Tiffany & Company Case Study

“Offer high-quality diamonds and fine jewelry at outstanding prices.” Blue Nile’s corporate philosophy is proudly presented in its website, the largest online diamond retail platform in the world. In 1999 Mark C. Vadon, who was shopping for his engagement ring, came across a company called Ineternet Diamond. Not only did he buy his ring, but joined Doug Williams to establish “Blue Nile”. As Vadon was purchasing his ring from Internet Diamond, his fiancee most likely would have been looking through the displays of Tiffany’s. Tiffany & Co. is the most prestigious jewelry and specialty retailer renowned for its luxurious diamonds. Marilyn Monroe made them “a girl’s best friend;” Audrey Hepburn’s Holly Golightly called Tiffany’s flagship New York

It furnishes product variety and availability by providing custom products where people could “build their own rings” from a choice of over 200,000 stones in thousands of different settings. Despite its overwhelming variety, customers who are unfamiliar with jewelry (mostly men) do not experience any pressure during purchasing. This is because Blue Nile supports customers with its educational information including diamond cuts, types of pearls, and precious metals. Most importantly, Blue Nile provides a thirty-day return guarantee with an exchange or a full refund. This enables customers to relieve the pressure during decision making. Along with its product variety supported by its return policy, Blue Nile is able to secure a lower pricing model due to its low inventory and warehouse expense. One of the main reasons that Blue Nile was able to lower warehouse expense is due to its responsive and prompt delivery through FedEx. This kind of responsive shipping enables Blue Nile to centralize its inventory and discard any installation of expensive flagship stores. Unlike Tiffany and Co. where it holds multiple stores in high-priced areas, Blue Nile has a single warehouse in the United States where it stores all of its inventory. Product variety from vast inventory and low pricing through single warehousing enabled Blue Nile to achieve competitive advantage over other competing

delivers value to its customers through high quality and brand name power. Having a strong name advantage, it enables some customers to neglect the under-pricing methods of online retailers. For example, some customers prefer “a piece of fine jewelry in a robin’s egg blue box with Tiffany on it.” Keeping exceptionally high standards of quality enabled Tiffany & Co. to hold its reputation high. Tiffany & Co. is particularly picky about their stones. Not all of the rough diamonds that has been collected are capable to meet their quality standards. These materials are then sold to other retailers at market price or even at a loss. Another aggressive movement that the company made could be seen in 2008. The firm began launching a more-compact Tiffany, with most of the smaller stores averaging 2,000 square feet. By conserving expenses with a more reduced sized store, Tiffany & Co. was able to increase its number of outlets. Consequently, customers were given more accessibility and availability to the products. Most importantly, with a physical presence, people could ‘feel’ the prestigious atmosphere as they walk in, get high-end service from a salesperson, see and feel the jewelry, and walk out immediately with a diamond ring. In some sense, this gives competitive advantage to Tiffany & Co. as it would not be easy for Blue Nile’s customers to spend thousands of dollars for intangible products that they have not seen or touched. The delivery time also plays a