1. How does Blue Nile create trust in buying an expensive item like an engagement ring?

Blue Nile created trust in buying engagement ring by offering a 30-day return policy and having grading reports. This is useful because the customers do not get to touch or try on the ring before purchasing. By giving the customers an option to return with free shipping, Blue Nile eliminated concerns related to a lack of physical presence.

Not having any stores is an unsual business feature for a jewelry store. The traditional way of selling diamonds is through a jewelry store, where the dealers and sales people show and let customers try the products. If customers do not want the ring, they immediately can hand it back to the sales person in the store. This can be done simply and easily in the stores, but not on mobile website. Blue Nile gives customers the similar experience with the free shipping and return policy. Morover, the shipment is fully insured to avoid loss and damage in transportation. Customers do not have to worry about the expensive item in transit. The grading reports on diamonds and strong relationships with suppliers strengthen the trust in Blue Nile. In other words, customers can get the same high quality diamonds from Blue Nile, with the same worry-free process as they can get in stores.

  1. How does Blue Nile educate potential customers?

Blue Nile utilizes technology to make their websites educational for potential customers. The websites have high definition and large images of the products. Each product has good description and explanations. Customers can use the Build-your-own feature to customize and get the exact ring design that they want. Goign through the customization process is educational. The customers get to see how the products can be put together. Modification is made easy by the online tools, while in traditional stores, the customers do not have that.

  1. How does Blue Nile get users to buy expensive diamonds on a mobile device?

In order to get customers buy from the mobile website, Blue Nile has to offer their entire collection for viewing, customizing and purchasing. Besides the technology, the educational part of the website gives customer’s confidence to purchase the item. The price tag is just the last part of the purchasing process. Before getting to the price, the customers want to get the right size of diamonds, as well as color and materials of the base. Blue Nile created value based on the buying experience being educational and hassel-free. For products over $1000, there are grading reports, certifications and professional appraisals. Customers are assured of the quality and the value of the products by the reports and appraisals. The company was founded based on a bad shopping experience of engagement ring, so Blue Nile found a way to create confidence and ease of shopping.

  1. How does Blue Nile make the diamond buying process hassle free?

The buying process with Blue Nile is hassel-free because of the abundant of information, user-friendly website, free shipping and 30-day return policy.

  1. How can Blue Nile grow internationally if the Internet is not always available?

Blue Nile currently has no way to tap into the markets where Internet access is not available or reliable. Blue Nile is an online only retailer of expensive goods, so they must ensure customers of safety of the products. However, in many countries corruption exists, so the shipments do not reach the customers due to theft and counterfeits. Blue Nile has insurance and 30-day return policy, but the products could be held at customs for months before reaching customers. Moving diamonds is a risky business, and some customers may not want to take that risk. Customers would continue to go to the traditional jewelry stores if they do not feel safe buying from an overseas online company.

In a market of rare products such as diamonds, Blue Nile still have a competitive advantage. Their colored diamonds are exclusive by supply. If a customer is looking for a rare pink diamond, then it does not matter where they are in the world, they will find a way to get the diamond. Blue

  1. Can Blue Nile expand its product offerings beyond diamonds and jewelry?

Blue Nile should look into the possibility of offering beyond diamonds and jewelry to compete with the low-end retaileres. It is equally difficult to do as to move into the high-end market with competitors like DeBeers. Blue Nile has the advantage of not having a physical inventory, while other competitors have. Blue Nile’s ROI is high because they do not have to purchase diamonds before customers place an order. They only keep some of the parts of the product in inventory. Operation and logistics can give Blue Nile the ability to diversify the products and expand beyond diamonds and jewelry. They have found a way to capitalize on just-in-time inventory process.

However, there are some risks to this model. Since Blue Nile does not hold the inventory, they have to depend on suppliers to deliver. If their suppliers fail to deliver because of political or climate reasons, the shipment of products to customers will be delayed or canceled. Then Blue Nile would have to find ways to communicate these issues to customers.

  1. Is Blue Nile “Stuck in the Middle?”

Blue Nile is stuck in the middle of the diamond ring market. They can not compete with the high-end retailers such as Tiffany & Co. They also can not beat the price and distribution scale of online retailers like Amazon or Overstock. At first, Blue Nile found the niche of offering high quality diamond rings online. This niche is not enough for the company to grow on. The middle of the market is the worst place to be in. Sooner or later Amazon and Overstock can feature middle-range products to compete with Blue Nile. Tiffany & Co or DeBeers can redesign their websites to offer customers the same online experience as on Blue Nile’s websites. Meanwhile, Blue Nile still can not compete with the high-end retailers. Therefore, Blue Nile is truly stuck in the middle, and they need to get out of this position. In order to grow and gain more market share, they must be able to move into the high-end market.