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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