nile
Another important factor to note is that Blue Nile operates partitions that are
geographically based (Blue Nile 2015). Due to such partitions, the following vulnerabilities
arise:
i) Business results are influenced by the services given to customers
ii) The business likely to be thoroughly affected if cost effective services are not
provided in a well managed shopping platform (Blue Nile 2015).

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iii) Economic factors have the ability to influence the company’s operations and
financial performance
Would you buy an expensive ring at Blue Nile?
Yes, because the company is well established on an online business platform. It is
therefore easy to understand that they have a well established brand that will always strive to
offer quality at reasonable prices (Blue Nile 2015).

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Reference
Alden, D.L., Steenkamp, J.-B.E.M. and Batra, R. 1999. ‘Brand positioning through advertising in
Asia, North America, and Europe: The role of global consumer culture,' Journal of
Marketing, 63(1), p. 75. doi: 10.2307/1252002.
Amazon.com Inc. 2017. "Growth, Profitability, And Financial Ratios For Amazon.Com Inc
(AMZN) From Morningstar.Com". Financials.Morningstar.Com.
http://financials.morningstar.com/ratios/r.html?t=AMZN
Blue Nile (2015). Blue Nile: A hidden gem in the diamond and fine jewelry online marketplace –
Technology and Operations Management. [online] Rctom.hbs.org. Available at:
https://rctom.hbs.org/submission/blue-nile-a-hidden-gem-in-the-diamond-and-fine-
jewelry-online-marketplace/ [Accessed 9 Sep. 2017].
Doc, T. (2017). The Cons of Selling Diamonds on the Internet. [online]
Smallbusiness.chron.com. Available at: http://smallbusiness.chron.com/cons-selling-
diamonds-internet-26780.html [Accessed 9 Sep. 2017].
Khoja, Amjad-Ali. 2017. "Blue Nile: Telling The Story Through Financial Statement Analysis".
Seeking Alpha. https://seekingalpha.com/article/1847022-Blue Nile-telling-the-story-
through-financial-statement-analysis?page=2