Blue Nile

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By James Blake, Meghan Boswell, Kevin Distaso,
Courtney Dwyer, Danielle Lozier, Alexandra
Wienckoski
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Industry Information

• 1 Online jeweler
• Ranked 3 diamond sales in US
• 4 of engagement ring market
• Sells a 20,000-40,000 ring per day
• Sells 1000 engagement rings per year vs. average
  of 12 rings/year at traditional retailer
• Best in customer online service by multiple
  surveys

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Industry Information
Key Competitors

• Wal-Mart
• Largest seller of jewelry ( 2 Billion a year)
• More inexpensive jewelry

• Tiffany Company
• Brand
• High-Income Customers
• 5th Avenue Store
• 1 Diamond Sales

• Like Wal-Mart, targets budget conscious consumers

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Firm Information

• Sells Diamonds and other fine jewelry online
• Analysts moved stock from Market Perform to
  Outperform status this year
• Stock value at 46.11 as of 4/24/07
• Single location-4000 ft2 warehouse in Seattle
• High Profit Margins
• No Middlemen-Direct to consumer sales
• Cheaper than most brick-and-mortar competitors

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Stock Performance
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Technology

• All sales over a helpful website that
• Makes purchasing easier
• Reaches large customer base
• Allows customers to build own jewelry
• Educates customers about diamonds
• Teaches customers how to care/maintain diamonds
• Uses an interactive search and shopping cart
• Utilizes secure encryption technology

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Competitive Advantage

• Economies of scale
• Brand
• Direct-to-customer sales through internet
• Low running costs
• Valuable Strategic Move by working with such well
  known companies as AOL, MSN, Yahoo, and Google
• Low inventory

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Threats/Current Problems

• evil empire
• Small retailers possibly boycotting wholesalers
  selling to online companies in the future
• Tough to acquire customers from famous brands
  such as Zales and Tiffanys
• Only known by a fraction of American consumers
• Customers cannot physically hold diamonds in
  hands

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Opportunities

• Only known by small percentage, yet captures 4
  of engagement ring sales
• Plenty of potential to grow
• Gaining more and more recognition as great
  products and customer service (The New York
  Times, BusinessWeek, and others)
• Potential to increase international sales (Canada
  UK)