Blue Nile Company Strategic Management


Online business has become the core business for most organizations. Most businesses are finding it very profitable to engage in online business. This is so as it reduces the cost of doing business and also reaching out to a wider untapped market. Online business involves using the internet to promote brand awareness and the sales of a certain product. Blue Nile is among the many organizations that are prided with carrying out of online businesses.

The growth of this Company is visible each passing year. Its growth can be attributed to strategic management. The management of this company ensured that they carried out a thorough market research with an intention of becoming the best in the market.

It is due to this that Blue Nile was identified as one of the most successful online stores by Internet Retailer Magazine and Forbes Magazine. This paper provides Blue Niles SWOT analysis, Financial Analysis, operation analysis, management, marketing, recommendation and implementation.

SWOT Analysis

A SWOT analysis involves identifying a company’s strengths, weaknesses, opportunities and threats. Strengths and weaknesses refer to factors that are within the control of the Company while opportunities and threats refer to those factors beyond its control. These issues must be taken into consideration if a company is to take advantage of its market niche.


According to the case study, Blue Nile had great advantages over its competitors. This is a probable reason why it is recognized internationally as a successful organization. One thing Blue Nile believed in was providing consumers with quality products. All consumers desire to acquire quality products from their sellers. This is exactly what Blue Nile offered its customers. It wanted to ensure that consumers always anticipated to shop with them.

Most consumers were also attracted to the Company’s low prices on goods. It has become nearly impossible for consumers to acquire quality goods at a low price. Most companies that produce quality products usually sell them at a very high cost. Selling quality products at a relatively low cost made Blue Nile Company attract consumers from all walks of life.

Paying attention to consumer needs was also another strength that enabled Blue Nile to penetrate a large market. Customers have different tastes and preferences. It is therefore upon an organization to ensure that it produces its products according to the different tastes and preferences of consumers. Intensive research helped in ensuring that Blue Nile acquired information on the changing needs of the consumers.

Shopping online possesses great challenges to consumers. In most cases consumers are not provided with the necessary information concerning the products they purchase. Blue Nile went out of its way to ensure that consumers were provided with the necessary information on the goods they ordered. This was done through recruiting qualified Customer Service Representatives that offered consumers with information on the products.

Having different suppliers ensured that Blue Nile never ran out of products. Having several suppliers also ensured that consumers were provided with a variety of products in accordance to their tastes and preferences.

It allowed consumers to compare different products and later select those they thought met their characteristics. Blue Nile did not only look out for different suppliers but suppliers who could offer quality goods. Research shows that Blue Nile’s suppliers were rated as the best in the United States.


Blue Nile had some weaknesses that made it hard to acquire rapid growth as expected. One was coming up with business strategies that could easily be replicated by competitors. One of these strategies was acquiring products upon request from consumers. This is a very good strategy; in fact the best for organizations that would like to reduce on the amount of dead stock.

It was unfortunate that key competitors of Blue Nile embraced the same strategy. These competitors are:,, and Failing to carry out enough research before venturing into new markets was another challenge that faced Blue Nile. The fact that Blue Nile performed pretty well in the United States, made its management to assume that it would perform even better in new markets.

This is the reason why they resorted to launching new websites in Canada and United Kingdom. Although this business later performed well, the first years were quite tough for this company. This is because the sales were quite low.


The high number of customers forced Blue Nile to penetrate the international market. Blue Nile wanted to ensure that it served not only consumers from the United States but also from other parts of the world. The management played an integral role in ensuring that Blue Nile acquired an international recognition.

This management strongly believed that Blue Nile had what it takes to be successful in an international market. This was due to its infrastructure and good customer services. It therefore saw Blue Nile establishing a website in 2004 in the United Kingdom. Another website was established in Canada in 2005.


Competition posed a great threat to the growth of Blue Nile. Most businesses had ventured into the selling of jewelry in 2004. It therefore became very hard for Blue Nile to convince its customers that it provided the best compared to its competitors. It even became harder because the sales of jewelry were seasonal.

This means that the sales were mostly high during Mothers Day, Valentines days and during wedding periods. Another challenge for Blue Nile was coming up with a business model that could not be duplicated by the competitors. In 2005 most jewelry company’s adopted Blue Niles business model.

This involved purchasing products upon request. Some of the key competitors of Blue Nile were,,, and All these competitors sold products that were similar in quality as Blue Nile. In addition they had a very strong management that helped in achieving success. for example had a manager with twenty five years experience in the industry.

Operation analysis

Blue Nile had a very unique operation compared to its competitor. The employees of this company had to ensure that consumers were provided with the right products. A return policy was therefore formulated in order to ensure consumers had enough time to reconsider their orders.

Consumers were given a total of thirty days after the shipment of their products to ensure that they were delivered the right goods. Unsatisfied consumers were allowed to return the goods and later offered a refund.

Consumers in the US were delivered with their products at no fee. The goods were shipped by use of Postal Services, FedEx Ground and FedEx Express. FedEx Ground was mainly used in shipping those goods that costed less than $250. Those orders that were over $250 were shipped by use of FedEx Express. FedEx Priority Overnight was used for shipping goods that were over $1000.

Consumers were free to change the mode of delivering by paying a fee of $15. A replacement value was always placed on every product Ordered. Color, cut, Typical Retail Price, weight, market value and clarity were the main determinant of this value.

Each product was attached its photograph, color, weight, clarity, carat and cut. This was important because it helped in replacing goods in case of damage or theft. It also acted as an insurance cover for consumers.

Financial Analysis

2001-2006 was a great period for Blue Nile. This is because this company was able to attain an Average Growth Rate of about thirty nine percent. Its sales were at $48.7 million as at 2001. There was an improvement in 2006 when this company attained sales totaling to $251.6 million. The gross profit on the other hand was $11.1 million in 2001 and $50.9 million in 2006. This was a sign of great improvement.

Its net loss as per 2001 was $7.4 million and the net profit was $13.1 million by 2006. Blue line had generated a cash total of $40.5 million in 2006. It was also observed that this company had no debt. Such a case was a good sign for Blue Nile as it showed that it was able to meet the cost of its creditors. The top management expected to achieve at least $290 million net sales and $0.85% net income in 2007.

One advantage Blue Nile had over its competitor was the capability to raise funds for paying suppliers in time. In addition, the suppliers financed the company making it easy to run its day to day activities. Other funds originated from high sales and capital investments. Blue Nile spent a total of $7.1 million on equipment and other facilities from 2001 to 2006. Its budget for 2007 was $4.0 million.

According to the Company’s executives, Blue Nile had a defensible market. The company tried as much as possible to acquire the best diamonds from its suppliers. This was through signing a memorandum of understanding with its suppliers. Creation of brand awareness and a unique brand name ensured that this company was always at the top in the market compared to other organizations that sold the same products.


Organizations carry out marketing for one sole reason, this is to increase brand recognition. Blue Nile carried out marketing for various reasons. These reasons included: acquiring customers, promoting brand recognition, promoting consumer traffic and building a consumer base that is loyal. The management believed that it was vital to come up with appropriate marketing strategies.

This was because most consumers of jewelry always go for quality goods. These consumers always looked out for sellers that were convenient and with a good reputation. The first step towards acquiring consumer trust was to create an attractive website. Blue Nile wanted to ensure that every consumer had a positive image every time they visited the website hence building their confidence to purchase fine jewelry and diamonds from the organization.

This was done by creating an interactive platform that could enable consumers identify goods that met their taste and preference. There are several characteristics that a consumer could consider before purchasing a commodity. These characteristics are: table depth percentage, color, cut, carat weight, price and even symmetry.

Generally Blue Nile wanted to ensure that consumers had confidence and knowledge while evaluating and purchasing their products. Blue Nile used advertising, offline and online marketing. The most common web portals that were adopted by this organization were MSN, America Online and Yahoo. Online marketing was also carried out directly. The expenses this company incurred due to marketing clearly showed how it truly believed in advertising.

Blue Nile spent a total of $4.5 million on advertising in 2003. There was a great increase in the expenditure for the same in 2006. This company spent a total of $9.6 million on advertising in 2006. There was however a drastic decrease in the expenses for advertising in 2005. This was due to an increase in the cost of purchasing key words online.


The management of Blue Nile was mainly involved in major decision making. These decisions involved determining new markets that the company could penetrate. The management together with the technological expatriates was in-charge of monitoring the Company’s operating systems.

The same management had to see to it that the company became successful. This was through carrying out research on means through which the Company’s operation could be improved.


Blue Nile would have performed even better if it had concentrated more on market research. Research is very important to any business that would like to attain global recognition. Research in business mainly involves acquiring knowledge on the existing market, competitors and consumer behavior. Understanding this places an organization in a better position to becoming successful.

Understanding consumer behavior ensures that, goods produced are according to the taste and preference of consumers. It is true that businesses produce goods not to their own benefit but to the benefit of their consumers. Hiring experienced personnel is also a key drive towards the success of all business organizations. This does not only entail the top management but also the subordinate staff.

The image of an organization is very important. A good image is determined by the skills that the employees portray. The Customers Service Representatives for example should be well informed on how to handle customers. Creativity is another important aspect to consider when hiring employees in an organization. Creativity helps in ensuring that unique strategies that cannot be replicated by other organizations are formulated.


Blue Nile was one among many Companies that showed a significant improvement in online business. Online business requires a lot of patience and skill to become successful. It also requires approaches to marketing strategies such as inbound marketing and the use of social media. Blue Nile through the use of appropriate strategies was able to beat its competitors like, and

Some of these strategies involved selling goods at a lower price, producing according to consumer taste and preference and having a customer care that could attend to the consumer needs when necessary. These are some of the strategies that enabled this company to achieve an international recognition.

The management was in-charge of ensuring that the company’s operations were run smoothly. Although it incurred some challenges such as competition, it focused on its strengths to ensure that it maintained a high profile.

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