Blue Nile Case Analysis

Overview Founded in 1999, Blue Nile has grown to become the largest online retailer of certified diamonds and fine jewelry. At Blue Nile you'll find high-quality diamonds certified by the most respected independent diamond grading labs. You can create your own jewelry were you choose the diamond and they will set it in your favorite earring, pendant, or ring design. Every order is shipped free, guaranteed and returnable within 30 days, so you can be sure you made the right decision. With sales of $251.6 million in 2006 compared to $169.2 million in 2004, Blue Nile is larger than the next three largest online jewelers combined. Blue Nile was the only jeweler to have ever received the bizrate.com Circle of …show more content…

Other strategy efforts that need improvement are the international websites because both the U.K and Canadian site offered limited merchandise selections compared to the U.S. website as well as less developed search and educational features. The two combined sites only had sales of $3.3 million in 2005. Another issue is the fact the Blue Nile became a public company in 2004; they state that they have an employee stock purchase plan but no shares have been issued as of January 1, 2006. This could in turn employee satisfaction and in turn could affect customer service or sale efforts.
Analysis and Evaluation Blue Nile had sales of $251.6 million in 2006 which increased from $169.2 million in 2004. Management believes that the company’s market share of online sales of engagement rings exceeded 50 percent in 2005. In 2005 the share of the overall engagement ring market in the United States was approximately 3.2%. Sales of diamond jewelry other than engagement rings accounted for 18 % of Blue Nile’s 2005 sales, while sales of jewelry not containing diamonds accounted for 10% of Blue Nile’s 2005 revenues. Blue Nile had a net profit margin of 6.5 % in 2005, compared to 2005 net profit margins of 4.5 %. Blue Nile’s current ration in 2005 was 2.78 in 2006 it was 2.38 and in 2007 it was 1.56 which shows the firms ability to pay liabilities using assets that can be converted to cash has been