Blue Nile
1. How strong are the competitive forces confronting Blue Nile and other online retail jewelers? Which one of the five competitive forces is the strongest? Do a five-forces analysis to support your answer.
The companies that are competing in this industry are Blue Nile, Zales, Tiffany 's, Online Jewelry Stores (Diamonds.com, etc…), and Local Jewelers. The Rivalry among the competing sellers is strong because there are many competitors and they are basically offering the same product. Also, the costs buyers experience when switching brands are low.
Currently, the Potential for New Entrants is moderate. The reason the potential is moderate is because the Jewelry business is an expensive business to get started into. Since most of the product that is sold is expensive (diamonds, gold, etc…) it is hard for any new entrants to come in strong. Also, with the economy in the situation that it is currently in, high priced jewelry is not something that a lot of people have extra money to spend on.
When looking at the substitutes, the competitive pressures are weak. When it comes to jewelry, there are not many substitutes besides other stones and fake jewelry. When most people are looking to buy engagement rings, anniversary gifts, or presents, they tend to buy items that contain diamonds.
Next in the five-forces model is suppliers. Suppliers have a moderate bargaining power. Diamond suppliers are largely dependent on the sellers for a large portion of their revenues. However, diamonds are not great in supply and are a critical item in the jewelry world.
Lastly, buyers bargaining power is weak. The buyers in this industry are couples that are getting engaged, married couples, and females. Since there are not many substitutes, buyers are not very price-sensitive, and supply is insufficient to satisfy buyer demand, buyers have little bargaining power.
Rivalry among competing sellers (the arena) is the strongest competitive force. There are many companies competing in
The companies that are competing in this industry are Blue Nile, Zales, Tiffany 's, Online Jewelry Stores (Diamonds.com, etc…), and Local Jewelers. The Rivalry among the competing sellers is strong because there are many competitors and they are basically offering the same product. Also, the costs buyers experience when switching brands are low.
Currently, the Potential for New Entrants is moderate. The reason the potential is moderate is because the Jewelry business is an expensive business to get started into. Since most of the product that is sold is expensive (diamonds, gold, etc…) it is hard for any new entrants to come in strong. Also, with the economy in the situation that it is currently in, high priced jewelry is not something that a lot of people have extra money to spend on.
When looking at the substitutes, the competitive pressures are weak. When it comes to jewelry, there are not many substitutes besides other stones and fake jewelry. When most people are looking to buy engagement rings, anniversary gifts, or presents, they tend to buy items that contain diamonds.
Next in the five-forces model is suppliers. Suppliers have a moderate bargaining power. Diamond suppliers are largely dependent on the sellers for a large portion of their revenues. However, diamonds are not great in supply and are a critical item in the jewelry world.
Lastly, buyers bargaining power is weak. The buyers in this industry are couples that are getting engaged, married couples, and females. Since there are not many substitutes, buyers are not very price-sensitive, and supply is insufficient to satisfy buyer demand, buyers have little bargaining power.
Rivalry among competing sellers (the arena) is the strongest competitive force. There are many companies competing in