Blue Nile Case Analysis

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Blue Nile Case Analysis 1) Do all the elements in the strategy fit together? Or are there built-in contradictions? The main elements of Blue Nile’s strategy – High quality, competitive price, customization, informative website, good customer service and support, long term supplier contracts, negative cash flow cycle, certification, brand recognition, reliability, convenience and speed of delivery- have enabled it to establish itself as the number one online diamond retailer. Although it has a sound overall strategy, under competitive pressures, certain elements conflict each other dampening its position as a market leader. 1. Pull back on advertising (purchase of keywords) v/s increase in brand awareness and recognition 2. Increase inventory of fine jewelry v/s lean operating model 3. Customization v/s competitive pricing 4. Outsourcing operations/services v/s maintaining high quality customer service 5. High value sales (6 digit single sales) v/s high gross margin 6. Cutting prices to make sales v/s increasing net income Blue Niles sells only through the Internet. Pull back on online advertising, due to increased cost; lessen its visibility on search engines, reducing brand identity and recognition. Further increase in product line both in terms of high price and product variety, to attract a large range of customers, can affect their lean operating model increasing inventory costs. Increasing customization options could also affect its competitive pricing increasing operation costs. Even though outsourcing operations and services can help keep a better control but in times of high demand they can be compromised since they are not directly a part of the company. The quality of the service is dependent on the ability of the outsourcing company and not Blue Nile. Further, it set lower gross profit margins on high value sales (just to make the sale)
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