Q1. How is Blue Nile impacting the traditional diamond industry?
e-Commerce portals such as Blue Nile seem to be taking advantage of the fact that integration of IT in business eliminates intermediaries and in-turn results in a significant amount of cost cutting. They can afford to provide their customers with the same product at nearly two-thirds the price of a normal brick-and-mortar store. But we are looking at one point in isolation. This is not the only contributing factor for some stores having to shut down.
By avoiding the need for a physical store, Blue Nile has no need for numerous staff and delivery-based middle-men. This would seem, at the outset at least, the ideal thing to do for all companies.
But as we are all aware, setting up an e-commerce portal goes beyond simple issues such as designing a website that manages end-to-end delivery of the product. There needs to be a solid back-end as the frame work, a top-notch supply chain management, and above all, ensuring that the customers get not only service that is superior to anything they have experienced before, but something more than they bargained for.
For Blue Nile, this is seen in the form of buyers' advice free of charge, a service that is definitely useful for both new and experienced customers. With quality products at kill-for prices and free services thrown in, they have changed all rules of the game- now they just need to force everyone to play.
Q2. What can the traditional diamond industry do to compete with Blue Nile?
Other companies can definitely take a leaf out of Blue Nile's book, but accomplishing what they have managed to do, is by no means an easy task.
Many companies have tried diversifying by hiring professionals to create a website that will not only reinforce the existing customer base they have, but also transcend boundaries and reach prospective customers far and wide- thus, creating a global network.
But only a few have succeeded.
Though most companies have websites as-you-like-it, each merely clones of one another, they fail to have a sizable impact on customers, Nearly every venture is either a failure, or simply passé. They need to keep in mind that various other factors come into play when you go 'e'. Many companies tend to overlook the finer aspects such as-
- Its not how or when you enter the foray, but the steps you take to stay in the picture.
- There's a lot more than meets the eye. A lot of thought needs to go into the entire transaction process- it can make or break the business' success.
- Seeing the company from the outsiders' view gives a fresh new perspective- and a uncovers bunch of hidden flaws.
- When things go wrong, it is not always the implementation, but the planning that's at fault.
Concluding remarks:
Keeping all the above points in mind, it can be said that even though the profit margin equation has been thrown off-balance by such players, there will always be a need for physical stores simply because of the various characteristics exclusive to them- trust being among the most important.
So why not have the best of both worlds - An online presence helps compliment a business and support its growth. Small companies can also merge, for at the end of the day, that is the right way forward. A stand-alone 'e-only' system is characterized by a low success ratio. Considering that e-commerce accounts for only 4% of the business, it is not a major threat to the market as of now, but definitely, a force to reckon with.
Siddharth Surana
1MS07IS098
Now days every business has an e commerce store online. So due to its huge demand, it increases each day pass. So it should not be much effective for the traditional business, because still people also go to the store physically to see the actual jewelry, what they want to buy?
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