Blue Nile Case Study

Abstract

Blue Nile management supports shifting the company’s current competitive strategy from focused-low cost to broad low-cost in an effort to increase market share in the United States. Blue Nile will accomplish this by expanding its product line to include all types of fine jewelry and by introducing a signature jewelry collection. Product expansion will appeal to a larger customer base thus marketing will have to be significantly increased to inform new customer targets. The company’s current financial position supports expansion in the U.S. market.

Blue Nile’s Strategic Horizons: Why the Company Must Think Broader

Using figures provided by Thompson (2007), Blue Nile’s 2004 and 2005 market share of the United States (U.S.) jewelry industry was estimated to be 0.30% and 0.34%, respectively. These percentages represent a very small fraction of the industry’s $60 billion (2007) in annual revenues and leads directly to the key issue facing the company: Should Blue Nile take proactive measures to increase its market share in the U.S.?

When it comes to U.S. market share Blue Nile has three basic options:

1. Accept its current U.S. market share and focus on opportunities in international markets like the United Kingdom, Canada, Europe, Taiwan, etc.

2. Focus on increasing its U.S. market share.

3. Focus on increasing its U.S. market share while simultaneously pursuing opportunities in international markets.

If Blue Nile wants to focus on increasing its share of the U.S. market then the company must resolve these key issues:

• Can Blue Nile continue to operate competitively as a focused low-cost provider or will