http://www.businessinsider.com/online-jewelry-industry-booming-2011-7

If in 1999, investors weren’t convinced that shoppers would buy a diamond ring online, the gleam is certainly in their eye today. eCommerce has been one of the most active segments, with 67 merger and acquisition transactions topping $6 billion thus far in 2011 vs. $180 million in the same period in 2010 according to investment bank Petsky & Prunier.

Within eCommerce, one of the segments which is gaining traction and investment favor is jewelry. Since late 2010, Gemvara, Stella & Dot, Baunat and BeachMint have all secured major funding rounds ranging from $4 to $40 million. And jewelry is an active segment in the fast-growing fashion flash sale business which includes such heavily funded websites as the Gilt Groupe, which recently raised $138 million, Beyond the Rack, Hautelook, Ideeli, Modnique, Rue La La, and My Habit.

The VC funding activity in jewelry is supported by research from Forrester, which includes jewelry as one of the fastest growing eCommerce segments through 2014. As a product category which initially started slow online (when compared with books for computer equipment), jewelry is now enjoying strong growth for several reasons:

Increased Shopper Confidence: Twelve years ago, investors were skeptical if shoppers would flock online to buy big ticket items. But the growth of eCommerce since the late 1990s has proven that consumers will buy anything online which they used to buy in-person. Through mechanisms like merchant reviews and based on an overwhelmingly positive shopping experience, shoppers, who first dipped their toes into online commerce with the purchase of a book or a T-shirt are now willing to place their trust in online merchants in the same way they trust a local shopkeeper.

Customization: A big benefit for online jewelry retailers versus local jewelers is the ability to create customized jewelry based on shopper requests. With most local jewelers buying directly from a few wholesalers, they usually don’t have the design and manufacturing contacts to create and manufacture customized jewelry. Furthermore, a one or two store operation usually lacks the scale in order to make such an operation profitable, and the wholesalers who supply their jewelry are focused on selling existing (and not customized) jewelry through their pipeline. For an online jeweler, customization can be a point of differentiation around which the company was developed. And in the same way that local jewelers historically built their business by knowing the tastes of their local clientele, online jewelers have established their businesses based on the ability to source jewelry from a broad range of international suppliers to improve cost efficiencies and create product differentiation.

Product Selection: As with customization, product selection is another area where local jewelers face challenges when competing with online jewelers. All an online jeweler needs to do to add a new product is to upload a picture and description of the product. A local jeweler, on the other hand, must physically obtain the product and then merchandise it in-store. The ease in which new products can be added and removed enable online retailers to add and then tweak entire product lines with ease, facilitating much more fluid merchandising opportunities. This issue is magnified when it comes to loose diamonds. Online stores can hold a virtual list of diamonds, thus enabling them to exhibit tens of thousands of loose diamonds for sale. Needless to say that no brick and mortar store can hold such inventory.

Improved Product Displays: In 1999, most online shoppers accessed the Internet through a dial up modem. Today, with almost all shoppers using broadband Internet,and advancements in 3D imaging and graphic displays, shoppers can really see how the ring or necklace will look.

Better Customer Service: One of the reasons for the improved shopper confidence is undoubtedly the improved customer service. In 1999, most shoppers had to log off an eCommerce website and their dial-up Internet service in order to free up their phone line to make the phone call to call customer service, if the website even published a number to call. Today, most online retailers offer shoppers a range of options, including real-time chat, FAQs and toll free numbers to customer service, all available 24/7, and often in several languages. Along with these pre-shopping services, online shoppers also benefit from free shipping from many online retailers on many items, and very liberal return policies.

Though social and mobile shopping applications are also helping all online retailers, including jewelers, it’s the aforementioned improvements in online retailing which are driving the newfound interest and investment in online jewelry companies. Yes, Ms. Monroe certainly had it right, but watch out girls, diamonds just may be an investor’s new best friend.

Read more: http://www.businessinsider.com/online-jewelry-industry-booming-2011-7#ixzz1SVJVK14f

Prepare yourself, jewelers. Here comes Generation Y (aka Gen Y), 74 million big-spending consumers, born between 1978 and 1995, who inspired a recent Gen Y Forum purported to be “the largest gathering of prestige marketers in North America.”

The forum’s official goal was to discuss the “characteristics, influence and brand affinities of tomorrow’s affluent consumers.”

In other words, the aim was to determine how Gen Y consumers make buying decisions–an ambitious task indeed.

In case you didn’t know, the 74 million Gen Y members purchase, directly or indirectly, $200 billion worth of goods or services a year, five times more than their parents did at the same age.

There are now more Gen Y members than there are baby boomers, and this demographic will represent 50 percent of the total U.S. workforce by 2015. Oh, did I mention that within the next five years, the Gen Y consumer will provide the biggest revenue source for any industry you can name?

The forum consisted of 22 thought-leaders from diverse fields, including a bureau chief for The Economist, the publisher of Teen Vogue, the chief of digital marketing for Microsoft and a member of the U.S. State Department, among others.

All of these “rainmakers” agreed that Gen Y members are technologically sophisticated shoppers who were probably using computers before their first day of school.

The computer became the “training wheels” for this group, which is often called the “Internet Generation.” It was also clear among the forum leaders that the technologically adept Gen Y consumer would make purchasing decisions using high-tech tools.

In a nutshell, here’s a rundown of some of the important points discussed. (The college marketing students I teach will wrestle with the rest.) Much of the information discussed at the event is the result of extensive U.S. and international market research.

Speedy decision-making: “Business will be as usual, but much faster,” was a common theme at the meeting. Simply put, the shopping process goes something like this: They click, they browse, they buy. It will be the retailer’s responsibility to keep up.

Design trends: Product design can no longer be developed by committees, research teams or in staff meetings. Such groups take too long to reach consensus, and styles change too fast. What a company should do is develop a network of blogs and tweets to inform styling decisions. Besides being inexpensive, these interactive forums allow for speed and dexterity.

An investment: Gen Y consumers see luxury products as investments, not as indulgences. They do not have an appreciation for “trendy” styling, and favor more “classic” designs. When they purchase an item, they generally use it. (It will not be placed in a drawer.) They expect exceptional quality.

Parents as reference: These young consumers consider themselves to be “equal opportunity buyers,” with an unspoken motto that “We buy the same as our parents, except … we want more.” Heritage plays no part in design, styling or reference decisions. While their parents considered luxury to be something special, Gen Y consumers understand luxury as something that they deserve.

Bling is blung: Ostentation is clearly out, and subtlety is in. Gen Y jewelry consumers seek simple designs that are cool, hip and “in the know.” Some visual expression is important, but it is not key.

Purchase rationale: Gen Y consumers have a need to add an emotional rationale to their buying decisions. For example, when purchasing a pendant, the shopper requires–as a rule–an additional use for the piece. She wants to be able to wear it to work, and to a party.

Reference groups: Positive feedback, (real or imagined) from their reference group is arguably Gen Y’s most important decision criteria. Whomever their peer group is–be it colleagues, friends, or fellow club-goers–acceptance by that group will close the sale.

Sale vs. deal: Beware of putting items on “sale.” Gen Y consumers consider that word to be the radioactive kiss of death. They strongly prefer the word “deal” as a way to communicate bargains or price reductions. Getting a great deal sounds–to their ears, anyway–better than getting something on sale.

Blogs and more blogs: The new–and hopefully permanent–Internet-based marketing vehicle is the blog. The blog is inexpensive to set up and maintain and its uses are abundant. Almost in unison, the thought-leaders at the forum expressed the conviction that blogs were the marketing tool of tomorrow–if not today. To be a successful Internet “player,” your store or site should be called out on a minimum of 25 blogs today and at least 250 in the future.

For those who are not Gen Y members, your knowledge of technology may be strained. Mine was. It is our job to become current in this technology and understand the negative marketing implications if we don’t. Let’s face it, we could end up in the same category as hand-held calculators and in-store flyers.

This idea is a major move forward in the world of online jewelry sales. A  step in overcoming the anxiety of not being able to see and feel what you are buying on the internet. If this company can make these “samples” nice enough to really do the selling once received, this company has hit a homerun! If you are a brick and mortar only operation, it is time to take the internet seriously or buy some stock in Eternity Diamonds .

Ostbye Signature Display

Following article was published by Abe Sherman of the “BIG” group.

Link to Website

An increasing number of bridal manufacturers are selling alloy and CZ rings as samples to augment the jeweler’s bridal selection. Is this an idea whose time has come? There have been articles and blogs written about what has become known euphemistically as Brass & Glass addressing this issue. Some contend that this is a strategy that will undermine what a ‘fine’ jewelry store is supposed to be. Those speaking against the concept believe the potential damage that could be done to our industry would include allowing non-industry interlopers to swoop in and take over your bridal business. If they had ever worked behind the counter and walked a couple through the myriad issues concerning her perfect ring, I think they would realize there is little chance that the corner grocery store will be setting up a bridal department anytime soon…After the third or fourth messed up special order, they would ship the whole thing back and stick with selling melons.
Not too long ago, I would have thought this to be a bad idea myself. A ‘real jeweler’ should have an assortment of ‘real inventory’. But studying the realities of our industry for the past decade and getting down to what our issues are today, I have rethought this idea and believe that it is right for many, although not all, retailers.
As we all know, our industry has a cash flow as well as an inventory problem. Manufacturers, even more than retailers are being hit on several fronts:
1. Very slow payments
2. Few stock orders are being placed
3. Fewer still opening orders
4. Retailers reluctance to re-order fast selling inventory
Retailers are loath to introduce a new line, especially in a capital intensive area like bridal today. We must consider that much of their investment does not sell out of the showcases. Instead it needs to be special ordered for metal, color, head size or finger size. What we have is, in effect, a showcase of samples. They just happen to be “live” samples at a much higher price. The fact that these are ‘real’ samples, instead of alloy samples is the point of contention. I completely understand the arguments, especially from the sales reps and manufacturers who historically have walked out of an account with a $50,000 stock order: they believe this will kill their business.
Add to this that more JBT ratings are declining every week (3 is the new 2), and know the manufacturers are being pressured by their banks not to ship. Everyone is very nervous about making new sales, but they are more nervous about getting paid.
While I agree that in the short term, this will take a bite out of the potential incoming cash from the larger stock orders, the reality is very few jewelers are placing large stock orders anyway and the retailers are sitting on merchandise that continues to age. Having inventory isn’t the issue, jeweler’s showcases are chock full of inventory. But that inventory must remain relevant and ‘stock-balancing’ our way out of it isn’t a likely scenario.
Expanding your bridal selection by introducing alloy samples as a portion of your inventory needs to be done with a plan. It won’t be adequate to merely put these rings in trays to fill your showcases. You need to have separate displays, preferably that stand apart from your regular inventory, and have a well rehearsed script for your staff to use.
Some of the key points of using alloy samples are:
1. Significantly expands your bridal department selection
2. Investment in new styles costs pennies on the dollar
3. Immediate return on your investment (sell one ring, pay for 100)
4. Constant replenishment of relevant styles
5. Every ring is custom made for that client – a huge selling feature
6. Eliminates the Exit Strategy issues with branded lines that no longer fit your store
7. Customers can borrow samples to show “Mom”
8. Duplicate rings can be provided in alloy for travel
9. Cuts down on the need to increase inventory and therefore costly insurance
10. Makes outside Bridal shows far less risky
Johanna had some additional thoughts, so I’m adding these separately:
1) Alloy samples, particularly of styles that should not be sized, keep the jeweler from being tempted to do the sizing and mess up the ring. They force the jeweler to do the right thing and special order to fit.
2) Some categories such as eternity bands, really only make sense as alloy samples since they cannot be sized. If you stock live product you could never have the selection of styles you could with alloy.
3) If I were the retailer I would stock my sizable best sellers and have the rest in alloy. I think it can easily be explained to customers that for structural reasons, it is better to special order from the alloy samples.
Our sense of who we are as merchants, that the jewelry we carry defines us, will turn some people off to carrying alloy samples, and we understand this. But for those of you who are looking to expand your positions within the bridal department while keeping your investment low, this is a strategy that you might want to seriously consider. I believe this will be a part of most jewelers’ bridal inventory and if positioned correctly within your store, should significantly add to your bridal sales. Give us a call if you’d like to discuss which suppliers to use for this project.

It’s easy to to adopt the policy of avoiding risk at all costs, that whenever possible, the products you launch or the engagements you have should be flawless and without downside.
Here’s the problem: in most endeavors, a small increase in risk can double the reward. It’s the second doubling of reward that brings serious risk with it. But the first leap is relatively painless.
In the chart above, notice that going from point A to point B brings almost no incremental risk. It might feel scary, but rationally, it’s not. Doubling reward again from B to C, though, brings significant incremental risk. It’s this second doubling that gets you through the Dip, that leads to a breakthrough, that makes you remarkable.
But I’m not even talking about that. I’m just hoping you’ll warm up by making the tiny leap of avoiding all risk. Riskless is hardly worth your effort.

June 15, 2009

Stuller's "Live Diamond Try-On (brought to you by Red Box Diamonds)" iPhone application allows users to pick out a diamond engagement ring, try it out for size using an image of their own hand, share the image with friends and find a jeweler to buy the ring from.

Las Vegas–Stuller has partnered with Gemvision Corp. on an iPhone application that allows users to pick out a diamond engagement ring, try it out for size using an image of their own hand, share the image with friends and find a jeweler to buy the ring from.

IPhone users can choose from among thousands of downloadable applications that allow them to use their phones while on the go to do everything from play video games to manage their money to get workout tips.

Soon to be added to the list is the diamond ring application unveiled by Stuller during the Las Vegas jewelry shows, which is called “Live Diamond Try-On (brought to you by Red Box Diamonds).” The application will be offered for free to iPhone users beginning in late summer via the iPhone store, said Kerry Hand, Stuller’s executive director of marketing services and public relations.

Hand and Ryan Koning, director of advertising, communications and events for Gemvision, demonstrated how the program will work.

The first step is to use the iPhone’s touch screen to go to the application, which then prompts a user to choose a diamond by carat size and shape, and then a mounting by precious-metal color, either white or yellow. There are a limited number of ring styles currently available through the application, but these include classic styles and additional choices that feature side stones.

After the user has made a diamond and precious-metal color selection, it’s time for the try on. The user then takes a picture of her hand using the iPhone camera. Then, using the iPhone’s touch screen, the user can position the ring onto the picture of the hand, adjusting for a perfect fit. The iPhone can also be held directly on the hand with the image tilted to enjoy the “sparkle” of the diamond image.

The image of the person’s hand, with the chosen ring, can now be e-mailed to friends and family, posted on Facebook, Twitter, etc.

At this point, the iPhone user can also track down where to find the ring through the “find a jeweler” function of the Live Diamond Try-On application, which uses the phone’s GPS function to pull up Google maps and place virtual pins on the nearest Red Box Diamond Jewelers, ranking each one selected based on proximity, Hand says.

“This is the beauty of the application. It drives consumers to dream big and them pushes them to spend big with Red Box Diamond retailers,” Hand says.

The new application is one of a number of new programs Stuller is offering that are designed to let jewelers take advantage of digital technologies to give consumers expanded options. During the JCK Las Vegas show, Stuller also unveiled the Virtual Diamond Selector program, which allows retail jewelers to go online with customers to choose from 10,000 diamonds by size, shape or color, and the Customized Earring Program, which provides retail jewelers with the chance to customize a pair of diamond earrings exactly the way the customer wants them.

Another new option, Stuller’s 3D Ring Engraver, allows retail jewelers to personalize a wedding band while sitting in the store with their customer, who can choose a unique message and a particular font, and then get a dynamic 3D preview of what the ring will look like once it is inscribed.

Jewelers who are interested in being part of the iPhone application must be Red Box Diamond jewelers. For details, contact Stuller via e-mail at info@stuller.com or by calling (800) 877-7777.

Las Vegas–The economic downturn, which has sent jewelry sales skidding downward for the last few quarters, will leave permanent marks on consumer behavior and the retail jewelry business going forward, an industry veteran told attendees of the JCK Las Vegas show.

“If you’re going to continue to do retail the way you’ve always done retail, you’re going to fail,” said Bill Boyajian, industry consultant and former Gemological Institute of America president, speaking at a breakfast keynote session on Saturday. “No one is going to emerge from this recession unchanged.”

Boyajian said he often hears jewelers say they wish things would get back to “normal,” but the reality is, they will have to adjust to a new normal. Late last week, developers placed the project he himself had spearheaded–the 2 million-square-foot World Jewelry Center in Las Vegas–on ice because of economic conditions, serving as yet another example of how the recession has cut across the industry, hurting both mom-and-pop operations and large-scale projects alike.

On the retail level, the economy has only intensified industry consolidation: Over the last several years, 500 to 700 jewelers have gone out of business annually. Last year, some 1,400 retailers closed their doors, and there are predictions that the figure will rise to 2,200 this year, Boyajian said.

Meanwhile, manufacturers are losing business because retailers aren’t buying, and a growing number might turn to retailing themselves to stay afloat.

“I predict the next wave of jewelry retailers will be designers and manufacturers,” Boyajian said.

Echoing a theme that emerged in numerous other seminars held during Jewelry Market Week in Las Vegas, Boyajian said retailers need to get a better handle on their stock through some type of inventory management system that will allow them to make smarter merchandise decisions and ramp up sales.

During the current economic downturn–and afterwards–jewelers should promote their custom and repair services, as well as the bridal category, deemed one of the most recession-resistant categories in tough times.

And although many more jewelers have created Web sites for their stores– evidenced by Boyajian’s informal polling of the audience–they also need to make sure their Web sites are up-to-date and reflective of the type of image they want for their stores, he said.

“The Internet has changed the way people think about purchasing,” Boyajian said, pointing out that younger people, especially, go online to do research before they buy anything.

Jewelers also need to provide leadership for their staffs and hold staff members up to higher standards. In a tough job market, there’s “never been a better time to hold people accountable,” he said.

Another way to distinguish your business is simply to keep a positive attitude.

“The number one hindrance to growth is a self-limiting mindset,” Boyajian said. “Never limit what you can be personally. You need a unique angle to succeed today. Differentiate yourself and your business.”

He also suggests taking advantage of this slower business period to do some networking at the local Rotary Club or Kiwanis Club.

Above all, the one thing that jewelers need to remember is that their product differs from other retail categories because it is often a symbol of celebration, and love.

“We’re selling happy things to happy people,” he said.