BLUE NILE Inc. Strategy and SWOT Analysis

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Table of Contents

Introduction
An Evaluation of the Company’s Strategy
The BLUE NILE business model
SWOT analysis of the company
Conclusion
Works Cited

Introduction

Blue Nile was founded in the year 1999 (Thompson 1) and it has since grown to become the world largest online retail dealer of best high quality diamonds and gems. The company markets its product online through the internet.

An Evaluation of the Company’s Strategy

Low cost strategy

The Blue Nile Company has few employees as most of its products are marketed online and thus this has enabled the company to operate at low costs compared to its other industry competitors. This low costs operation enables the company to sell its diamonds and gemstone products at lower prices thus having a cutting edge over its competitors.

The company’s strategy of operating in virtual stores, thus displaying its products in the internet without having the real products and only purchasing the required diamond or gems after an order has been placed, enables her to minimize risks and the costs involved in carrying large inventories and purchasing huge stocks which no customer demands for.

Another cost saving strategy which enables the company sell its products at cheaper prices is the lean operating costs that the company employs. Rather than employing everybody on permanent basis, the company hires experts for example from the financial and merchandising sectors on contract basis and only when their services are required rather than employing them on permanent basis where they could be demanding for wages daily or monthly without having done anything productive.

This has resulted in the Blue Nile Company offering high quality diamonds and fine jewelry at attractive prices which are affordable to most of its customers.

Education information and certification

Providing its customers with useful information about their stocks and a trusted guidance throughout the purchasing process is another strategy the company is using to stay as the global leader in jewel online trading. The educational information provided, the in depth product information, the grading reports, and the wide product coverage gives its customers the confidence that they know what they are dealing with.

The information provided includes the shape, color, cut and carat weight and when the customer is knowledgeable about these qualities then he can decide on the value and affordability of the products. The company has developed the 5Cs: Carat, Color, Cut, Clarity and Cut grade. This in-depth information has enabled the customers educate themselves on the quality and values of their products (Thompson 4).

Marketing approach

To boost her brand recognition, enhance the consumers’ mobility, and increase the customer base. In doing this, the company has created a user friendly interactive search tool that allows shoppers to customize their search quickly and identify the characteristics and the desire in a jewel then make an order to the company.

The company offers information about the qualities and characteristics and thus the customers can search for the diamonds and gems according to quality, price, weight and other traits as their pockets could allow. Advertising is another marketing strategy the company is using both online and offline so as to reach a wider pool of customers.

Customer service and support

To complement the information provided in their website, the company has developed a call center through which their customers call for enquiries about the purchases and refunds among other enquiries. The call service response does not take longer than 10 seconds and this has helped improve the relationship between the company and its customers.

To enhance customer value and confidence the company has designed an order fulfillment by entering the customer orders accurately and then delivering the shipment order to the company suppliers who delivers the diamonds or the gemstones as per the orders. The company then makes the jewels and delivers them quickly and securely making no inconveniences to its customers. In line with the customer service, the firm has also the product line expansion where it has been offering both customized and non customized jewelry items.

The BLUE NILE business model

The cost minimization model which gives the company the ability to purchase diamonds and gemstone only when an order is made is a good model as it has enabled the company to conduct its business with minimal inventory, helped the company build a brand name and brand awareness hard to be copied by the competitors.

Negotiated agreements with various suppliers enables the company to be secure from overdependence on one supplier and thus reducing the chances of exploitation by a single company. By allowing the “ build your own feature” to operate, this allows the company make orders of only the required materials and thus reducing the chances of buying idle stocks which lenders working capital inactive.

SWOT analysis of the company

Strengths

Low number of employees, competitive pricing and lean costs. Since the company sells its products mostly online with the little number of employees, this enables the company on cut on its expenses and thus enabling it to provide their products at cheaper prices compared to their competitors. As stated by Thompson (3) the company sells its products at 20 to 40% cheaper compared to other industry competitors.
Customization ability. The build your own feature that allows the company to make the jewelries according to the customer requirements is another major strength in comparison with the other jewel makers who cannot be able to do this.
Information provision. This is another major strong point for the company as it is able to provide the customers with all the required information about what it offers. The company also offers informative knowledge on how to determine the value, quality and price giving the customers confidence that Blue Nile is a company you can trust.

Weaknesses

Virtual shops. Most of the customers purchase their diamonds and gems online without having the physical touch or feel of the jewels. Their rivals in the industry can take advantage of this by convincing the customers that when buying jewels its always best when you can have a feel of what you are buying.

Opportunities

Products diversification. The business offers necklaces, earrings, and rings. To expand its market base the company should start investing in making sunglasses or glass frames, women purses and male wallets, door handles and other appliances which their diamonds can be used on. This could ensure that the market share of the company grows.
Market exploration. The company should expand globally and be more vigorous in marketing its products abroad so as to increase its revenue returns.

Threats

Competition. The company has been facing stiff competition from other rival companies like Tiffany and Diamonds.com which offers similar products to what the company is offering and the fact that these competitors are convincing their customers that a customer deserves a touch of the jewel before buying is a major threat as most of the Blue Line Company stores are online.

Conclusion

Though online trading is rather risky and exhibits low trust and confidence among the customers, the Blue Nile Company has proven that its not only books which can be traded online but expensive jewels can also be traded online as long as the suppliers creates trust and confidence on its customers.

Works Cited

Thompson, Arthur. Blue Nile Inc. World Largest Online Diamond Dealer. Alabama: The University of Alabama, 2007

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