E-Commerce in the Jewelry Industry: Trends and Strategy

Introduction to E-Commerce in Jewelry

The jewelry industry has changed dramatically over the past decade as 800 numbers and mail-order catalogues have shifted to websites and online ordering. Jewelers are discovering new ways to benefit from investing in e-commerce to make their sites fully functional and profitable, according to researchers and small business experts. For retailers, there are many advantages to developing a business strategy that takes advantage of the power of the Internet (NSW, 2003).

Retailers in the online jewelry market have been able to significantly increase their revenues as a result of e-commerce (Tracy, 2000). According to recent research, the United States market was projected to grow from $77 million in 1999 to over $1 billion in 2004. In addition, experts predicted that growth of the online jewelry market would be faster than that of consumer e-commerce in general and of web adoption in the U.S. overall.

"The market will defy the conventional wisdom that says consumers would want to see and hold fine jewelry before they plunk down large amounts of money," according to Jonathan Gaw, a research manager with IDC's Consumer eCommerce Major Purchases program (Tracy, 2000). "Although [the industry] faces the same challenges with regard to channel conflict and infrastructure development as those confronted by their counterparts in other industries, fine jewelry retailers will be able to apply the lessons of those that came before them to accelerate their learning curve," Gaw said.

E-Commerce Customers and Features

The majority of customers who purchase jewelry online are experienced e-commerce shoppers who are comfortable with the process. "Online jewelry consumers will know what a good Internet selling experience is, and they won't tolerate a poor one from a retailer trying to sell a $1,000 item," Gaw said (Tracy, 2000).

The growth of the online jewelry market is fueled by an increasing number of jewelry stores selling their products online, the lower prices of online goods, improvements in technology that enhance online viewing, and the no-pressure atmosphere of online buying (Tracy, 2000). Research shows that brick-and-mortar jewelry retailers who engage in e-commerce will have a significant advantage over brick-and-mortar stores from other industries that moved online. Brand names and the trust they convey will be the reason for this advantage, as they are more important factors in jewelry purchases than in many other categories.

In the modern global market, e-commerce strategies can produce results on the supply or demand side of virtually any retail business, bringing in new business that would never have thrived without the existence of the Internet and the new trading possibilities it brings to the retail world (NSW, 2003). In addition to the enhanced marketing capabilities that e-commerce provides, retailers can benefit from a variety of other e-commerce features.

Strategic Advantages for Small Retailers

For example, a small local jewelry store can sell its products or services to buyers in other parts of the country or around the world without having to open a physical location in those areas. However, businesses must be sure to develop production capacity, transport, and distribution channels to support the increased market demands generated by e-commerce activity.

Implementing e-commerce strategies can also reduce labor costs, supply expenses, and human errors, all of which can be detrimental to the cash flow of a small store. In addition, e-commerce quickens the pace of inventory turnaround, invoicing, and accepting payments via the Internet.

Client retention is an important factor for all retailers. In most cases, increasing orders from an existing customer is less expensive than acquiring a new one. For this reason, e-commerce is a good choice for small retail stores, as it provides the means for integrating business practices with those of existing customers. Ultimately, communication is improved and a competitive edge is established.

There is also an economic advantage to investing in e-commerce. It costs less money to launch a functional e-commerce site than it does to open a brick-and-mortar facility. In addition, marketing materials can be extended or updated without significant cost.

Conclusion

The Internet and e-commerce present enormous opportunities to the jewelry industry, as they provide access to world markets, achieving the kind of market presence and penetration that has traditionally been exclusively available to larger companies (Enos, 2001). However, the future of e-commerce in this industry depends on much more than simply creating a website.

When investing in e-commerce, retailers must look to the future and recognize the importance of client relationships. A good online experience — from both a marketing and a sales perspective — makes a significant difference in the success of e-commerce strategies. The Internet offers smaller companies, in particular, the opportunity to create and maintain a name in a global market. If customers do not feel comfortable buying jewelry online, the future of e-commerce in this industry is uncertain.

Retailers must also remember that the basic rules of retailing still apply. It is important to develop an engaging website that can effectively attract and retain clients. The website should cater to the needs of customers, offer promotions, and treat customers as individuals. In order for e-commerce to succeed in the future, retailers must take their websites as seriously as their physical stores.

Research reveals that most people are apprehensive about giving out personal information — such as credit card details — online. Therefore, e-commerce strategies must incorporate secure and familiar methods for clients to pay for their purchases. Encryption services are necessary to protect credit card and other personal information. This is particularly important in the jewelry industry, where products carry high price tags.

Bibliography

Enos, Lori. (September 21, 2001). What Small Biz Gets from the Web. E-Commerce Times. Retrieved from http://www.ecommercetimes.com/perl/story/13551.html

NSW Department of State and Regional Development Small Business. (2003). Brief on Electronic Commerce. Retrieved from http://www.smallbiz.nsw.gov.au/textonly/issues/technology/brief/Why.html

Tracy, Joe. (July 5, 2000). Online Jewelry Sales to Exceed $1 Billion in 2004. Webmaster Techniques Magazine. Retrieved from http://www.webmastertechniques.com/index.html