Blue Nile Case Study

Blue Niles is the world largest online certified diamond retailer. It was founded in 1999 and went public in 2004. It has annual sales exceeding $300, 000, 000 up from 169, 000, 000 in 2004. The majority of Blue Nile’s sales are in engagement rings. The company has sold more than 200,000 engagement rings by 2009. According to the text, “Blue Niles is ranked 58th in internet retailers. In 2009, Blue Nile was named best online retailer by Kiplinger Personal Finance every year from 2006 to 2009. Forbes Magazine has it listed as a favorite online retailer since 2000. In addition, it received the Bizrate platinum excellence award, which is the best online customer service award. It was given because online customers gave them high rates. Blue Nile is the only jewelry company to ever receive this award recognizing their quality service every year since 2002. Blue Niles business strategy is to offer high quality jewelry at a reasonable price and offer customers a lot of information and guidance throughout the purchasing process.

SWOT ANALYSIS:

Strengths:

Blue Niles show cases over 60,000 different diamonds approximately 5,000 more than its competitor. Blue Nile’s economical supply chains and lower operating cost allowed them to sell comparable diamonds and other quality jewelry considerably lower than those of local jewelers. Blue Niles bypassed the markups of traditional stores because it bypassed the layers of diamond brokers, wholesalers and supply chain. Because it lacked the overhead of traditional brick and mortar stores, their savings could be passed on to consumers. Until the transaction is completed, then Blue Nile would order the diamond. This alleviated the need to have a large inventory or warehouse to store the jewelry. Blue Nile’s supply chain gives it a large price advantage, compared to its cost mark of 28 percent to their customers versus Tiffany’s mark up of a whopping 130 percent and Zale’s price increase of 88%.

Blue Niles does not...