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Blue Nile and Diamond Retailing Networking Design in the Supply Chain

Autor:   •  December 12, 2017  •  3,954 Words (16 Pages)  •  648 Views

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Blue Nile success can be credited to their great business strategy and excellent customer service. Blue Nile prides itself on offering high-quality diamonds and fine jewelry at outstanding prices. Individuals, especially men want a company that will help them make the best decision when selecting jewelry for their loved ones. Blue Nile website does exactly that by providing guidance and easy-to-understand jewelry education that’s perfect for any occasion. Blue Nile allows the customers to build their own ring, even with the small details such the cut they prefer, stones, and at the end their selections would be finalized and priced. They most impressive attribute about their services was responsiveness to customers provided on the phone by sales reps. They focused on providing value to the customers by keeping their markups at about 20 to 30 percent, while others marked up diamonds by up to 50 percent. Blue Nile believed that it could afford the lower markup because of lower inventory and warehousing expense. Unlike jewelry retailers who maintained stores in high-priced areas, Blue Nile had single warehouse in the United States where it stocked its entire inventory. This is a major advantage because it eliminates a lot of cost associated with carrying products in stores and in DCs. These methods have allowed the company to experience to a lot of success that it hopes to continue on with in the coming years and expand overseas.

De Beers, appeared unmoved, refusing to give any commitment to curtail production. The company had recently opened the Voorspoed mine in South Africa, which, when fully operational, could add 800,000 carats a year into an already oversupplied market. Historically, De Beers had exerted tremendous control over the supply of diamonds, going so far as to purchase large quantities of rough diamonds from other producers. In 2005, the European Commission forced De Beers to phase out its agreement to buy diamonds from ALROSA, the world’s second largest diamond producer, which accounted for most of the diamond production in Russia. Russia was the second largest producer of diamonds in the world after Botswana

Results

Strategic planning takes a tremendous amount of research, capital, and time. Therefore, before an organization take on the challenge of entering an industry, they must also understand the internal and external factors of their targeted market. There are numerous ways of entering any industry, but the problem lies with forecasting, long term cost, and overall profitability. In the case study, three of the diamond company were looking for a way to hurtle over an economic downturn. Blue Nile will become the ultimate winner, due to their great business strategy and excellent customer service. Educating the customer allowed Blue Nile to make customer felt like they had enough information to make an educated decision. Also providing the customer with the service to build their own ring, allowed Blue Nile to display all their inventory related to the customer’s profile. Also assist them with any questions they may have through the phone by a sales rep who did not work on commission. All these factors allow the customer to feel relaxed and not fell pressured to buy anything. Zales tried to compete discount retailer such as Wal-Mart and Costco by changing their brand to a more upscale. With Zales switching back and forth between their image, they already lost a lot of loyal customers and did not gain any new ones. but with the huge mark downs in inventory they started to gains profits. But once fuel prices went up, their target market could not afford to do any discretionary spending. So they created a leaner operation by reducing their inventory and employees. Tiffany used their brand image to allow customers to fell privileged for having an item form them. By using third party suppliers to establish a diamond processing operation, they were allow to pick Tiffany quality diamonds. Using 30 percent of third party manufactures, allows them to have buffer in case something happens.

of the race. While Tiffany is the runner up, Zales is the absolute profit killer. For example, Zales strategic plan did not align with the long term objective of the company. Therefore, shifting their target market from low to high cost diamonds cause a massive decrease in profit. Tiffany remained focus with their strategic planning and had an acceptable profit while the economy was in a recession. For example, they started as a high end gem retailer and they maintain that image when things were downward in the market.

With considerable debate among colleagues and other peer review. Group one came to an interesting result. We took on the voting approach, since the presidential primaries was taking place during the week of the case. Upon voting, the result support Blue Nile as the favorable company to conduct future business opportunities. There were two factors that made the company the winner among the others. Factor one, was purely focus on e-commerce. For example, Blue Nile had the lowest inventory cost because all their gems are located under one umbrella. Therefore, the firm does not need multiple retail stores to hold or sell their products. Which resolve the number businesses concern: How can the firm save money? With the cost of brick and mortar stores swept under the rugs, Blue Nile may use that additional revenue to develop under diamond mines. For example, they can invest in their third countries mine development and potentially reduce the price of their current gems. The second factor that made Blue Nile a significant giant doing the recession was their ability to sell diamonds at a 20 to 30 percent markdown. While the competition was marking up their price at 50 percent. Those where the factors that made Blue Nile prevail ahead of the competition.

Summary of Results

Investing and carefully dissecting the case which lead to the decision of choosing the solution for the case, it was decided that Blue Nile would be the best decision for the case. Zales strategic plan did not align with the long term objective for the company, which was a major concern in determining the what company to go with. Tiffany stayed focus on making sure they profit during the recession; however, their markup was up to fifty percent whereas Blue Nile was twenty percent. Blue Nile was the company to choose based on their pull strategy and their customers could order directly from them. In other words, there was no middle man in getting the product to the customer.

Questions

1) 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

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