Blue Nile Case Essay

Background Blue Nile has grown into one of the largest jewelry retailers in the United States with only using the Internet as its distribution channel. The success is a direct result of a well-crafted business strategy that attracts high price customers and provides them with in-depth education about diamonds and jewelry. Gamble, Peteraf, Strickland III, and Thompson (2012), indicated that the company’s strategy provides customers with high quality diamonds, exceptional customer service and low prices (p. c-128). They pride themselves on their selection and outstanding education that they provide to consumers looking for the perfect diamond. In addition they have received various awards and recognition from Forbes and Bizrate.com (Thompson, Peteraf, Gamble, & Strickland, 2012, p. C-127). Blue Nile has found a niche in which to differentiate itself by creating an online marketplace for jewelry shopping and with low operating costs which makes them extremely competitive. In viewing Blue Ni les website, one can see that they have a vast amount of for potential buyers, that which determine a diamond’s value- carat, clarity, color, cut, and cut grade. Strength The company has a user friendly site that present a lot of diamonds styles to choose from with the 5C’s of diamond selection which are cut shape, cut, color, clarity and carat weight. Their price is much lower than others. Blue Niles also prides themselves on their selection and outstanding education that they provide to consumers looking for the perfect diamond (Thompson, Peteraf, Gamble, & Strickland, 2012, p. C-127). Weakness Blue Nile competes in a small area with a specialty offering. Brand awareness remains a constant source of weakness for the company. Blue Nile, Inc. needs to increase their advertising campaign to attract new and retain old customers. Opportunities Blue Nile needs to create a strong brand awareness that will allow can compete with Tiffany and Co. Blue Nile, Inc. recently opened warehouses in Canada and Britain, but has limited globalization to sales of 40 nations. Blue Nile will need global growth into the European market could prove to be a financial success. Threats Through the operating capital calculations it indicates that Blue Niles strategy is needs some adjustments in the current market space. From 2005 to 2009 the cash that has been available for the firm’s day-to-day operations has dropped dramatically. There was an estimated $58.8 billion in sales in the United States alone in 2009 (Thompson, 2012, p. C-127). With Blue Nile taking $302 million in sales in 2009, they had a great year but in reality only maintain a less than 1% of the market industry hold. This suggests that there is room for growth in this are. With steady profits for the past two years, 2011 has been the best year even though the 4th quarter resulted in small loss. The company profits are 2011 – $348 million, 2010 – $332.9 million, 2009 – $302.1 million, and in 2008 – $295.3 million be (Blue Nile, 2012, Investor Relations). References: Blue Nile, Inc. 2011 Annual Report (2012). Blue Nile, Inc. (online). Retrieved from http://files.shareholder.com/downloads/NILE/1855688484x0x560442/D1DAE1BA-0161-4574-8447-242F9561DF0E/2011_Annual_Report_FINAL.pdf Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2012). Crafting & executing strategy: The quest for competitive advantage (18th ed.). New York, NY: The McGraw-Hill Companies, Inc. Discussion 6.1 Jeffrey Clapper Jeffrey, I agree with your posting and I enjoyed reading it also. In reviewing the financials and the Internet site, it is apparent that Blue Nile spends a lot of money in the area that has no direct impact on generating profit. Blue Nile is now pursuing a new market consisting of non-engagement jewelry by offering an expanded range of products across several price points. This market should offer a great amount of growth opportunities for now and the future. All in all the brand and name recognition is the key aspect that the must pay attention to. Discussion 6.1 Michael Veltman Michael, Your post was very insightful. A main issue for Blue Nile is the lack of exposure through the their advertising. Blue Nile offers the best prices while still being able to create a profit. The low operations cost of the business enables them to offer low prices and still make a profit. On the other hand the lack of store front exposure creates a problem for gaining additional clients. By adding new products they can create there reach and drive more revenue.