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Blue Nile Inc. By: Henrik Oiseth Jason J. Casey Lars Isaksaetre. Intro. Company profile Industry profile SWOT Financial ratios Strategies EVA . Company profile. Online retailer of fine diamonds and jewelry Headquarter in Seattle, WA 178 employees Founded in 1999

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blue nile inc

Blue Nile Inc.

By:

HenrikOiseth

Jason J. Casey

Lars Isaksaetre

intro
Intro
  • Company profile
  • Industry profile
  • SWOT
  • Financial ratios
  • Strategies
  • EVA
company profile
Company profile
  • Online retailer of fine diamonds and jewelry
  • Headquarter in Seattle, WA
  • 178 employees
  • Founded in 1999
  • Went public May 20th, 2004
    • IPO $20.50
retail jewelry industry
Retail jewelry industry
  • $40 billion of annual revenue in the U.S.
  • Mature market
  • Discretionary consumer goods
  • Vulnerable to economic downturns
  • Seasonal sales cycles
  • Kimberley Process
porters 5 forces
Porters 5 forces
  • Supplier bargaining power
    • Barging power has shifted
      • Easier to find new suppliers today
  • Barriers to entry
    • Capital intensive
    • Supplier dependent
  • Buyer bargaining power
    • Customers have some
    • Low switching costs
porters 5 forces cont
Porters 5 forces cont.
  • Threat of substitutes
    • Other luxury goods
    • Synthetic gemstones
  • Degrees of rivalry
    • Competitive market
      • Tiffany & Co.
      • Zale Corporation
      • Signet Jewelers Limited
      • Costco, Wal-Mart, Amazon
threats
Threats
  • Intense competition
  • Counterfeit goods
  • Hacking and spoofing
  • Declining demand of diamonds
weaknesses
Weaknesses
  • Lack of brand recognition
  • Profit margins
  • Concentrated supplier base
  • 70% of revenues from engagement rings and wedding bands
strengths
Strengths
  • Unique business model
    • Mass customization
    • Inventory system
    • Price leader
  • Customer service
    • Call centers
    • Informative website
  • Company structure
    • Only 178 employees
opportunities
Opportunities
  • Growth in online sales
  • Diversify product portfolio
  • International expansion
strategy one
Strategy one
  • Merger and acquisitions
    • Blue Nile is in good financial shape
      • $54 million cash on hand
      • In a position to take on new debt
    • Horizontal or Vertical expansion
      • Greater market power
      • Increased diversification
    • Acquired by a larger organization
    • Risks
      • Integration difficulties
      • Loss of entrepreneurial ability
strategy two
Strategy two
  • Improvement of international operations
    • Half of the world market for diamonds is outside USA
    • Blue Nile’s international sales accounted for 9% of total revenue in 2008
      • Mostly generated from the UK, Canada, Australia, and New Zealand
    • Shipping to 40 countries in the Asian Pacific region and Europe
      • More user friendly websites and payment options
    • Risks
      • Fluctuation of exchange rates
strategy three
Strategy three
  • Concentrated Supplier Base
    • Weakness
      • Rely too heavily on top suppliers
      • 25% from top three suppliers
    • Renegotiate new long-term contracts with existing suppliers
    • Acquire more suppliers
    • Risks
      • Jeopardize relationship with current suppliers
strategy four
Strategy four
  • Improve brand awareness
    • Increased advertising
      • Magazines, Billboards, Product placements
    • Exclusive Blue Nile collection
      • Artist in mind is Theo Fennel
    • Customer referrals discounts
    • Risks
      • Diluting the Blue Nile brand name
      • Campaign does not meet expectations
      • Could be costly
implementation
Implementation
  • Outsource creative advertising
    • Company in mind BBDO
  • Advertising expenses
    • From $11.9 to $29.4 million
  • Increased market share
    • 6.3% to 6.9% of online jewelry sales
  • Increased revenue
    • $322 to $352 million
  • ROI
    • 63%
  • This strategy is also the least invasive…
slide18
EVA

All numbers in thousand

EBIT (1-t) $169,400

(WACC) (11,690)

EVA $157,710

  • Based on expected increase in revenue and related costs
questions
Thank you for your timeQuestions?

“the special question to the special girl deserves a special ring…” create yours at www.bluenile.com