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Jewellery etailing can be defined as the sourcing, purchase /selling and payment of jewellery items mediated by information or digital technology at both locationally separate ends of the exchange...
By: Shilpi Gautam Sharma
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Apr 25 2006 12:00AM
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Reference: 2173  

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The secret of successful retailing is to give your customers what they want: a wide assortment of good quality merchandize; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant total shopping experience.” - Sam Walton

Jewellery etailing can be defined as the sourcing, purchase /selling and payment of jewellery items mediated by information or digital technology at both locationally separate ends of the exchange. Most brick-and-mortar jewellery retailers are replacing their stores by the e-stores which are a lot like the neighborhood jewellery shop offering the ultimate sensory experience, beautiful jewellery pieces along with a great selection of high quality merchandise, friendly service and “new schemes” strategy.

E-tailing is synonymous with business-to-consumer (B2C) transaction as it is selling of retail goods on the Internet. Both B2C and B2B initiatives have inherent Internet-driven benefits of low servicing cost and 24x7 accessibility when compared with legacy systems such as telephone, facsimile and mail. Accenture research estimates that a Web-based transaction costs $0.05 on average, as compared to $5 for a telephone-based one. That’s a staggering saving of $4.95 per transaction, or a factor of 100!

Advantages for Sellers online
The advantages of maintaining jewellery e-store begins with no investment for the infrastructure or the inventory management. Time saving as it is, one can easily set up an e store by paying a minimal amount of entry fees .It offers a level playing field which has both the regional, national and international access. The market is restricted not just to the regional / national level but at the global level transcending the physical, cultural and lingual barriers. The supply and demand cycle can be harmoniously maintained without wasting on the maintenance of extra inventory and ‘made for order’ jewellery pieces can save time.

As a seller on the net, the biggest advantage that one gains is the possibility of becoming an international player, selling authentic traditional jewellery to someone in US/UK/Gulf, etc. overnight. Jewellers have been able to reach customers in the most faraway parts all over the world, thereby enabling them to expand their business and increase profits. A strong customer orientation adds up to provide quick feedback and instant delivery.

Jewellers can also collect information about the buying habits of their customers through the use of cookies. Cookies help the operator of the website to collect information and are invaluable to the business because they allow them to target their advertising better with better information better choice

Advantages for Customers:
The need to re- invent the market place by offering more options for the buyers to have a wide market experience without actually going through the pollution, dust and grime, the ever present coaxing jeweller who leads forcefully to buy one or the other item without giving a breather . The presence of net market helps to choose from the widest array of jewellery items in different price segments without the need for visiting various jewellers and comparing their designs and rates. While the number of sellers is expanding it has a proportional effect on the buyer too, with the present generation being net savvy, e-commerce comes as a boon to the time starved people.

E-Tailing scenario in India
The jewellery industry in India has 3.5 lakh players and is estimated to be worth about Rs. 40,000 crore. The share of the organized sector in this is just Rs. 1,000 crores (about 2.5 per cent).The growth of the internet as a marketing tool in India is a development which evokes global aspirations. From a humble dial-up network in the late 1980s to prospects of up to 40 private and government ISPs unleashing over two million domestic users in the coming year or two, the internet has come a long way in India. Today, India has more software companies with ISO : 9000 certification than any other country. Its software industry has grown more than a hundredfold over the last decade, though it has less than 1 per cent of the world software market share. Much of the success of the internet as a medium and as an economy depends on universal or near-universal access for citizens to cyberspace. Unlike ordinary telecommunications service, issues relating to access to the Internet do not stop at the level of the line and the device.

Gautam Thakar, Country Manager eBay India said, “We are delighted to see Indian sellers leverage the e-Bay platform to sell apparel, jewellery, handicrafts and stamps to thousands of buyers worldwide. In fact an Indian seller is selling an item to a global buyer every 9 minutes.” %5 Meg Whitman, President and CEO e-Bay Inc on her first visit to India reiterated immense confidence in India’s growing ecommerce market, she stated, “India’s booming economy is fuelling the growth of the internet and especially e-commerce. The changing consumer behavior and growing adoption of internet will help to create more opportunities for young Indian entrepreneurs in the online world both in India and around the globe.”

Jewellery is a very popular category on e-Bay India with a piece of jewellery selling every five minutes. There are over 7,500 live listing in the jewellery items at any given point of time. One diamond ring is sold every 9 minutes; a jewellery set every 28 minutes, a loose diamond or gemstone every 43 minutes, a bracelet every 32 minutes, an earring sells every 56 minutes, a ring sells every 41 minutes. These sales figures are from a recent (e-Bay. India) presentation and indicate the size of an untapped business transaction taking place. A ‘diamond solitaire ring” is the most searched item on e-Bay India. 3.5 carat heart shaped diamond ring for Rs. 1, 90,000, large blue diamond for Rs. 1, 31.000 and special diamond ring sold for Rs. 60,000.

The new brands coming up as Tanishq, Aura, Orra, Arisia, Moksha, etc. adding to the world of internet business taking the world by the way of net. Jewellery brands that have already established themselves offline have an excellent possibility being online. While some novices would like to test the waters there are others who have already tasted success, as evident from the presence of bigger brands named above.

E-tailing in USA:
E-tailing began to work for some major corporations and other entrepreneurs as early as 1997 when Dell Computer reported multimillion dollar orders taken at its Website. The success of Amazon.com hastened the arrival of Barnes & Noble’s e-tail site. Concerns about secure order-taking receded. 1997 was also the year in which Auto-by-Tel reported that they had sold their millionth car over the Web, and Commerce Net/Nielsen Media reported that 10 million people had made purchases on the Web. Jupiter research predicted that e-tailing would grow to $37 billion by 2002.

Consumers are increasingly feeling more comfortable in buying products through the internet. According to a report released recently by the Department of Commerce first-quarter retail sales rose 23.8 per cent to US$ 19.8 billion in the United States from US$ 16 billion a year ago. E-commerce sales during the first quarter of 2005 rose 6.4 per cent compared to the fourth quarter of last year.

Forrester Research estimated that 2005 online retail sales will increase at a pace of 22 per cent. Today a third of all households in US make at least one purchase online within a year, a figure which will grow to almost 40 per cent by 2009, predicts Forrester. As a seller, this strong growth of online sales means that you have to put considerable stress on your internet sales endeavor if you are not already doing this. According to statistics compiled for the Internet Retailer Top 400 Guide, the top retailers in 2004 garnered combined online sales of more than US$ 51 billion, which accounts for 58.3 per cent of all US internet sales. The growth in online sales is quite impressive for large retailers. J.C. Penny Co. Inc., for example, reported a 35 per cent year-over-year rise of online sales in May, 2005.

Zales: In the 1920s, Morris (M.B.) and William Zale had a vision: to provide customers with quality merchandise at the lowest possible price. This vision became a reality when the first Zales Jewelers store opened in Wichita Falls, Texas, on March 29, 1924. With a credit plan of “a penny down and a dollar a week,” the Zale brothers launched a marketing strategy considered to be revolutionary at the time, and thus made jewelry and other merchandise affordable to the average working American. Friendly customer service, liberal credit policies, and dedicated employees led to great success and expansion, with 12 stores in Oklahoma and Texas by 1941 Expansion again became the primary growth strategy with two major acquisitions: Peoples Jewellers of Canada in 1999 and Piercing Pagoda, Inc. in 2000.

Today, Zale Corporation is a $2.3 billion success story that evolved during a phenomenal growth period from 1994 to 2000, including an overall 93 per cent increase in sales and 78 per cent growth in average store sales. As North America’s largest specialty retailer of fine jewellery, Zale now operates over 2,300 retail outlets throughout the United States, Canada, and Puerto Rico as well as through the Internet at www.zales.com. Corporation’s business units include Zales Jewelers, Zales Fine Jewelry Outlet, Gordon’s Jewelers, Bailey Banks & Biddle Fine Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.

Amazon: Amazon might not be as popular as e-Bay or Yahoo as far as auction marketplace is concerned, however, many auctioneers claim that some of the products sell better on Amazon than any other auction marketplace.

E-tailing in Japan:
Yahoo: It is difficult to imagine the biggest portal on our planet as a marketplace, in some countries, like Japan and Canada, Yahoo auction is doing better than e-Bay. In US market Yahoo has just announced its intention to eliminate fees charged for using its auction site. This is good news for even many e-Bay power sellers. Some of them will definitely move to Yahoo in a bid to save on high fees charged by e-Bay. The good thing about Yahoo is its becoming a major hub for many small business web stores. As a matter of fact, according to Yahoo, every eighth online store is now hosted by Yahoo.

Tiffany CEO Michael Kowalski is trying to spur demand in Japan, the company’s second-biggest market, by pushing gold-and-diamond jewellery that costs more than US$2,000. Third quarter sales in the country were unchanged after Tiffany failed to attract customers with lower priced silver.

E-tailing in UK
From the mid 1980’s, when the use of modems became widespread, many bulletin boards throughout America and the United Kingdom offered facilities for making purchases online. The first online shopping that occurred was through USENET, when people used USENET to post classified ads, and others in appropriate areas would respond, and sales would result. The subsequent release of Netscape Navigator and the popularization of the WWW, prompted many companies to recognize the opportunity to set up online shopping sites. UK is one of the fastest growing e-tailing markets in Europe. According to a Verdict survey published in 2000, etailing customers within UK spend some 581 millions annually.

E-tailing Failure:
The initial euphoria generated by the mushrooming of dotcoms the world over is waning. On an average, only one in every 10 dotcoms has survived. Obituaries are being written even for the biggest e-tailer of them all, Amazon.com. The horror stories are many and varied, but the general theme remains the same: dotcoms are dying, and dying even faster than they had sprung up. It seems paradoxical !

Put another way, to attract a paltry 1,000 customers who each purchase a reasonable $100 worth of jewellery pieces every year over your website (and hence generate a revenue stream of $1,00,000 spread over a year), your initial acquisition costs would be $1,08,000.We haven’t even got down to product cost, logistics cost and infrastructure cost, and you’ve already booked an $8,000 loss in your first year !

Too many websites: One estimate puts the number at a mind-boggling 250 million, of which at least a quarter are e-tailing in one form or the other. Not many sites are sticky enough. Even for those that are, there isn’t enough to go around.

Most e-tailers lack strong backend system: Accenture worldwide research has shown that one in four attempted purchases over the internet fails. Would you go back to a grocer who ditches you 25 per cent of the time?

Poor integration of etailing websites with the associated supply chain processes: Accenture research indicates that the most common complaint of online shoppers is: “Items ordered are out of stock.” Many etailers are stand-alone e-businesses with poor (if any) linkages with supply chains that deliver the promised product.

How to Succeed in Precious E-tailing:
‘Customers keep coming back only if earlier shopping experiences have been pleasant and successful.’ This is an age old, tried and tested mantra of successful business. Instead of reading the rags to riches story of etailers. Research on your competitors especially the neighborhood jewellery shop which has a close-to-100 per cent record, and a smiling, friendly jeweler who has won the trust of the regular buyers from generation to generation.

Treat your etailing site as the customer-facing end of a supply chain, the face of your company. Focus on building strong bonds between every link in the supply chain i.e. order processing, order status tracking, payment status, inventory level reporting, and procurement.

Build alliances the same way as the traditional brick-and-mortar jewellery shops have well-established supply chains. Figure on his weakness - lack of esavviness and access to technical gizmos, latest designs catalogues to name a few.

E-tailing isn’t just about building a pretty website loaded with beautiful pictures of your jewellery brand. An established management consulting firm will bring in the requisite skills to evaluate your business plan, check out revenue models, help identify potential alliances and integrate supply chain processes with your eCommerce initiatives.

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