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.
After reviewing all the five competitive forces, my analysis showed that the weakest of the fives forces is the threat of new entry’s despite the possibilities of selling of a good with a high contribution margin, it is very challenging and expensive to develop a new competitor that could go head to head with Blue Nile and make a profit, let alone survive the competition. Supplier power is a modest force due to the fact that Blue Nile depends on one of the thousands of diamond suppliers for the diamonds they use since they do not pay for a diamond unless it is ordered first by the customer. The reason why they are not too big of a force is because there are plenty of other suppliers to turn to. The top three suppliers accounted for only 24 percent of the company’s purchases in 2009. Another modest force is competition from rivals.
How strong are the competitive forces confronting Blue Nile and other online retail jewelers? Which one of the five competitive forces is the strongest? In the online retail jewelry industry there is a strong power of buyers and suppliers, and a stronger difficulty of entry. In the diamond industry the biggest threat is competition from other online retail jewelers as well as huge completion from brick-and-mortar retail stores. While all five of the competitive forces are strong when analyzing Blue Nile and other online retail jewelers, the strongest competitive force is analyzing rivalry determinants.
Five Forces Analysis of the Search Based Advertising Competitive Structure Search-based advertising has attracted enormous attention in the advertising industry as it offers unprecedented ability to target potential customers with quantifiable returns. Bargaining Power of Buyers and Suppliers The bargaining power of both the buyers and suppliers is relatively low because the online audience usually determines the exchange between the buyer and the supplier and also because of the Auction process where the Buyers negotiate between themselves (E.g. Google and X Company) Threat of New Entrants The barriers to entry in the Internet search market are high. The current competitors have thousands of servers deployed in locations all over the. A new entrant would need to provide better search results at very fast speeds to compete in this highly competitive market.
Through arrangements with suppliers, they are able to offer a large inventory of loose diamonds at low prices. Until a customer orders a stone, Blue Nile does not have to purchase it. Besides being able to have small inventories, this set up allows them to be paid by the customer before they have to pay suppliers. Using this cost saving supply chain also gave them the advantage of being able to set a markup price lower than competitors. The nature of their business model enabled them to enter the fairly new online market and compete based on lower prices.
Tony Qian 1/13/2011 BUAD 441 – Individual Case Study1 Blue Nile, Inc. – World’s Largest Online Diamond Retailer 1. What key factors will determine a company’s success in the online jewelry business in the next 3-5 years? The online jewelry business will be highly dependent technology. They will also need to keep good relationships with the organizations that certify their diamonds. They need to give their customer a safe, comfortable environment in which to make high dollar purchases.
A few issues that they are facing is trying to compete with a larger chain that is opening across from the current New Sundbury store and online retailers. Skadurz Pro is not able to sell the same volume as either of their competitors so they can not offer the same discounts. The core products that are being sold are skateboard and snowboard equipment that unfortunately has a small profit margin. While the clothing items do have a higher profit margin sales are limited
Week 5: Team Assignment Poppler’s Scenario Poppler’s management wants your team to create a proposal to implement technology upgrades to its inventory and customer management systems. Management wants to know how it can benefit from the introduction of new technology and if the investment will pay off. Review the existing business practices of Poppler’s (see Poppler’s gift shop scenario under the Materials tab) and using research, determine what technology upgrades you would recommend. Your team must provide specific information on the major components needed for the upgrade and your rationale for the
Paintings and antiques are often very expensive and require a significant amount of cushioning and foam to provide the best protection. • Shipping companies - Various shipping companies such as UPS, FedEx or the U.S. Postal Service would be great customers to target for Sealed Air Corporation. Sealed Air is known for providing packaging equipment and the companies aforementioned could benefit by increase customer's satisfaction by providing various packaging solutions. • Moving companies - Many of us
Postal Service. The U.S. Postal Service served much of the rest of the market, and it had a legal monopoly in delivering first-class letters. Among the first-tier level firms, there was a fierce competition for market share, especially between Federal Express and UPS. The small companies had to intensify their product differentiation and find niche markets within the industry.