Blue Nile Case Analysis

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Rivalry Among Competitors
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-other internet jewelers, independent jewelry stores -qvc -brick & mortar stores like zales
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Supplier Power
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-limited supplier power -no dependence on one supplier -top 3 supplier accounted for only 24% of blue nile purchases in 2009 -strong relationships w/ their suppliers
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Buyer Power
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-Minimal buyer power -prices are set by suppliers & blue nile depending on the quality of the diamond/setting based on the 5 c’s -buyer power among competing sellers
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Threat of New Entrants
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-emerging websites -brick & mortar jewelers expanding to online market
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Substitutes
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-low -alternatives to diamond engagement rings -non-certified, cheaper alternatives
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Key Success Factors in the Next 5 Years
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-Keeping competitive prices -Fast turnaround -Providing useful info & guidance throughout the purchasing process -Supply chain efficiency
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Strategy
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1. Offer high-quality diamonds & fine jewelry at competitively attractive prices 2. Provide jewelry shoppers with a host of useful information & trusted guidance throughout their purchasing plan *FOCUSED DIFFERENTIATION*
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Financial Performance
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-High revenue & earnings growth on a historical basis -Strong recovery from Financial Crisis -Outstanding cash flow -sound balance sheet -Very low inventory turnover (12%) -Low markup rate
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Strategic Issues
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-Poor economic problems -How to compete with Brick & Mortar jewelers that had begun selling online -How to get a greater share of jewelry customers to shop online -How aggressively Blue Nile should pursue expansion into international markets
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Recommendations
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-Increase advertising -Consider opening stores or showcases -Expand product offering for repeat customers -Increase global market share
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SocioCultural
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-non-intimidating shopping for men, quick and easy
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Technology
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-website advanced searches, create-your-own custom jewelry, see certifications and reports, can call or email questions, apps, comparison shopping
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Political
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No use of \”blood\” or \”conflict\” diamonds, partnership with the United Nations
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Inbound Logistics
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Receive diamonds from suppliers within 1 business day of customer order being received
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Operations
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-Inspection/work by bench jewelers -low operating costs -> low prices
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Service
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-GIA & AGSL certifications and reports -GCAL appraisal -Automatic provision of an appraisal to aid in insurance matters (value-added) -30 day return policy on anything in original condition without custom engraving -extensive educational material on website -facilitates comparison shopping to their own products & competitors products
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Outbound Logistics
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-Free shipping in the US via FedEx or USPS -$15 charge for overnight priority shipping for orders under $1000, normal overnight shipping >$1000 -2-day shipping for $250-1000 -Final Inspection before shipping
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Marketing
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-Major portion of marketing effort focused on making sure visitors had a positive, informative experience -Most ad money went to ads on web portals -Low SG&A expense -Decreased ads during 2005 because increased cost to buy key words on search engines
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General Admin
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-Lots of outsourcing of technology & business stuff -customer service oriented
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HR Management
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-Small number of employees -Training of expert customer service representatives
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R&D
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Management continuously explored avenues to improve efficiency, refine company’s supply chain & leverage its investment in FC technology
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Procurement
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-Large # of suppliers who can supply diamonds within one business day of customer order -Only keep very small limited inventory, make small purchases -Suppliers represent more than half of high quality diamonds in US
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Capabilities
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1. Custom jewelry ready to ship in 3 days (sustainable CA) 2. Provide skilled customer service representatives and reports, certifications, and appraisal of jewelry (not sustainable, but a CA)

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