BUSINESS
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While the Internet has proved extremely useful for jewelers interested in expanding their marketing efforts, communicating with potential customers, and sharing information with colleagues, most jewelry designers recognize that e-commerce opportunities are limited, at least for the moment. “I think it’s going to take a while before people are going to buy large amounts of jewelry on the Internet,” says William Schraft of William Schraft Design. While he has sold some of the work he designs through Ashford.com, and previously through Miadora, he has maintained a feet-on-the-ground approach, pointing out, “Jewelry is a tough thing to buy over the Internet because you have to put it on and look at it closely.” According to Greenfield Online, an online market research company based in Wilton, Connecticut, jewelry still remains a small ticket item on the Net. In its monthly retail index compiled, online sales of jewelry in September amounted to $92 million, barely a third of online apparel sales in the same month. Less then three percent of those questioned by its Digital Consumer Shopping Index had purchased jewelry in September. That, coupled with the same financial issues that have dragged down other e-tailers, led to the closure of Miadora.com, Jewelry.com, and Adornis.com within the past six months. (All three have since sold their inventory to Overstock.com.) Many see some potential for online sales, if only as one additional tool in the jeweler’s marketing and sales toolbox. “We believe the greatest value of the Internet will be its usefulness as an information source — Where is the store? What does the store sell?” says Ken Gassman, an e-commerce analyst. “The ultimate successful merchant will be bricks and clicks. They will utilize stores, catalogs, the Internet, and other distribution channels.” GOING IT ALONE. For now, many believe it is still too risky for a single designer or artisan to rely heavily on Internet sales, particularly on their own sites. The obstacles facing online jewelry retailers stem from the overall challenges of e-commerce, as well as the specific nature of jewelry sales. Jewelers and analysts alike repeatedly cite the hands-on aspect of buying jewelry as a major impediment to faster growth in the market. “Jewelry is difficult to sell over the Internet,” says Gassman. “Jewelry is sold on romance. It is a tactile sale — touch and feel are a major part of the sales equation.” Quality and repair concerns also play large roles in a customer’s decision whether or not to buy jewelry online. “There is a desire to buy jewelry online. What the consumer needs is something of a back-up,” in case there is a problem or the need for a repair, says John D. Henry, director of communication for the Manufacturing Jewelers and Suppliers of America. Gary Iverson, general manager of Gwen’s Jewelry and Gifts, says the five-year-old company has tried to make quality a high priority, constantly seeking out new suppliers and following up on customer responses. “If [suppliers’] quality is bad, we drop them,” he says. The company also allows customers to return merchandise, even in the event that the customer feels that the piece they ordered is not up to snuff. Cindy Edelstein, president and owner of the Jewelers Resource Bureau, said many jewelers are hesitant to sell on their own sites because they do not want to aggravate their distributors, who might view that as direct competition. “If you sell on your own site, your retailers don’t want to sell for you,” she says. “If you’ve got enough stores, you shouldn’t be selling on the Web.” Diamonds are among the few jewelry-related items that are selling relatively well, according to Edelstein. “Diamond sales are doing perfectly. It’s a commodity. You don’t have to see it.” Cost is another key issue. Kathleen DiResta, vice president of the Jewelry Design Professionals’ Network, has launched her own Web site but says that she is not about to start selling online, mainly because of the cost involved. “I didn’t even set up the e-commerce part because that’s an extra expense,” she says. Harvey says that small operations that rely on an artisan’s or designer’s existing reputation could do well eventually, because the customer knows what to expect. When the name is familiar, he says, “you remove a lot of the trepidation that a consumer has with a large online jewelry store.” THE ELECTRONIC MIDDLEMAN. Designers and artisans seem most likely to benefit if they turn to larger online retailers with a variety of items to offer, much as in the past when they have relied on distributors and galleries to carry their lines. This provides a larger umbrella and shifts much of the infrastructure to the distributor, rather than requiring the artisan to start from scratch. Ashford.com, for example, sells high-quality gift items ranging from handbags to fragrances. These companies can develop a range of suppliers to keep consumers happy with a constantly changing inventory. Iverson says Gwen’s Jewelry has done fairly well with its online sales. “We were one of the first ones out there, and we’ve expanded quite a bit,” he says. On average, the site receives 5,000 visits every day. Customers will often turn to online sites particularly if they are looking for a good deal, he adds. As an eight-employee company, Gwen’s has worked hard to establish itself as a quality online retailer, Iverson says. “We try to hire people that have a jewelers’ background.” The company is also predominantly self-financed, another rare feat in the e-commerce realm. Wendy Brigode, a designer based in the Los Angeles area, has developed just such a virtual front door. She has been selling through her own site and on Ashford.com for about two years. Each month, her own site attracts about 2,500 customer visits, and her online sales amount to about 10-25 orders, averaging about $300. Even with broad inventories, the examples of Miadora and Adornis failed in part because they were relying on investor funding at a time when investors were becoming less willing to throw out large sums of money, Gassman explains. At the same time, the amount of retail sales could not keep up with their enormous outlays for advertising and infrastructure. THE BRIGHT SIDE. While it may take some time, few doubt that the Internet will play a major role and fill a variety of niches for artisans looking to expand the exposure their work receives. Despite initial problems, many feel the Internet can play a valuable role for jewelers. “I think sites that create a dialog are great,” DiResta says. Gassman encourages jewelry designers and retailers to establish their own sites, calling Web sites “another front door to the store.” Whether or not it goes as far as some thought it might, e-commerce isn’t going to go away. “Online jewelry sales will be a fact of life in the jewelry industry, just as it will be in virtually every retail industry,” Gassman says. “However, we believe that on-line jewelry sales will represent a smaller portion of total jewelry industry sales than most other retail sectors,” because of the limitations. Brigode said she relies mainly on her Web site for exposure and communication with her customers. It also allows her to reach out to a broader audience. When she first went online two years ago, many of her earliest customers were from more rural areas that were not close to the stores where her work is usually sold. “It’s just another link. It’s something that I don’t count on, but it’s a presence.” Being featured through a link with Yahoo! Shopping has helped quite a bit, she added. With the site up and running, maintenance has been relatively minor. The staff checks its e-mail twice a day and has orders in the mail the next day. Harvey said he has found the Internet particularly useful when it comes to customers looking for specific items to add to their collections. Rather than scouring galleries for works by a particular designer, customers can order directly. “It’s bringing the jewelry designers closer to his or her hard-core fans,” he says. Yet if jewelers are looking to take advantage of the additional possibilities the Internet offers, they might be best off working with larger retailers who can put that infrastructure in place. Greenfield Online spokeswoman Gail Janensch said established retailers offer a sense of security for customers looking to ensure quality and customer service. “They look for the comfort that they find in dealing with merchants that they’ve heard of before,” she says. “Now that the big-name stores are moving in, it would seem to me that would give them a leg up.” Over time, customers will eventually come around to conducting some online jewelry purchases, just as they warmed up to catalog sales. Greenfield Online’s Janensch observes that the newer a customer is to e-commerce, the less likely he or she is likely to buy more expensive items. “Not only is the more experienced [computer] user more likely to buy anything online, but the they are also more likely to have a higher comfort level,” she says. “I do not count on it at all for sales. I just look at it as a convenience for my customers,” Brigode says. “A Web site is a nice place to learn about a designer and see about the designs.”
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