Case 7 Blue Nile inc.
1. The diamond and fine jewelry industry was very competitive. Market share was divided between locally owned brick and mortar stores, retail chains, big box stores like Costco and online retailers. Which made The rivalry between competing sellers the strongest of the competitive forces in the industry. Buyer bargaining power: very strong
-Buyers incur a low cost of switching (they can purchase jewelery anywhere with no cost. -Buyers are armed with a lot of information about quality, price, availability so they can comparison shop. -like any luxury item buyers can postpone purchases if terms are not favorable and can easily make purchases at another retailer.
-Companies do not depend solely on a small number of buyers
-Consumer demand has grown at about 5% every year since 1980 Substitute product: weak
There is no threat of substitute products to diamonds, but if we look at business model as a product then there is intense competition because everyone is offering similar shopping experiences. Supplier bargaining power: weak
-growing price of precious metals
-rarity and price of diamonds make them unique compared to other stones
-Diamond suppliers are readily available and most companies have thousands of diamonds available at their disposal. -Retailers can switch suppliers at a low cost unless there is an agreement in place -Companies like Blue Nile keep relations with multiple suppliers ensuring lack of dependence on any one of them Potential New Entrants
-Big brick and mortar stores may make bigger push into online retailer (zales, costco etc.) -Online diamond retail can be very profitable and attractive venture. Blue Nile has recorded strong growth with very little cost Weaknesses
-potential costs to start an online business can be high (website development, initial marketing) -brick and mortar stores can be risky and are not all...
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