Blue nile and diamond retailing case study powerpoint

Case Study: Blue Nile and Diamond Retailing

ISCOM/370

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Jason

Introduction

Key Success Factors for Blue Nile / Zales

Blue Nile Success Factors:

“Largest online diamond retailer in the world

High Quality Diamonds and fin jewelry at outstanding prices

Low pressure sales tactics that focuses on the education of the customer on Cut, Color, Clarity and Carat

Low mark up on their diamonds, 20-30% versus the rest of the competitive which had mark up of 50% or better”

( University of Phoenix,2017 PP. 102-105)

Zale’s Success Factors:

“Offered a credit purchase plan “ 1 penny down, 1 dollar per week

Zale’s moved to a more upscale Jewelry company from a low end diamond and jewelry company*

The company grew to hundreds of stores by buying up other stores and smaller chains.

Return to its role as a promotional retailer focused on diamond fashion jewelry and diamond rings”

( University of Phoenix,2017 PP. 102-105)

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Key Success Factors for Tiffany’s

Tiffany’s Success Factors:

“Tiffany’s silver designs in particular became popular all over the world.

Tiffany introduced its now famous “Tiffany setting” for solitaire engagement rings.

The Tiffany brand was so strong that it helped set diamond and platinum purity standards used all over the world

Tiffany had 220 stores and boutiques all over the world with about 80 of them in the United States”

( University of Phoenix,2017 PP. 102-105)

“Tiffany maintained its own manufacturing facilities in Rhode Island and New York but also continued to source from third parties. In 2007, the company sourced almost 60 percent of its jewelry from internal manufacturing facilities. Tiffany had a retail service center in New Jersey that focused on receiving product from all over the world and replenishing its retail stores. The company had a separate customer fulfillment center for processing direct-to-customer orders.”

( University of Phoenix, 2017, PP.102-105)

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Which of the two product categories is better suited to the strengths of the online channel? Why? Support your answer with course concepts and examples Blue Nile

Blue Nile is better suited for the online channel. They offer customer more product variety, “non-engagement products, including rings, wedding bands, necklaces, pendants, bracelets, and gifts and accessories containing precious metals, diamonds, gemstones, or pearls” (Chopra 104) . It provides the customer a ton of options, 90% of their inventory was in stock in single warehouse, therefore it could be easily located.

They did not succumb to stockout, in their inventory were 140,000 stones that customer a multitude of availability.

Since diamonds cost so much, customers want to be able to physically verify the stones and to ensure they have to a quality stones, they provided 30 days money back guarantee. It made the returnability rate much lower that reduce the uncertainty in customer being unsatisfied. After the customer completed their profit and preference.

Blue Nile suggest new diamonds in their profile that match their selection, it gives a swift opportunity to market new product faster.

The customer experience was increasing, they launched additional websites in two other countries United Kingdom and Canada. Open up customer service tech center in Ireland. Head quarter in Seattle handle the Asia-Pacific region.

These five factors allows the Blue Nile to excel on in their online channel. The foundation of the company was the based on the idea of internet style jewelry retailer. As the need of the market change, so did the company who alter their format by implementing some physical locations

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Product availability

Product variety

Returnability

Faster time to market

Customer experience

Tiffany & Co.

Tiffany stores have thrived by focusing on the sale of high-end jewelry. Why do you think Zale's upscale strategy failed in 2006?

Although both companies offered high-end jewelry, they had a different way of presenting its product to the market. Where Tiffany’s took care in building its brand, Zales appeared to be on the defensive. Tiffany’s offered a variety of products and other brands on their website and catalogs, but made sure to only sell its high-end products in retail stores with an average sales price of $3,000 in 2007. By doing that, Tiffany’s made sure to make a clear distinction between the rest of its offering and its high-end product line. Zales, on the other hand, did not. They had a few different concepts in which their target market ranged from teenagers to working class adults. Their retail stores were located in shopping malls and discount stores such as Wal-Mart and Costco. When they attempted to rebrand themselves by removing the low-end product line, did not adequately plan transition and the delays cost them their base customers. I believe that Zales did not establish the focus of their distribution network. Since they planned on removing much of their low-end jewelry, they needed to make sure that the suppliers and the carriers could replenish their stock with their new offerings in a smooth manner to ensure that they would not suffer from stock outs. Since they failed to do this, the result was a loss of millions of dollars as they dodged their upscale strategy (Chopra & Meindl, 2013).

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MEL

Which of the three companies do you believe is best structured to overcome weak economic conditions? Describe how the company's structure is related to its distribution channels; and explain how changes in market conditions may impact overall company performance.

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Advice for Strategies and Structures

Blue Nile needs to focus on lower prices

Zales needs to get control of their inventory and centralize

Tiffany needs to focus on keeping its brand image and going into wholesale

Blue Nile has a strategy that focuses on lower prices with the variety of high end stones. They will keep marking with the 4 C’s and third party validation are the main components when they value the diamond. Blue Nile will keep selling stones and diamonds without the customer being able to try or even touch anything before even buying them. This is a great strategy because they will not lose out on a sale and someone stealing the stone if they show them in an open area. Blue Nile takes an aggressive position because they emphasize its lower procies with similar quality to the high end diamond retailers. They use the same structure as a high end and known retailer to sell their stones.

Zales needs to be able to control their inventory to be able to sell strong to the high end retail way. Zales will have to centralize their inventory so all stores can have access to all stones and diamonds when customer want to order them and ship to the store within a reasonable time frame. When they do this the lower end stock will be available at all times in all stores while the high end will be order only once it is paid for. While diamond rings with imitation stones could be used to help the customer decide which style they want and at then end the diamond will be installed at the central location and then shipped to the store for the customer.

Tiffany will not be able to centralize like Zales and Blue Nile due to their brand image. Tiffany is know for everyone around they world due to the little teal box with the white bow on top of it. With this box alone everyone knows they will get a great diamond or stone from Tiffany. While Tiffany needs to look into wholesale to be able to compete with Wal-Mart and even Costco. When going into wholesale it will give the company a margin and get a form of exclusivity on the stones they sell.

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Jason

Conclusion

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Reference’s

University of Phoenix.(2017) Designing Distribution Networks and Applications to online sales. Retrieved from University of Phoenix, ISCOM/370

Chopra, S., & Meindl, P. (2013). Supply Chain Management, (5th ed.). Retrieved from University of Phoenix ebook Collection database

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