Blue Nile, IncWorld’s Largest Online Diamond Retailer Blue Nile was founded in 1999 And today, it is one of the largest online retailers of diamonds. it also offers platinum, gold, pearl, and sterling silver jewelry. It is headquartered in Seattle, Washington and it operates in 25 countries Offering products through its United States, Canada and the United Kingdom websites Employees At January 1, 2012, they employed 206 full-time employees and six part-time employees.
Some highlights of blue Nile business performance in 2011 include• Sales growth of 4.5% to a record $348.0 million.• An increase of gross profit to $72.1 million, a record.• Blue Nile ended the year with cash and short-term investments of more than $89.4 million, while repurchasing $39.9 million of stock.• New customers increased by 7%, a trend made it believe that it can build on in 2012.• Improvements in both mobile website and dedicated phone app, enabling customers to shop for diamonds and jewelry whenever they want and wherever they are.• International sales growth of 29% to a record $55.9 million, representing 16% of overall sales. Blue Nile serves 44 countries and markets worldwide
Strategic Vision Objectives• To offer high quality • To distribute all over diamonds & fine European and Asian jewellery at outstanding continents price and to continue • To effectively manage our leadership in our future expansion core business. • Continued establishment & promotion of Blue Nile brand • To continue to enhance customer experience
Mission Statement To build premier specialty retailer of jewelry by offering consumers high quality products at compelling values through an empowering shopping experience
Business model Fast inventory turnover CustomerReceive diamond Ship item to customer receives product from supplierDay 1 Day 2 Day 3 Day 4 Day 5 Day 45-60Customer Paypurchase Payment received supplier 40 -55 day positive cash float
Business Strategy Unmatched Comprehensive diamond education and selection and guidance interactive search tools The highest Commitment to quality a superior standards in the Blue Nile – A customer industry brand to experience reckon with in diamonds & fine jewellery
Competitive Pricing Source: www.bluenile.comThey are able to provide diamonds based on the customers preferenceDifferent types are available on the basis of cut, clarity and colorHence the customer can choose what he/she can afford
Marketing Strategy Increase Blue Generate Acquire Nile brand consumer traffic customers recognition Ads at web Build loyal Promote repeat portals & searchcustomer base purchases engines sites
Growth Strategy • PriceExpansion of • Product mixproduct line • Customized • Non-customized • Based on consumer preference forGeographical jewellery Expansion • Extent of online purchasing • Competitive landscape
External environmentFor the analysis of the external environment for the Blue Nile has used the PEST framework. This framework describes the factors of a macro-environmental analysis. These four factors are; Political. Economic. Social. Technological.
Porter’s Five Forces Threat of substitutes – EBay Threat of new competitors – Whiteflash.com Sustainable competitive advantage – Competitive pricing, Wide network of Suppliers Bargaining power of buyers - Displaced decision- making Bargaining power of suppliers - They do their own diamond cutting and polishing, jewellery crafting and distribution
Competitors Criteria Bluenile.co Diamond WhiteFlash Ice.com JamesAllen.co m s.com .com mEstablished 1999 2000 2001 1998 Range of 60,000 40,000 About 1000 300,000 55,000 Products Distinct Competitive - Trade-up EMI Finest feature pricing program options CollectionInformation Yes Yes Yes (video No Yes (3D on website tutorials) Viewing)
Problems Too much cash on hand The lack of international exposure Concentrated Supplier Base Lack of brand recognition in the marketplace.
Other problems Independent jewelry stores Retail jewelry store chains, such as Tiffany’s and Zale’s Other online retailers that sell jewelry such as Amazon.com Department stores, chain stores and mass retailers, such as Nordstrom’s Online auction sites, such as eBay Catalog and television shopping retailers, such as Home Shopping Network Discount superstores and wholesale clubs, such as Costco and Wal-Mart.
SWOT AnalysisStrengths: Pricing Power allows Blue Nile to control their prices. Supply Chain allows the efficient transportation of goods for Blue Nile. Sell unique products that are hard to find elsewhere.Weakness: Profit margins are generally low Customer Service at Blue Nile needs to improve.Opportunities: The three main opportunities Blue Nile has is International expansion, Expanding product portfolio, Increasing their online sales
Continued………… Threats: They face intense competition, especially online Change in consumer tastes could hurt Blue Nile Independent jewelry stores Retail jewelry store chains, such as Tiffany’s and Zale’s Other online retailers that sell jewelry such as Amazon.com Department stores, chain stores and mass retailers, such as Nordstrom’s
Alternatives Strategy 1 Weakness: Too much cash on hand suggestion: Merger and acquisitions Justification Blue Niles income statement shows that they have an excess of cash on hand. Simply having cash on hand that is not invested is not necessarily a bad thing especially in our current economic state. It will allow them to stay in business. Blue Nile has the opportunity to acquire other online jewelers to expand their market share.
Strategy 2 Weakness: The lack of international exposure Suggestion : Increase exposure in foreign countries.• JustificationCurrently Blue Nile is mainly operating within the United States, Canada, and the United Kingdombut in order to be successful in e-commerce, companies need to reach out to more foreign markets and Blue Nile is lacking in this aspect. International exposure is the key for Internet stocks.
Strategy 3 Weakness: Concentrated Supplier Base Suggestion : Implement new contracts with more suppliers. Justification Currently Blue Nile has a concentrated supplier base. The company’s top three suppliers accounted for approximately 21%, 21% and 25% of the company’s total purchases in the fiscal year 2008,2007, 2006 and 2005 respectively. By having such a large percent of purchases come from one supplier it really puts pressure on the company because they rely so heavily on one supplier and any trouble with this supplier could result in major losses of Blue Nile. Too heavily relying on select suppliers gives the suppliers the advantage of dictating their prices.
Strategy 4 Weakness: Lack of brand recognition in the marketplace. Suggestion : Increase the use of marketing to attract more customers Justification Blue Nile can be accessed by millions of people through their websites. It is great that they focus so much on the customer experience and building long-term relationships, but for future growth one cannot simply rely on those two things. To keep up with the present, and even stay ahead of the competition, Blue Nile has to come up with new strategies. When searching online for jewelry and diamonds in particular, the company has done well in establishing their address in the different search engines. However, even though these things have taken the company to where they are today, there is a need for developing and increasing the customer base.
What could be done… Improve the collection of jewels 3-D view of diamonds Mechanism to identify the ring size Auction sales Invest more in advertising to attract more customers and receive more publicity. focusing on the customer experience . Emails about sales, new offers and new products should be sent out to existing customers Another option to increase the brand awareness could be TV commercials
Conclusion Blue Nile has had success since its start up and received multiple awards for its user friendly websites and business model. However, because of the fierce competition in the market Blue Nile needs to seek for continues improvement and take advantage of the opportunities in the market place. By increasing the exposure of the Blue Nile brand, the company can achieve a higher customer base and increased revenues.