Blue Nile

Blue Nile Inc. in 2010

1. Looking at the five – forces analysis it was clear that competition is prevalent in this industry. There is not much concern for people offering substitute products because in an online market a diamond is either of quality or not of quality. In their supply chain they are able to reduce cost greatly. They skip over a lot of the middle men that other companies have to deal with. This gives them a cost advantage in supply. The new entrants are established jewelry retailers that are attempting to enter the online market. They are a threat but not as much as a new company entering the market for the first time in the online market. Buyers are always interested in quality and ease of purchase. They offer several tools that encourage their buyers to use their service. They also offer a full refund in 30 days if a customer is not satisfied. This gives them some competitive advantage in the buyer market. Most of their competition comes from rivals in the same market. These rivals had the same advantages as Blue Nile because they all sell through the internet. This is a shop from home type service. Blue Nile is able to succeed due to their lean business practices but some other companies have many years experience and this gives them quite an advantage.

2. In order to survive the next 3-5 years they need to maintain their lean practices. Reducing their cost during this time will greatly help them. They also need to maintain their website daily; constantly keeping the customer intrigued with new product designs and format. Any advertising they can do will also greatly help bring more attention to their business. That is one problem with online retailers; many people just don’t know they exist.

3. I am choosing the Best-Cost provider strategy for a close match to their strategy. They offer a high quality product at a great cost. They do this by effective management through lean practices. They also like to educate their customers so...