By Team : 2

Blue Nile Inc.: World’s Largest Online Diamond Retailer

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

EmployeesAt 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

• To offer high quality diamonds & fine jewellery at outstanding price and to continue our leadership in our core business.

Objectives

• To distribute all over European and Asian continents

• To effectively manage future expansion

• 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

Receive diamond from supplier

Day 1

Customer purchase

Day 2

Ship item to customer

Day 3

Day 4 Day 5

Payment received

40 -55 day positive cash float

Day 45-60

Pay supplier

Customer receives product

Business Strategy

Blue Nile – A brand to reckon with in diamonds & fine jewellery

The highest quality

standards in the industry

Comprehensive education

and guidance

Unmatched diamond

selection and interactive

search tools

Commitment to a superior

customer experience

Competitive Pricing

They are able to provide diamonds based on the customers preferenceDifferent types are available on the basis of cut, clarity and color

Hence the customer can choose what he/she can afford

Source: www.bluenile.com

Educational Information & Certification

Marketing Strategy

Increase Blue Nile brand recognition

Generate consumer traffic

Acquire customers

Build loyal customer base

Promote repeat purchases

Ads at web portals & search

engines sites

Growth Strategy

•Price•Product

mix•Customi

zed•Non-

customized

Expansion of product line

•Based on consumer preference for jewellery

•Extent of online purchasing

•Competitive landscape

Geographical Expansion

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 ForcesThreat 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

Criteria Bluenile.com

Diamonds.com

WhiteFlash.com

Ice.com

JamesAllen.com

Established

1999 2000 2001 1998

Range of Products

60,000 40,000 About 1000

300,000

55,000

Distinct feature

Competitive pricing

- Trade-up program

EMI option

s

Finest Collection

Information on

website

Yes Yes Yes (video tutorials)

No Yes (3D Viewing)

Competitors

Consolidated financial data

Problems Too much cash on handThe lack of international exposureConcentrated Supplier BaseLack of brand recognition in the marketplace.

Other problems Independent jewelry storesRetail jewelry store chains, such as Tiffany’s and Zale’sOther online retailers that sell jewelry such as Amazon.comDepartment stores, chain stores and mass retailers, such as

Nordstrom’sOnline auction sites, such as eBayCatalog and television shopping retailers, such as Home

Shopping NetworkDiscount 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 onlineChange in consumer tastes could hurt Blue NileIndependent jewelry storesRetail jewelry store chains, such as Tiffany’s

and Zale’sOther online retailers that sell jewelry such

as Amazon.comDepartment stores, chain stores and mass

retailers, such as Nordstrom’s

Alternatives Strategy 1Weakness: Too much cash on handsuggestion: Merger and acquisitionsJustification 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 exposureSuggestion : 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.

Strategy 3

Weakness: Concentrated Supplier BaseSuggestion : Implement new contracts with more suppliers.JustificationCurrently 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 4Weakness: Lack of brand recognition in the marketplace.Suggestion : Increase the use of marketing to attract more

customersJustification 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 jewels3-D view of diamondsMechanism to identify the ring sizeAuction salesInvest 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 customersAnother 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.

Thank you