Blue Nile Case Analysis

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Table of Contents

Introduction
Market Structure
Key Success Factors
Internal marketing audit
References

Introduction

Blue Nile is a company that was founded in 1999 and has grown to be the largest jewelry retailer in the whole world. The company is listed on NASDAQ as NILE. The company is doing well in online retailing and was acknowledged with the BizRate.com circle of excellence platinum award as the best online retailer as recognized by the customers.

The company has entered into the international market in the UK and Canada. High percentages of its online retailing are wedding bands and engagement rings. The firm has strategies to increase the awareness of its products to its customers through advertising. The company is also able to provide educative information about its products. The company offers a variety of products therefore making it competitive in the market.

Market Structure

Any company has to evaluate and analyze its competitors to determine its market potential in the target market. This analysis must include the extent to which relevant information about the commodities and services of the company reaches the target market. The amount and the number of customers, and the size and the quantity of the produce are also the aspects of companies’ analysis of their competitors.

Market competition enables the company to identify the needs and demands of the customers and helps to intensify the effort of the company to increase the quality of its products. The Blue Nile Company competition is from online and offline firms.

Since the Blue Nile Company is the best online seller in the jewelry and diamond company, competitors have never been able to outcompete it. The main competitors of the Blue Nile Company are Zale, sterling, tiffany and Heklzer (E-Commerce Students, 2009).

Most of online retailing competitors apply the Blue Nile strategy of buying from suppliers only when an order is made by the customers. These online retail competitors include whiteflash.com, ice.com and JameAllen.com among others. The Blue Nile company website provided the customers with required information about the diamond and the jewelry.

The company consultants are also trained to guide the customers on the steps in the process of buying appropriate items and shipping policies to be adhered to. Some of the competitors do not offer guidance services and have less return for non-customized orders. Therefore, the Blue Nile Company remains as the most competitive company in the market (E-Commerce Students, 2009).

The company’s aim is to produce a large inventory of low prices and quality diamonds that match with the needs of the customers. The firm also aims at providing satisfactory information about its diamonds to potential customers to raise awareness and add efficiency by introducing online retailing products.

The company offers more than 60,000 different diamonds and styles of fine jewelry that includes the rings, necklaces, pendants, watches earrings and ranges from the simple classic to impressive signature of the finest diamond in the world. All diamonds differ in shapes and sizes offering a wide selection to the customers and giving the company a competitive edge among its competitors.

Key Success Factors

These factors are those that are essential for the business to attain its marketing strategy. These factors help in changing the behavior and the demand of products by customers. The Blue Nile company strategies of providing information about grading, shapes quality and prices of diamond jewelry is one of the factors that leads to the success of the company. Wide selection of products and affordable prices also attracts customers to buy the jewelry from Blue Nile (E-Commerce Students, 2009).

Internal marketing audit

Mission statement

The mission statement of the Blue Nile Company is to create an affordable efficient and effective way for customers to purchase diamond and fine jewelry online. The company also aims at providing a variety of high quality products at a great value, convenience and customization its customers.

The company has made it possible its clients to access information about the diamond’s quality shape and texture easily by providing it in their website. Customers are able to customize the products and get their orders within three working days. The company gets feedback and questions from customers on their website therefore getting the best orders from their suppliers.

Porter’s Five Forces

Porter’s forces are the competitive forces that enable the company to identify its weaknesses and treats. They are the factors that lead to the increase or reduction of the profits of a company.

Competition in the Industry

The Blue Nile Company has faced great competition both locally and internationally. The competence of the industry has been increased by increased competition in the pricing of jewelry and production of information to customers. Completion in the jewelry industry is also fueled the ability of customers to choose products online.

It has made the company to incur some loss due to pressure to employ more trained consultants to guide consumers on the best products and the qualities of the products. The Blue Nile has intensified the process of creating awareness of their products to the customers through the advertising.

This has led to the increase of the adverting cost of the company. Competitors of the Blue Nile Company offer the same services therefore reducing the company’s market potential to create profit (E-Commerce Students, 2009).

Threat from New Entrance

New companies entering the jewelry industry are the main threat to the Blue Nile Company. This is because they tend to offer the products at low prices in order to win the customers. The new companies operate at low costs that enable them to sell their products at low prices.

However, new market entrants in the jewelry industry are not always able to make an impact on the sales of Blue Nile Company because they lack experience in the market.

Threat of Substitute Product

Low prices on rings, bracelets, necklaces and other jewelry sold by new companies in the market have caused some customers to shift from the Blue Nile Company to their companies. Although the effect has not been so big since more customers are raising up.

Changes in the bargaining power of buyers and suppliers

The buying behavior of customers has been changing due to the changes in the economy. The change of the behavior of consumers has also been influenced by the freedom they have to choose from the variety of jewelry and the awareness created by the company.

The behavior of customers has made the company to increase the budgetary allocation. However, the cost of production for the Blue Nile has been increased due to the world economic change (Alkhafaji, 2003).

Pestle Analysis

Political Environment

This involves the legislation, government and pressure groups that limit the activities of the company. The Blue Nile Company faced no restrictions on its entry in the local and the international market. However, it was affected by the high cost of entering into the UK market thereby reducing its potential in the global market (Alkhafaji, 2003). Nevertheless, the firm was able to raise $33.2 million in 2009.

Technological Environment

The level of technology in the jewelry markets enabled the Blue Nile Company to create a website where customers were able to get access to educative information about wedding rings and other jewelry. The technology also enables the Blue Nile Company to access information about competitors thereby changing their strategies to remain competitive in the market (E-Commerce Students, 2009).

Economic Factors

Due to the current recession in the economy, both companies and customers have reduced the habit of buying luxury goods. This is because of the uncertainty of the economic treats in the future. The changes in the economy have led to the increase in the cost of production of the jewelry product for the Blue Nile Company (Alkhafaji, 2003).

Social Cultural Environment

These are the institutions and other forces that affect the basic preferences of customer’s, values and behaviors. Consumer increased use of the internet may be termed as an achievement for the company since they are able to reach a wide range of the target market more efficient than when there were fewer customers using the internet.

SWOT Analysis

Strengths

The company purchases the products as ordered by the customers and have only less than 200 employees. It sells the jewelries online and this allows reducing the operation cost which occurs with the selling the products physically. It also enables the company to charge 20% to 30% less than the other retailers therefore winning the competitive advantage over the competitors.

The Blue Nile Company was the first one to offer the customization of the engagement rings and enabled the customers to choose the shape, color, size and clarity. The company is also able to ship the product to the customer within the 48 hours. The company was the first one to sell their products online and have information on the products being accessed easily by the customers (Alkhafaji, 2003).

Weakness

The online services do not allow the customers to touch or see the diamond they are buying. This makes the customers to risk in buying the products online. Customers therefore fear buying online and most of them tends to buy the diamond from the local retailers. The company still needs to do more customer awareness (E-commerce, 2009).

Opportunities

The Blue Nile Company offers products that are more attractive for women such as rings, bracelets, earrings and necklaces. They buy the products from the supplier’s only when there is an order made by the customers reducing the cost of storage and the uncertainties of the customers refusing to buy the product.

Threats

Blue Nile has the threat of competition from the local stores who sells the product online. The company faces the greatest threat from Tiffany and Co. in the local stores and the online competitors for the company are diamond.com, ice.com and ashford.Com.

Value Chain Analysis

Primary Activities. Inbound and Outbound Logistics

Inbound logistics of the Blue Nile Company involve the activities of receiving the diamonds from the suppliers and storage before the goods are shipped to the customers. It also involves the jewelry that is sent back by the unsatisfied customers.

The outbound logistics are the order processing of the commodities ordered by the customers. It also involves all the activities involved in the shipping of the product to the customer (E-Commerce Students, 2009). Other activities are operations that involve the production of jewelry.

Supportive Services

Firm’s Infrastructure

The company’s organizational structure matters a lot in the success of the company. Inventory planning and measurement helps in the company’s performance. The Blue Nile Company is able to plan on the shipment of the orders to the customers within the 48 hrs, which gives the customers satisfaction, which they require. The unsatisfied customers are able to return the products within 30days of shipment.

Procurement

This involves the companies process of purchasing all the require material for the production of the final product. The Blue Nile purchase already finished product for their customers but they allow the customers to customize their products. Distinctive competence is what the company is able to do better than the competitors are.

The Blue Nile company distinctive competence is its ability to retail online and being the first company to do so. Their shipping policies also offer the customers enough time to check whether the shipped commodity is in the quality they wanted and if not so, they can return the [products within the 30days of shipment (Alkhafaji, 2003).

The core competence of the Blue Nile Company is its ability to train customers on the 5c’s characteristics of the diamond. The company’s website also provides easy to understand information about the products.

Strategies

Increase Entry in the Foreign Market

The Blue Nile Company only operates in the U.S.A., Canada and the U.K. The company needs to establish itself more in the other international markets since it is the best online retailer of diamond in the world.

The e-commerce is recognized in the whole world and the Blue Nile will not have problems with the establishment of their product in the local market. There is a great opportunity for the company in the international market, the benefits depend on the speed of its entry into the market (Alkhafaji, 2003).

Increase Brand Recognition

One of the marketing strategies is to increase the recognition of the brand among the customers. Although the customers who already know the Blue Nile Company have proved to be loyal to the customer, the company has not achieved the needed awareness among all potential customers. The competitors have embraced the media advertising that increases their brand exposure.

These companies are tiffany and Zale and they use the televisions and magazines among other types of media. Their customers online can access Blue Nile Company but a recent study have shown that very few people know about it. The company should be aimed at creating a long-term relationship with their customers. They should also focus on the customer experience on their products.

However, the company has established the strategies of giving their adverts on the website when a customer is looking for any kind of product either the diamond or the jewelry. The company also needs to increase the customer base (E-Commerce Student, 2009).

The Blue Nile Company should implement the strategy of increasing the customers’ awareness first before they intensify on the increase in the international market. By increasing the brand recognition, the company will get more return because they will also increase the awareness to the international customers in that the customers will be ready to buy their products once introduced to them.

The Blue Nile Company should get the advertising agent that is known worldwide to do their advertising. If the company increases the marketing, it will be able to get 10% market share and this will win customers loyalty among its competitors (Alkhafaji, 2003).

References

Alkhafaji, A. (2003). Strategic management: Formulation, implementation, and control in a dynamic environment. London: Routledge.

E-Commerce Students. (2009). Blue Nile Inc: Education, guidance, diamonds and fine jewelry. London: Rolf butz.

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