Blue Nile - Analysis and Evaluation

Blue Nile, Inc

Problem Statement

Identification of Blue Nile, Inc's course of action for improving the company's future prospects.

Analysis and Evaluation

Blue Nile, Inc has been keeping at the lead of the pack even through the harder economic times, even though it has slipped a little since the products are more of a luxury item rather than a necessity. With competition gaining on Blue Nile they need to review practices and procedures and not get complacent with their standing in the field of expertise. Come up with ideas of expanding product line. Figure out what the next trend that parallels their business.

The competitive forces confronting Blue Nile and its rival jewelers are very intense and competitive because online jewelers are very competitive. There are more product selections, quality, price, customer service and support and reliability. Customers are able to compare prices of online jewelers with their local jewelry stores to see which one is better buy. To gain more of a competitive edge Blue Nile will need to determine which of the five competitive strategies to employ - overall low-cost, broad differentiation, focused low-cost, focused differentiation, or best-cost. Being that the economy is not very strong right now, recommendation for an overall low cost strategy is one that should be employed.

In order to be successful with this low cost strategy, Blue Nile needs to out do their competitors in cost effectively managing value chain activities and find innovative ways to reduce cost producing activities. This strategy works particularly well when products of rival sellers are nearly identical and supplies are readily available from eager sellers, when there are not many ways to differentiate that have value to buyers, when many buyers are price-sensitive and shop the market for the lowest price, and when buyer switching costs are low. With in the jewelry industry, even though buyer switch costs are not always low, this would be the best fit with this company for the next 3-5 years.

Competitive forces Blue Nile faces in the fine jewelry market are product selection and quality; price; customer service and support; brand recognition; reputation; reliability and trust; and with online retailers, website features and functionality. The largest competitive forces that faced Blue Nile in the beginning were brand recognition, and still could hinder their success a bit today, if consumers are unaware of their strengths. These forces can be limited with proper research of what the buyer would spend their hard earned money on, what gives the consumer the best bang for their buck.

Using SWOT analysis we are able to determine a company's strengths, weaknesses, market opportunities, and external threats to the company's wellbeing.