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I have case study of e-commerce I need you help to answer the 3 questions I will upload the file below you can take a look on it
Assignment 1
HOW BLUE NILE INC. IS CHANGING THE JEWELRY INDUSTRY
Blue Nile Inc. (bluenile.com), a pure-play online e-tailer that specializes in diamonds and
jewelry, capitalized on online diamond sales as a dot-com start-up in 1999. The company is a
textbook case of how EC fundamentally changes the way that an industry conducts its
business. For information about the company, see quotes.wsj.com/NILE/ company-people .
The Opportunity Using the B2C EC model ? eliminating the need for physical stores ? Blue
Nile was able to offer discounts of 35%, yet it became profi table in a short time. (The cost of
operating online stores is very low.) What are the critical success factors of the company?
First, they offer large discounts. For example, you can purchase a $6,000 diamond for $4,000,
which attracts more customers. Second, Blue Nile offers a huge selection of diamonds online
and provides more information about diamonds than many physical jewelry stores can offer.
In May 2012, Blue Nile offered about 60,000 round diamonds that could be used to build a
customized wedding ring. No physical store can offer so many diamonds. Third, the company
provides educational guides as well as independent (and trusted) quality ratings for every
stone. A customer can look over a rating scale for cut, clarity, color, and so on, and then
compare prices using Bizrate ( bizrate.com ) and other online stores. Note that there usually is
a 30-day 100% money-back guarantee (now an online industry standard). This provides
customers with a comfort level of trust against fraud and gives Blue Nile a competitive edge
against stores that take the stones back but charge a fee. The site provides live chat, payment
options, build-your- own engagement ring, gift ideas, and much more. The company has a
mobile website for iPhone and Android users ( m.bluenile.com ). See (
bluenile.com/diamond_search_mobile.jsp ). The Results Blue Nile?s sales reached $129
million in 2003 (a 79% increase over 2002), with a net income of $27 million. In 2013, net
sales were $450 million ( marketwatch.com/story/blue-nile- announces fourth-quarter-andfull-year- 2013-financialresults-2014-02-06 and investor.bluenile.com/
releasedetail.cfm?ReleaseID=823747 ). The company became the eighth-largest specialty
jewelry company in the United States and went public in 2004 (one of the most successful
IPOs of that year). While sales fell during the economic downturn in 2008, in 2009 and 2010
the company rallied again with a 2.3% growth. In order to sell $450 million in jewelry in 1
year, a traditional retail chain needs over 300 stores and over 3,000 employees. Blue Nile
does it with one 10,000-square-foot warehouse and 193 employees. The company also
bypasses the industry?s complex supply chain, in which a diamond may pass through fi ve or
more middlemen before reaching a retailer. Because they are a large buyer, they can deal
directly with original suppliers. As a result, some 465 small jewelry stores closed in 2003
alone. The survivors specialize in custom-crafted pieces. Large traditional companies
compete with Blue Nile by offering online merchandise, becoming click-and-brick
multichannel organizations, and by streamlining their supply chain and customer service. The
future seems to be clear, as can be seen in Bloomberg ( 2004 ), in the case of Roger
Thompson, a small jeweler in Lambertville, New Jersey, who said, ?Anyone with half a brain
who wants a diamond engagement ring will go to the Internet.? In the meantime, grooms who
propose with Blue Nile rings can save $3,000 to $5,000. Note that, the competition in the
jewelry business is very intense, not only from jewelry retailers (both offl ine and online, e.g.,
bidz.com ; that now also sell fashion and apparel, fi ne art, and accessories), but also from
general e-tailers such as overstock.com and amazon.com . Sources: Based on Rivlin ( 2007 ),
Bloomberg ( 2004 ), BusinessWeek Online ( 2006), en.wikipedia.org/wiki/Blue_Nile_Inc .,
and bluenile.com/ about-blue-nile (both accessed March 2014).
Questions
1. Using the classification of EC (Section 1.2 , Chapter 1), how would you classify the Blue
Nile?s business? (1 point).
2. In what ways is the company changing its industry? ( 2 points)
3. What are the critical success factors of the company? (2 points)
Instructions:
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2. Name the document as (your name, course name, your section).
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