Blue Nile and Diamond Retailing Case Study Essay

1361 Words Sep 28th, 2011 6 Pages
Executive Summary The purpose of this case study is to measure the success of Blue Nile against Tiffany and Zales success in diamond retailing by comparing retail strategies and structures.
Blue Nile is an online jewelry retailer that was founded in December 1998 only selling products in the United States, with one warehouse facility in Seattle, WA. In 2007, their e-business expanded to Canada and United Kingdom, opening another facility in Dublin, servicing Western Europe and the Asia-Pacific region. Their lower warehouse and inventory expenses allow them to have a 20%-30% markup on their products compared to 50% from their competitors with retail stores. The company’s sales revenue was $322 million and their net income was $22
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As a result, the company lost existing customers and couldn’t establish new ones. Poor responsiveness due to an inefficient supply chain and poor demand forecasting, caused the company’s new strategy to fail, and they returned back to their old strategy costing them $26.4 million at the end of July 2006. By February 2008, Zales had planned to close 105 stores reduce 20% of company headquarters staff, and reduce $105 million in inventory in effort to improve effectiveness and increase profits.
Tiffany uses an e-business to sell their lower-end jewelry and stores to sell their higher-end jewelry. This forces the higher-end jewelry customer to shop at their stores were they get face-to-face customer service and product visibility in person before purchasing, and limits their low-end customers to only shopping online. Tiffany uses both, their own and third party manufacturing facilities, which allow them to minimize production cost. As of 2007, the company’s sale prices in retail stores average $3000 while their online sale prices average $200. Using the e-business approach would allow all three of these companies to efficiently capture historical sales data to forecast demand and make new products available as soon as possible.
2. I think that wide variety products offered at Blue Nile is an excellent approach in

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