BLUE NILE AND DIAMOND RETAILING

BLUE NILE
• Seattle jewelers Doug Williams & Mark Vadon
• Company changed its name from Internet Diamonds to Blue Nile
by the end of 1999, "sounded elegant and upscale"
• Offer high-quality diamonds and fine jewelry at outstanding
prices
• Four Cs - cut, color, clarity, and carat
 • Established by Morris and William Zale and Ben
Lipshy in 1924
• Marketing strategy to offer a credit plan of "a penny
down and a dollar a week"
ZALES • Success allowed them to grow to 12 stores in
Oklahoma and Texas by 1941
• Four decades later, company grew to hundreds of
stores
 • Opened in 1837 as a stationery and fancy
good emporium in NYC
• Enjoyed tremendous success, with its silver
designs
Tiffany • In 1886, introduced its now famous "Tiffany
setting" for solitaire engagement rings
• Offers high-end products including diamond
rings, wedding bands, and gemstone jewelry
1) What are some • Key success factors is the reputation of the company.
key success quality, variety of products and choices, and customer
service offered.
factors in • Blue Nile offers a variety of great. high quality
diamonds online at reasonable prices. Customers like
Diamond the low-pressure selling tactic that focuses on
education and providing good value to its customers.
retailing? How do • Zales Jewelers offers a credit plan of “a penny down
and a dollar a week,” marketing strategy. Selling
Blue Nile, Zales mostly diamond jewelry to working-class shoppers.

and Tiffany • Tiffany is popular due to its demand of silver designs

and its now famous “Tiffany setting” for solitaire
compare on those engagement rings. Offers high-end products.

dimensions?
2) What do you think of
the fact that Blue Nile • Blue Niles' market strategy is to offer a variety of
carries more than diamond choices through the online channel. Stones
30,000 stones priced at priced at <$2500 are relatively set at a lower demand
and to keep it in inventory is primarily higher. Their
<$2,500 while almost strategy is to save in inventory holding cost due to
lower buffer stocks and still be able to offer
60% of the products customers a broad variety of products.
sold from the Tiffany • Tiffany’s strategy is to offer high quality diamonds at
Web site are priced at retail stores and offer lower cost and higher demand
products through the online channel. Main reason is
around $200? Which of to utilize the limited facility space and reduce cost.
the two product • Blue Nile has an advantage and is well suited for
categories is better online channel because their primary focus is to offer
a variety of diamonds online while reducing cost.
suited to the strength
of the online channel?
3) What do you • Chose to sell non-diamond or only Category D items
think about through the online channel “D" products were higher
in demand and would lower the inventory cost.
Tiffany’s • Tiffany diamonds are set at an average price of
<$2,000. This would set diamond products at a lower
decision to not demand compared to non-diamond products with a
price of <$200.
sell diamonds • Ultimately, it would lead to an access in inventory
that can increase costs.
online?
4) Given that
Tiffany stores have
thrived with their • The failure of Zales was mainly due to focusing too
focus on selling much on outdoing their competitors and not focusing
enough on their brand image and on their customer
high-end jewelry, service.

what do you think • They were offering high quality diamonds at low end
retail stores such as Wal-Mart and JCPenney;
caused the failure customers perception of their diamonds were not as
high-quality as Tiffany's.
of Zales with its
upscale strategy in
2006?
5) Which of
• Blue Nile has the main advantage and was best
these 3 structured to deal with the downturn in 2008 Main
fixed costs were operating facilities and
companies do transportation cost. Offer variety of diamonds online
at reasonable prices
you think is best • Zales and Tiffany had more costs/expenses Retail,
admin, facility, and transportation cost
structured for • Tiffany offers high-end products at a higher cost

weak economic • Zales offer high-end products at reasonable prices at

retail stores and online
times?
6) What advice • Blue Nile has an advantage when it comes to selling a
large variety of high-end diamonds at reasonable
prices. They may need to continue focusing on their
would you give selling tactics and could re-structure their marketing
strategy to reach out to new customers.
to each of the • Zales may need to gain control of their inventory and
three companies limit their lower demand, higher cost products in
their inventory while selling lower cost diamonds at
retail stores.
regarding its • Tiffany needs to be careful when trying to lower
strategy and prices on their diamonds or their reputable image
may get ruined. Instead, they need to continue
focusing on their brand image by offering outstanding
structure? products and great service.
Thank You!