Blue Nile Essay

2138 Words9 Pages
Blue Nile, Inc. (Case Study) Submitted by A-Game 1. Five Forces Analysis Overall, the competitive forces on the industry are only moderately strong with rivalry competition having the biggest impact. The five forces are looked at individually below. Buyer Bargaining Power Buyer bargaining power is low, but growing in the online jewelry retail industry. The increasing power stems from the buyer’s switching costs to competing brands being extremely low. Another area creating bargaining power is the amount of quality information available to buyers. Most of the online retailers have enormous amounts of information available to help educate buyers about jewelry and the entire buying process. Most buyers also have the ability to push back purchases until they find prices to be more reasonable. Substitute Products The threat of substitute products is very weak in the jewelry industry. Substitute performance features are extremely lackluster at this point, especially in the high-end markets. The switching costs to substitutes can also be very large, limiting their viability, along with the negative social stigma that comes with owning a “fake” item. In the diamond market, large diamond miners have bought up most of these artificial producers and then limited the availability of their products. Supplier Bargaining Power Supplier bargaining power is moderate for the online jewelers. Obviously there are a fixed amount of diamonds and precious metals available for the jewelry market. Relationships with suppliers are also important because most of the online retailers use a “just-in-time” supply chain model and carry very little inventory. What offsets these strengths are the number of suppliers with quality products and the magnitude that one large jeweler can have on a supplier’s total sales. Blue Nile’s top three suppliers accounted for only 28% of
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