Blue Nile is an online retailer of diamonds and jewelry founded in 1999. It is headquartered in Seattle and operates in 25 countries. In 2011, Blue Nile saw sales growth of 4.5% to $348 million and increased gross profits. It employs over 200 full-time employees. While Blue Nile has been successful, it could benefit from expanding internationally, diversifying its supplier base, and increasing brand recognition through improved marketing.

1. By Team : 2

3. Blue Nile, Inc
World’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.

4. 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

5. 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

6. Mission Statement
 To build premier specialty retailer of
jewelry by offering consumers high
quality products at compelling values
through an empowering shopping
experience

7. Business model
Fast inventory turnover
Customer
Receive diamond Ship item to customer receives
product
from supplier
Day 1 Day 2 Day 3 Day 4 Day 5 Day
45-60
Customer Pay
purchase Payment received supplier
40 -55 day positive cash float

8. 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

9. Competitive Pricing
Source: www.bluenile.com
They are able to provide diamonds based on the customers preference
Different types are available on the basis of cut, clarity and color
Hence the customer can choose what he/she can afford

10. Educational Information &
Certification

11. Marketing Strategy
Increase Blue
Generate Acquire
Nile brand
consumer traffic customers
recognition
Ads at web
Build loyal Promote repeat
portals & search
customer base purchases
engines sites

12. Growth Strategy
• Price
Expansion of • Product mix
product line • Customized
• Non-customized
• Based on consumer preference for
Geographical jewellery
Expansion • Extent of online purchasing
• Competitive landscape

13. External environment
For 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.

14. 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

15. Competitors
Criteria Bluenile.co Diamond WhiteFlash Ice.com JamesAllen.co
m s.com .com m
Established 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 Collection
Information Yes Yes Yes (video No Yes (3D
on website tutorials) Viewing)

16. Consolidated financial data

17. Problems
 Too much cash on hand
 The lack of international exposure
 Concentrated Supplier Base
 Lack of brand recognition in the marketplace.

18. 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.

19. SWOT Analysis
Strengths:
 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

20. 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

21. 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.

22. Strategy 2
 Weakness: The lack of international exposure
 Suggestion : Increase exposure in foreign countries.
• Justification
Currently Blue Nile is mainly operating within the United
States, Canada, and the United Kingdom
but 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.

23. 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.

24. 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.

25. 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

26. 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.