naylinnko information systems management bit

INFORMATION SYSTEMS MANAGEMENT

COMP- 1646

Student Name: Nay Linn Ko

UOG Student Register ID: 000898709

Coursework Title: Strategic Evaluation Consultation Document for Blue Nile

COMP 1646: Information Systems Management

Due Date: 22th

April 2015

Centre: KMD (Yangon, Myanmar)


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Acknowledgement

First of all, I like to acknowledge the responsible persons from University of

Greenwich who provide this coursework for students. I would like to thanks to Harvey Kanter,

CEO of Blue Nile Company, for his encouragement to develop global e-commerce business. I

would like to appreciate the responsible persons from investor.bluenile.com/annual.cfm for

uploading the case study. Moreover, I would like to present my appreciation for our lecturer,

Daw Moe Pale, for her great and expert lectures and guidelines. Last but not least, I would like to

thanks to responsible teachers and staffs from our centre, KMD for providing such a good

learning environment.

http://investor.bluenile.com/annual.cfm


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Table of Contents

Executive Summary .......................................................................................................................5

Chapter-1 Introduction .................................................................................................................6

1.1 Background ............................................................................................................................6

1.2 Financial Performance ............................................................................................................6

1.3 Key Products and Services .....................................................................................................7

1.4 Current Situation and Problems .............................................................................................7

Chapter-2 Strategic Evaluation- Situation Analysis ...................................................................8

2.1 Introduction ............................................................................................................................8

2.2 SWOT Analysis ......................................................................................................................8

2.2.1 Strengths ..........................................................................................................................8

2.2.2 Weaknesses......................................................................................................................9

2.2.3 Opportunities .................................................................................................................10

2.2.4 Threats ...........................................................................................................................11

2.3 PEST Analysis ......................................................................................................................12

2.3.1 Political Factors .............................................................................................................12

2.3.2 Economical Factors .......................................................................................................12

2.3.3 Social Factors ................................................................................................................13

2.3.4 Technological Factors ...................................................................................................14

2.4 Summary ..............................................................................................................................15

Chapter- 3 E-marketing Strategy ...............................................................................................16

3.1 Introduction ..........................................................................................................................16

3.2 E-marketing Strategies that Blue Nile Adopted ...................................................................16

3.3 Balancing Online and Offline Promotions ...........................................................................19

3.3.1 Online Promotions .........................................................................................................19

3.3.2 Offline Promotions ........................................................................................................20

3.3.3 Balancing Online and Offline Promotions ....................................................................20

3.4 Impact Upon Performance of Business ................................................................................21

3.5 Summary ..............................................................................................................................22

Chapter-4 Legal and Ethical Issues............................................................................................23

4.1 Introduction ..........................................................................................................................23


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4.2 Issues in Gathering ...............................................................................................................23

4.3 Issues in Processing ..............................................................................................................23

4.4 Issues in Delivering ..............................................................................................................24

4.5 Avoiding from Legal and Ethical Issues ..............................................................................24

4.6 Summary ..............................................................................................................................24

Conclusion ....................................................................................................................................25

References ......................................................................................................................................26


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Executive Summary

This report is about “Strategic Evaluation Consultation Document for Blue Nile

Company”. Blue Nile Company is the world biggest pure-play online retailer of high quality

diamonds and jewellery. The company is based in Seattle, Washington. The detail of company’s

background, key products and services, financial performances, current situation and problems

are described in Chapter 1. In Chapter 2, we describe situation analysis of Blue Nile as part of

strategic evaluation. Situation analysis includes SWOT analysis and PEST analysis.

As part of Chapter 3, we broadly discuss about e-marketing strategy of Blue Nile

Company. Along with e-marketing strategy, we research how the management is balancing the

Blue Nile online and offline promotion methods. We also consider which kind of impacts could

affect by implementing the strategies. In Chapter 4, legal and ethical issues that Blue Nile should

need to be aware of are described. We also advice how to avoid the legal and ethical issues deal

with the use of information on the internet.


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Chapter-1 | Introduction

Blue Nile Company is a pure-play online retailer of high quality jewelleries.

The Company is based in Seattle, Washington and offers jewellery products for sale through

Blue Nile Website in over 40 countries and territories. Currently, the company is the biggest

online retailer of diamonds in the world. Blue Nile website provides more than 100,000 fine

diamonds and jewelleries. Harvey Kanter is the current CEO of the company.

1.1 Background

Doug Williams of Williams and Son Inc started The Delaware Corporation,

former name of Blue Nile Company, in 1995. The Delaware Corporation was selling diamonds

online. In 1999, Mark C. Vadon bought 85% of the company share. Later, the name of the

company was changed to Blue Nile in November 1999.

Currently, Blue Nile has following subsidiaries.

Blue Nile LLC Company

Blue Nile Worldwide Inc.

Blue Nile Jewellery Ltd.

Blue Nile LLC Company provides services for the customers in the United States,

Canada and Asia-Pacific. Blue Nile Worldwide Inc serves the customers in Europe and Blue

Nile Jewellery Ltd provides customer service and fulfilment centre in Dublin, Ireland.

1.2 Financial Performance

In 2000, the company got $44 million revenue, but spent $40 million in television

advertising. In 2006, the sales reached $210 million with 40 percent annual growth. To get the

revenue of $210 million in jewellery industry, a traditional retailer needs 200 stores and

approximate 1800 of employees. But Blue Nile did it with one big warehouse and 115

employees. Because of the cost effectiveness of Blue Nile products, 465 physical jewellery

stores in the United States closed in 2003 alone. On October 4, 2005, Blue Nile launched of its

United Kingdom website. (Ref: www.wikipedia.org/wiki/Blue_Nile_%28company%29 )

http://www.wikipedia.org/wiki/Blue_Nile_%28company%29


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1.3 Key Products and Services

Blue Nile Products can be categorised into engagement and non-engagement

products. Engagement products consist of gold or platinum engagement rings with a diamond

centre stone. Non-engagement products consist of wedding bands, earrings, necklaces, pendants,

bracelets, gifts and accessories containing precious metals, diamonds, gemstones, or pearls. Blue

Nile core business is engagement category.

Blue Nile trusts that customer service is important as part of customer relationship

management. Blue Nile website provides diamonds and jewellery consultant online. The

guarantees and policies of Blue Nile make improvements of customer satisfaction.

1.4 Current Situation and Problems

Since Blue Nile formation, the company has been competed with a number of

online and offline jewellery retailers. Traditional jewellery stores such as Tiffany Co.Ltd and

online retailer such as James Allen are huge competitors of Blue Nile. Other potential

competitors include online jewellery auction sites and internet shopping clubs.

According to the case study, Blue Nile has three potential initiatives in order to

surpass its competitors. They are-

To promote user experience when a customer is buying online

To innovate new jewellery products

To expand International Market

To receive more revenue, Blue Nile needs to operate these three missions

successfully. But, on the other hand, there are a number of possible issues which can affect these

initiatives. In order to analyse the issues, we will make SWOT analysis and PEST analysis.


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Chapter- 2 | Strategic Evaluation – Situation Analysis

2.1 Introduction

In this chapter, the strategic evaluation of Blue Nile would be analysed. SWOT

analysis is a kind of situation analysis method that analyse the company’s internal strengths and

weaknesses, and external opportunities and threats. PEST analysis is also a situation analysis

tool, but unlike with SWOT analysis, all the factors such as political factors and economical

factors are external that impact a business.

The following are referenced from http://www.bluenile.com/about-blue-nile. (Accessed Date :

9th March 2015)

2.2 SWOT Analysis

2.2.1 Strengths

1. Cost Effectiveness

The main business strategically strength of Blue Nile is cost effectiveness.

Normally, a diamond can pass through a lot of intermediaries before reaching a retailer. But Blue

Nile deals with original suppliers such as Thaigem.com. Therefore, Blue Nile can reduce

jewellery prices as there are no intermediaries. Moreover, the company do not need to rent or

buy a physical store to sell diamonds. Therefore, the company can reduce the diamond prices

more than its competitors.

2. Exclusive Supplier Relationship

According to the case study, Blue Nile Company has successfully built exclusive

diamond supplier relationships. Some of the suppliers allow the company to display their

diamond inventories on the Blue Nile website for sale to consumers. In this case, Blue Nile does

not need to hold the diamonds in their own inventory until the product is ordered by consumers.

http://www.bluenile.com/about-blue-nile


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3. Outstanding Customer Relationship Management (E-CRM)

Another strength of the company is that the company provides outstanding

customer relationship management (E-CRM). When a customer visits the website, he can call a

toll free number to get assistance on the phone. Online-live chats are also provided that allows a

customer to get assistance by conversation with well trained diamond and jewellery consultant.

A consultant can guide all steps in the process of buying jewelleries, such as selecting an

appropriate item, the purchase of that item, financing and payment alternatives, and shipping

services. Moreover, the Blue Nile Credit Card provides various financing options to the

customers and is a vehicle for other unique offers to cardholders.

4. Multiple Technology Platforms

Blue Nile website can be used across multiple platforms and operating systems.

Third-party software is applied to monitor the website. And an on-call team is ready to respond

any emergencies case or unauthorized access in the website.

2.2.2Weaknesses

1. Weak Brand Recognition

Blue Nile brand is not very recognised as national brand in the United States. The

company is well known in San Francisco and Seattle area but it still has to raise its brand.

Competitors such as Tiffany Co., Ltd already got strong brand awareness internationally and can

attract more customers. Blue Nile should find ways to promote the brand recognition.

Advertising with famous celebrities could be one of the solutions.

2. Difficult Payment Transaction

Though Blue Nile provides different payment methods through its website, some

customers still have problems in payment transaction. Some of the problems are different

currencies and credit cards. As the result, many consumers cannot buy although they want to buy

jewellery from Blue Nile.


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3. Risk of Theft and Being Damaged

Blue Nile has experienced theft or being damaged of jewellery products while

delivering to the consumers. However the company have made jewellery insurance, this would

impact company’s reputation and brand recognition.

4. IT Systems Vulnerability

One of the main weaknesses of the company is deal with IT systems

vulnerability. As the development of hacking technologies, more unauthorized accesses are

faced. The website should be enhanced encryption and authentication technology licensed from third

parties to provide secure transmission of confidential information, including credit card numbers.

2.2.3 Opportunities

1. Increasing Internet Users

The number of people who access internet through different devices is increased

dramatically in the past few years. This would lead Blue Nile to get more potential consumers.

Therefore, increasing internet users worldwide makes the opportunity for the Blue Nile

Company.

2. Expanding International Market

Blue Nile Company is currently selling jewellery products in over 40 countries

and territories. If the company can expand its international market, the amount of revenue will be

increased although there are a lot of restrictions and barriers.

3. Innovating New Jewellery Products

Innovating new jewellery products is also an opportunity for the Blue Nile. As

consumer needs are always changing, creating jewellery products with new designs will improve

reputation and popularity of the company.


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4. High Real-Estate Prices

As the prices of real estate markets are increasing globally, it is difficult to rent or

expensive to buy a space for physical jewellery retailers. As the result, a physical or traditional

jewellery retailer cannot reduce jewellery prices as Blue Nile. This is a huge opportunity for Blue

Nile Company.

2.2.4 Threats

1. Taxes

Blue Nile Company may be negatively affected if there is required to collect

additional taxes on sales. Currently, the company collects indirect taxes on sales from customers

located in State of Washington, State of New York and some of the countries. If the other states

in US or foreign countries impose to collect additional indirect taxes from customers, the

company has to face with a big problem since IT systems of the company have to upgrade for tax

transaction and customer do not want to pay tax.

2. Purchasers do not choose to shop online.

Another threat is that some purchasers of diamonds and fine jewellery do not

choose to shop online. A number of potential consumers do not want to buy jewellery over the

internet. Many consumers concerns about buying luxury products such as diamonds without a

physical storefront. Customers want face-to-face interaction with sales staff. Psychologically,

consumers want to touch or handle and examine products physically. This is one of the big

threats of Blue Nile Company.

3. Increasing Competitors

The retail jewellery industry is very competitive. There are a lot of emerging

motor-and-brick jewellery stores and click-and-brick jewellery stores. Large traditional jewellery

stores such as Tiffany may expand their market online. The suppliers of jewellery products could

also sell jewellery to consumers directly.


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4. Hacking and Cyber Attacks

The confidential data of Blue Nile can be hacked or hijacked any time. The data

are very important and confidential. It is very important to monitor and secure the systems

otherwise the company could decline.

2.3 PEST Analysis

2.3.1 Political Factors

The following are referenced from http://webspier.com/essay/496322 (Accessed

Date: 5th March 2015)

1. New Regulations Related to Conflict Minerals

According to the case study, there are new regulations adopted in some countries.

The regulations contain provisions to improve transparency and accountability in finding the

certain minerals, known as conflict minerals. These regulations would adversely affect the

suppliers of Blue Nile Company. As a result, the price of minerals used in Blue Nile products

would be increased. Moreover, if certain products of Blue Nile contain minerals which are

conflict minerals or are illegally traded, the company might face the reputational challenges.

2. Trademarks Confusion

In some countries and territories, trade secret and copyrights laws afford only

limited protection. Therefore, some competitors of Blue Nile have or may have copied the

company’s website images and trademarks. In some cases, Blue Nile could not be able to sue

them. This kind of trademarks confusion could damage the reputation and consumer trust of Blue

Nile Company.

3. Weak Governments’ Regulations of Internet and E-commerce

There are no certain laws or regulations for internet and e-commerce in some

countries. This means taxation, advertising and intellectual property rights are legally free on the

internet. This would bring both opportunities and threats for the Blue Nile Company.

http://webspier.com/essay/496322


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2.3.2 Economic Factors

1. Foreign Exchange Rate Fluctuations

Foreign exchange rate fluctuation is a huge impact for Blue Nile Company. The

results may differ from expectation while translation from foreign currencies from international

sales to US dollars. The foreign exchange rate fluctuation makes significant gains or losses for

the Blue Nile Company.

Moreover, the company set prices of diamonds based on US dollars. Therefore,

when US dollar strengths, the prices of the products in international markets will become more

expensive and sales may reach decline.

2. Increased Costs

Increased commodity prices such as higher costs of labour, higher shipping costs,

inflation and increased taxes may also affect the revenue of Blue Nile Company. As the result,

the company would need to raise the prices of the products to recover the revenue. Therefore,

any significant increases in costs may affect the financial conditions and results of operations of

the Blue Nile Company.

3. Changing Consumer Demand

The market of luxury products such as diamonds, the consumer demand could be

changed very easily. The jewellery market is mostly depending on the conditions in residential

real estate market and stock exchange market. These economic factors would affect the

consumer spending or buying habits for jewellery products.

2.3.3 Social Factors

1. Reduced Rate of Marriages

In some developed countries, the rate of marriages is becoming record-breaking

low. Blue Nile net sales and results of operations are highly dependent on the demand of

engagement rings. If demand of Blue Nile engagement rings declined, the company net sales

would be harmed.


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2. Different Customs

Diamond engagement rings are not a custom or trend in some traditions.

Therefore, Blue Nile would need to struggle while expanding market in countries with those

traditions. Moreover, in some cases, diamonds are believed to be used to fund terrorist activities.

Therefore, some people do not choose diamonds as their jewellery accessories.

3. Demography

The world’s population continues to grow and today there are over 7 billion

people on earth. The world population is expected to reach over 9 billion in 40 years. Most of the

population growth takes place in Africa and Asia-Pacific. Therefore, as a long term plan, Blue

Nile should expand its market in marketplaces where high population growth occurs.

Distribution of income based on age is also need to be considered. People born

between 1946 and 1964 are considered to be the generation with the biggest purchasing power in

every country. This is because most of them were saved up money and all major investments like

buying cars and educating the children were done. Therefore, Blue Nile needs to focus on the

generation who born between 1946 and 1964 as the target audience while innovating and

advertising jewellery products. Countries like Japan have the older population who born between

1946 and 1964 than younger population.

2.3.4 Technological Factors

1. New Information Systems are required to build.

As Blue Nile is a public reporting company, international accounting and

reporting requirements are critical to comply. Therefore, additional finance and accounting

systems might be required to implement. If Blue Nile financial reportings are not so effective for

the investors in international market, they could lose confidence in the company, and as a result,

this could adversely affect the company stock price.

2. System Interruption

Blue Nile Company is famous for the satisfactory performance, reliability and

availability of its website. But any future system interruption, down time of severs and technical

difficulties could make unavailability of Blue Nile Website. As a result, the reputation and brand

of Blue Nile Company could be damaged and results of operation would be declined.


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3. Human Errors and Natural Disasters

Blue Nile website and operations are vulnerable to damage or interruption from

human error, fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war,

break-ins, and similar events. The critical data and customer information should be back up

regularly, otherwise the company could decline when it meets natural disasters.

2.4 Summary

SWOT and PEST analysis were made as situation analysis. According to SWOT

analysis, Blue Nile currently has both strengths such as exclusive supplier relationships and

weaknesses such as IT systems vulnerability. The company currently face with some

opportunities and threats. Political, economical, social and technological factors that can affect

Blue Nile Company were also analysed.


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Chapter- 3 | E-marketing Strategy

3.1 Introduction

In this chapter, we would evaluate the e-marketing strategies that Blue Nile

adopted or planning to adopt. And, how the management is balancing online and offline

promotion methods would also be described. The objective of this chapter is to consider which

kind of impact would affect the business performance of Blue Nile by implementing the

strategies.

3.2 E-marketing Strategies that Blue Nile Adopted

There are some of E-marketing strategies that Blue Nile Company adopted. The following are

referenced from http://www.alexa.com/siteinfo/bluenile.com (Accessed Date: 10th

March 2015).

1. Brand Recognition

Blue Nile brand is not very recognised in the United States. Therefore, the

company is trying to raise the reputation of its brand, especially for the engagement rings. By

advertising with famous celebrities, the company is hoping to improve its brand. Advertising on

social websites and popular search engines like Google can be beneficial for Blue Nile

Company.

2. Online Customer Loyalty Marketing

The company is endeavouring to build a loyal customer base and promote repeat

purchases. But there is still no specific loyalty program that the company adopted. Some of

online promotions such as e-coupons (see page 19 for detail) and 30day money back guarantee

services makes customer loyalty. (Ref: Blue Nile Annual_Report_2012_FINAL.pdf)

3. Advertising both online and offline

According to case study, online advertising includes advertising on search

engines, affiliate programs, and advertising on social websites. Blue Nile Company also makes

an online direct marketing through their website. Offline advertising includes advertising on

televisions, print media and billboards.

http://www.alexa.com/siteinfo/bluenile.com

Annual_Report_2012_FINAL.pdf


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4. Expanding Market

Blue Nile website is currently selling diamonds online in over 40 countries and

territories. By deploying marketing to reach more customers, the company is hoping to improve

the revenue. Therefore, Blue Nile is trying to achieve legally allowance to sell jewellery online

in new countries and territories.

5. Providing Cheaper Price

The concept of the supply chain of Blue Nile transforms the cheaper price of

jewellery of the company. Originally, a diamond can pass through five or more middlemen

before reaching a retailer. But the Blue Nile deals directly with original supplier such as

Thaigem.com. Reducing the steps of intermediaries means that reducing the price of jewellery.

6. 30-day Money Back Guarantee

One of the most important marketing strategies of Blue Nile is 30-day money

back guarantee. The guarantee is that if a customer who bought jewellery wants to get his money

back, Blue Nile allow to exchange within 30 days without charging a fee. This provides

customers a comfort level against fraud and gives Blue Nile a competitive edge against stores

that take the stones back but charge a fee to do so. (Ref: http://www.bluenile.com/about-blue-

nile)

7. Online Education Guides

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 – colour, 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 jewellery, diamond characteristics, and metal

comparisons. The site also offers price comparison with other online jewellery stores such as

Diamond.com.

Because of these online education guides, Blue Nile received more than doubled

the number of customers.




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8. E-CRM Based Marketing

Many customers might think that buying expensive goods online, such as

jewellery, is not as convenience as buying in a store. But Blue Nile serves its customers the best

it can by offering different features on its website. In addition to educational guides, many other

helpful tools are provided on the website.

More e-marketing strategies such as affiliate programs, e-coupons, credit card

marketing and various customer loyalty marketing have been adopted or are planning to adopt.


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3.3 Balancing Online and Offline Promotion Methods

3.3.1 Online Promotions

1. Blue Nile Coupons

Fig. Promotion Coupons on Blue Nile Website

Blue Nile provides e-coupons as one of their online promotion methods. By using

e-coupons, customers can enjoy discounts and free shipping for a limited time. Some kinds of

coupons attract the customers to buy jewellery at Blue Nile website again and again. For

example, if a customer bought jewellery up to 3000US dollars within a month, he would receive

a coupon which saves up to 300US dollars to buy an another diamond ring. This kind of

promotion makes customer loyalty.

2. Blue Nile Credit Card

The Blue Nile credit card offers a broad range of compelling financing options

and flexible to pay over time. By using Blue Nile credit card, the member can get benefits such

as convenient payment options, no annual fees and special access to card member-only offers

and promotions.

Moreover, Blue Nile credit card offers member 25 days grace period. But if the

purchase balance is not paid in full within 6 or 12 months, interest will be charged to member

account.


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3.3.2 Offline Promotions

The following were referenced from http://www.idexonline.com (Accessed Date:

15th

March 2015).

1. Price-based Promotion

Blue Nile has adopted a promotion strategy that many traditional jewellers use

when sales slow. The company cuts retail prices of jewellery products. In 2011, the company’s

gross margin fell to 20.5 percent from 22.0 percent. Therefore, the company began to reduce

jewellery prices in mid-February, and the gross margin was increased. Blue Nile got successful

achievement because of its price-based promotion.

Because of the ineffectiveness of some of Blue Nile’s online marketing strategies,

the management made the decision to cut prices rather than to increase marketing spend.

3.3.3 Balancing Online and Offline Promotions

As Blue Nile Company is a pure-play online jewellery retailer, their promotion

methods are very online dependent. According to 2012 statistics, Blue Nile found that some of

their online promotion methods are ineffective. Therefore, the management reduced the

jewellery prices rather than spending money at online promotions. The management said that

promoting to 22 percent gross margin with a 6 percent marketing spend was likely to be less

effective than promoting to 20 percent gross margin with a 4 percent marketing spend.

Because of the huge costs of online promotions and advertising, Blue Nile

Company should think to open a physical store, which is more convenient for users to buy

expensive jewellery. For Blue Nile, physical stores might be a kind of offline promotion method.

In conclusion, Blue Nile should provide more offline promotions rather than online promotions.

http://www.idexonline.com/


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3.4 Impacts upon Performance of Business

The following are referenced from

http://www.diamonds.net/News/NewsItem.aspx?ArticleID=41543 . (Accessed Date: 16th

march

2015)

Blue Nile’s expanding to international market has good impacts upon

performance of Business. In 2011, China alone represented a $100 million business for Blue Nile

Company. Therefore, we could say that the e-marketing strategy of expanding international

market is a successful strategy.

Fig. Blue Nile Quarterly Sales

Revenue

before

internationa

l expansion

Revenue

after

internationa

l expansion

http://www.diamonds.net/News/NewsItem.aspx?ArticleID=41543


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Advertising on search engines such as google and yahoo makes more visitors to

visit Blue Nile Website. Blue Nile advertises top keywords such as “engagement rings”, “Blue

Nile” and “diamond” on the search engines. According to 2012 Blue Nile Annual Report,

21.10% of visitors who visited Blue Nile Website came from a search engine. Advertising on

search engines costs a lot, but at the same time, it makes a great improvement for the company.

Fig. Advertising on Search Engines

We have to consider about the price-based promotion strategy of the Blue Nile

Company. According to the price-based promotion strategy, the company reduces the prices of

jewellery products when the sales slow. This strategy makes improvements in sales growth rate

of Blue Nile Company, but it affects the net profit of the company at the same time. Net profit is

the most important for a company to stand in the market. Therefore, the management needs to

consider the impacts of price-based promotion strategy that they are using.

3.5 Summary

Some of e-marketing strategies of Blue Nile such as brand recognition, online

customer loyalty marketing, advertising, promotions and online education guides were described.

As Blue Nile is pure-play online jewellery retailer, most of their marketing strategies and

promotions are very online dependent. We described how the management is balancing online

and offline promotion methods. Impacts of e-marketing strategies of Blue Nile were also

described.


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Chapter- 4 | Legal and Ethical Issues

4.1 Introduction

In this part, we would discuss about legal and ethical issues that Blue Nile need to

consider. Major ethical and legal issues are occurred deal with Privacy, Intellectual property

rights, censorship, Consumer and merchant protection against fraud.

The following are referenced from www.bluenile.com/de/ploicies/privacy .

(Accessed Date: 4th April 2015)

4.2 Issues in Gathering

Blue Nile website collects the personal information of customers. The personal

information includes name, physical address, E-mail address, gender, phone number, occupation,

information of purchases, birthday, anniversary, interests, credit card information and many

more. Some of the information are confidential and need to have privacy. Some of these

confidential data are collected through cookies files and these cookies might be used by business

partners of Blue Nile without permission from customer. However the customers can decline

cookies on their browsers, third-parties organization might still be able to obtain their personal

information because in some cases, Blue Nile shares the data to its third-parties. In fact, Blue

Nile should not share or aggregate the personal information of customers without permission.

Therefore, there would be an ethical issue deal with gathering information from customer.

4.3 Issues in Processing

The employees of Blue Nile especially diamond consultants might or could access

the personal information of the customer through the website, via e-mail and over the telephone.

They could embezzle the customer information to pretend as a customer themselves. According

to recent researches, 80% of computer criminals or unauthorized accesses were carried out by

employees rather than outsiders. Blue Nile should consider how to process the confidential

information of customer within the company securely.

Some employees in Blue Nile might waste time while surfing non-work-related

websites during working hours is also a concerned ethical issue.

http://www.bluenile.com/de/ploicies/privacy


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4.4 Issues in Distribution

There is a legal issue deals with distribution information about conflict

diamonds. Conflict diamonds are diamonds where its history contains at least one worker who

was not treated fairly or the diamond is illegally produced. Blue Nile has a zero-tolerance policy

toward conflict diamonds. Therefore, Blue Nile follows Kimberley Process which is tracking

diamonds from mining stage to final retailing stage. According to Kimberley Process, when Blue

Nile sells a diamond product, the company provides the “diamond certificate” to customer to

ensure that the diamond is conflict-free.

There would be legal issue if one of the suppliers or intermediaries of Blue Nile

imitated the diamond certificate to pretend that the diamond is conflict-free. Moreover, some of

Blue Nile employees could copy a diamond certificate and then distribute the copy to illegal

diamond traders for their personal advantage. Therefore, Blue Nile needs to consider how to

distribute the sensitive information like diamond certificates.

4.5 Avoiding from Legal and Ethical Issues

To protect unauthorized access and embezzlement of confidential data, secured

technologies such as software firewalls and hardware firewalls should be used. Virtual Private

Network (VPN) could also be applied to protect the confidential information of customers from

some employees and hackers. Some encryption methods should be used in processing and

distribution of sensitive data such as diamond certificates.

The regulations of privacy, intellectual property rights and censorships on the

internet are different from one country to another. Blue Nile should aware the laws and

regulations of each country in which the company exists. Any legal or ethical problems can

impact the reputation and brand recognition of the company, consequently, the revenue of the

company.

4.6 Summary

Through this chapter, we discussed about legal and ethical issues that Blue Nile

need to be aware of. Legal and ethical issues deal with gathering, processing, distribution and the

use of information on the internet were critically discussed. And, some advices were given to

avoid from the legal and ethical issues.


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Conclusion

Blue Nile is the biggest pure-play online retailer of diamonds in the world. The

company is based in Seattle, Washington and offers jewellery products in over 40 countries and

territories. The current initiatives or missions that Blue Nile focuses are to promote user

experience, to innovate new jewellery products and to expand international market.

The strengths of Blue Nile Company are cost effectiveness, exclusive supplier

relationships, outstanding customer relationship management (E-CRM) and multiple technology

platforms. Some weaknesses such as weak brand recognition and IT systems vulnerability should

be enhanced. At the same time, political, economical, social and technological aspects which

were mentioned above are also needed to be aware of.

The e-marketing strategies that Blue Nile adopted or planning to be adopted are

brand recognition, online customer loyalty marketing, advertising both online and offline,

expanding market, providing cheaper price, promotions and E-CRM based marketing. As Blue

Nile is pure-play online retailer, their promotion methods are very online dependent. Therefore,

the management should improve the offline promotion methods rather than online promotions.

Legal and ethical issues that can impact Blue Nile while gathering, processing,

and delivering and the use of information on the internet were discussed in chapter (4). Some of

the ways to avoid from legal and ethical issues were also described.


COMP- 1646

References

Book References

Efraim Turban, (2008) Electronic Commerce A Managerial Perspective

Available from: www.pearsoned.co.uk

(Accessed Date: 1st March 2015)

Harvey Kanter, (2013) Blue Nile 2013 Annual Report

Available from: investor.bluenile.com/annual.cfm

(Accessed Date: 4th March 2015)

University of Greenwich, B.Sc (BIT) COMP 1464, Information Systems Management

Website References

Blue Nile Inc World Largest Online Diamond Retailer

http://www.studymode.com/subjects/blue-nile-inc-world-s-largest-online-diamond-retailer-

page1.html

(Accessed Date: 6th

March 2015)

Blue Nile Effect


(Accessed Date: 6th

March 2015)

Blue Nile CEO says click-and-bricks jewellery retailing test working well.

http://www.geekwire.com/2014/blue-nile-ceo-discusses-nordstrom-deal-says-clicks-bricks-test-

working-well

(Accessed Date: 9th

March 2015)

http://www.pearsoned.co.uk/

http://investor.bluenile.com/annual.cfm

http://www.studymode.com/subjects/blue-nile-inc-world-s-largest-online-diamond-retailer-page1.html

http://www.studymode.com/subjects/blue-nile-inc-world-s-largest-online-diamond-retailer-page1.html


http://www.geekwire.com/2014/blue-nile-ceo-discusses-nordstrom-deal-says-clicks-bricks-test-working-well

http://www.geekwire.com/2014/blue-nile-ceo-discusses-nordstrom-deal-says-clicks-bricks-test-working-well


COMP- 1646

About Us | Blue Nile


(Accessed Date: 9th

March 2015)

Blue Nile Credit Card

http://www.bluenile.com/services/blue-nile-credit-card

(Accessed Date: 9th

March 2015)

Blue Nile Overview


(Accessed Date: 10th

March 2015)

Blue Nile goes Responsive Website

http://mashable.com/2013/12/15/blue-nile-metrics


http://www.bluenile.com/services/blue-nile-credit-card


http://mashable.com/2013/12/15/blue-nile-metrics