Blue Nile
Question 1.
What are some key factors in diamond retailing? How do Blue Nile, Zales, and Tiffany compare on those dimensions?
All the companies involved in the diamond market want to have a big share of that market. And, the bigger the share, the company makes bigger revenue. It is very interesting that all three companies (even though they are in the same ‘business’) have different approaches in ‘taking market share’. An important fact is that the companies have a different clientele. The market population is different.
The first 2 paragraphs of the case study state a common concern in any industry: do you reduce prices in order to compete with the competition? [research is needed to see and predict the implications of discounts]
2008 is a good year to analyze the situation from all aspects (and to see how our three companies handled the ‘meltdown’). “As customers tightened their belts and cut back on discretionary spending, high-cost purchases such as diamond jewelry were often the first to be postponed.” Responses are needed. Adjustments are needed.
We can segregate the industry in two parts: wholesale and retail sales. Moreover, the price, selection and customization of services are other dimensions that differentiate the companies.
Blue Nile – internet base
Zales – mall based kiosks (teenagers); working-class mall shoppers; fancier locations (upscale market)
Tiffany – high-end products
Blue Nile has an advantage due to lower ‘location’ costs. These funds (that would be placed for renting space) can be allocated to additional inventory. This would in turn signify that the company would have a higher selection. Also, having lower markup percentages lowers the price of the diamonds. Moreover, when purchasing from Blue Nile (besides having a low-pressure selling approach), you are also not buying a name/brand (in comparison with buying from Tiffany).
It must also be noted that Tiffany started its business in 1837; Zales in 1924; and, Blue
What are some key factors in diamond retailing? How do Blue Nile, Zales, and Tiffany compare on those dimensions?
All the companies involved in the diamond market want to have a big share of that market. And, the bigger the share, the company makes bigger revenue. It is very interesting that all three companies (even though they are in the same ‘business’) have different approaches in ‘taking market share’. An important fact is that the companies have a different clientele. The market population is different.
The first 2 paragraphs of the case study state a common concern in any industry: do you reduce prices in order to compete with the competition? [research is needed to see and predict the implications of discounts]
2008 is a good year to analyze the situation from all aspects (and to see how our three companies handled the ‘meltdown’). “As customers tightened their belts and cut back on discretionary spending, high-cost purchases such as diamond jewelry were often the first to be postponed.” Responses are needed. Adjustments are needed.
We can segregate the industry in two parts: wholesale and retail sales. Moreover, the price, selection and customization of services are other dimensions that differentiate the companies.
Blue Nile – internet base
Zales – mall based kiosks (teenagers); working-class mall shoppers; fancier locations (upscale market)
Tiffany – high-end products
Blue Nile has an advantage due to lower ‘location’ costs. These funds (that would be placed for renting space) can be allocated to additional inventory. This would in turn signify that the company would have a higher selection. Also, having lower markup percentages lowers the price of the diamonds. Moreover, when purchasing from Blue Nile (besides having a low-pressure selling approach), you are also not buying a name/brand (in comparison with buying from Tiffany).
It must also be noted that Tiffany started its business in 1837; Zales in 1924; and, Blue