Blue Nile Case Stud

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Question1. What are some key success factors in diamond retailing? How do Blue Nile, Zales, and Tiffany compare on those dimensions? As with most retailing, the key success factors in diamond retailing can be measured by customer service factors and cost factors. Given the varied supply chain components and supply chain costs. Blue Nile has a distinct advantage in product variety and product availability since customers can “build their own ring” by choosing from an inventory ofabout 75,000 stones. Customers purchasing at Tiffany and, until recently, at Zales have beenlimited to the inventory available at the store. Customers who are comfortable making largepurchases online will find the low-pressure purchasing experience at Blue Nile, supported by theeducational Web site, salaried sales support, and thirty-day return guarantee, appealing. Giventhat the jewelry is made to order, clients at Blue Nile must be willing to wait to receive theirorders, unlike at Tiffany or Zales. The Tiffany brand is very strong and well established. It is associated with glamour, trust, andcustomer service. These associations allow the company to sell at higher margins than itscompetitors. Diamond and other high-end jewelry purchases are expensive, and many customerswill trade off other factors for the Tiffany customer experience when making such purchases.Moreover, when spending thousands of dollars for a single item, customers often want to see andfeel what they are buying. Zales does not have the product variety and availability that Blue Nileprovides, nor does it have the brand name advantage that Tiffany enjoys. The weaker brand isreflected in the firm’s margins, which are lower than those of Tiffany. Blue Nile’s focus on lowprices is reflected in the lower margins it has relative to both Zales and Tiffany. Blue Nile operates out of one warehouse, with its entire

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