Blue Nile

In: Business and Management

Submitted By palomino31
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1. How strong are the competitive forces confronting Blue Nile and other online retail Jewelers? Do five-forces analysis to support your answer.

There are 27,000 jewelry stores in the United States making this industry fiercely competitive. The rival competitors have high fix costs and this is due to the fact the jewelry is expensive because of its luxury. The competitiveness stemmed from highly fragmented sales amongst local and other retail stores and the fact that there are many avenues in which one can purchase jewelry. Because of all of these factors, Blue Nile had to compete with online and offline traders. During the recession, Blue Nile was able to continue functioning because of its strategy. If an order came in online, then would the diamonds be purchase and order was then fulfilled and quickly delivered to the client.

The Supplier bargaining power in this particular industry is weak. Blue Niles competitive advantage over other leading vendors is its economical supply chain and it low operating all with keeping a comparable product in terms of quality. Blue Nile negotiated arrangements that allowed for diamond and gem suppliers to have their products on their website. This arrangement s was multi-year contracts and only included certain diamonds on their site. Another advantage was that they never order large quantities of diamonds or gems to keep in stock. They simply placed orders as needed by a client and this drastically reduced cost that other jewelers incurred without making annual sales to cover those initial costs.

Other retailers offering substitute products do not fare well in this industry compared to Blue Nile because when it comes to jewelry people want quality, therefore hindering a weak competitive force.

Buyers here have the upper hand on bargaining power. It is moderate because like stated before people do not mind the higher…...

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