Managing Tricky E-Commerce Transition

Jennie Pastor, CEO and Co-Founder, KavadorWhile many brick-and- mortar sectors are seeing lower in-store footfall and sales as consumers move online, independent fine jewelry stores are particularly hard hit. Almost 1,200 retail jewelry stores in the U.S. and Canada closed in 2016, marking a 50% increase from 2015. These closures underscore the challenges facing independent jewelry stores, including costly insurance and staffing as well as the challenge of managing cash flow with large capital investments tied up in expensive inventory.Turning costly inventory investments into cash is critical, and many jewelry retailers have struggled to offset declining in-store sales with online sales. If a retail jeweler’s existing inventory isn’t sold into the store’s local market, the jeweler has three primary options for managing ongoing cash flow needs: (1) run in-store sales/promotions, which may negatively impact the store’s brand and pricing model, (2) liquidate inventory through third party liquidators, often for cents on the dollar, or (3) develop an online sales channel. As online sales are the fastest growing segment of fine jewelry sales, the online sales option has tremendous promise; however, creating a viable e-commerce platform and brand can be a daunting (and expensive!) proposition for new entrants. Building a “luxury” online shopping experience, suitable for fine jewelry consumers, requires a sophisticated website, professional photography, and digital marketing expertise.Here are several challenges facing jewelry stores and suggested best practices to find online:Standing ApartThe retail fine jewelry market is highly fragmented – even after store closures, there are still more than 15,000 independent jewelry retailers in the U.S., in addition to the “big brand” jewelers and high-end e-commerce sites that include fine jewelry in their offerings. All of this competition means independent retail jewelers new to the online market will be hard-pressed to differentiate their brands. In order to stand out in this competitive field, an independent jeweler must carefully identify its target audience based on inventory style and price points, then craft a compelling brand story to connect with that specific audience.Building TrustMost jewelry consumers do not know enough about gemstones and precious metals to assess the quality and value of fine jewelry on their own – they rely on their trusted jeweler to sell them authentic, high quality pieces at appropriate values. An independent retail fine jewelry store typically builds this trust with their consumers through an established local community presence, attentive and expert sales staff, and the emotional experience of touching and trying on pieces.An independent jeweler moving online must find ways to build trust with a broad online audience unfamiliar with its physical storefront and sales staff. Assurances about authenticity and legitimacy are essential, and can come in the form of certificates from reputable industry organizations, partnerships with complementary trusted brands, and standard hassle-free returns.Photography That Feels RealSavvy online consumers, especially those prepared to spend large sums of money online, expect high quality photography to help them virtually “see and touch” the product through their screen. For fine jewelry in particular, professional photography is a must – product images must be crisp and vivid to capture details of gemstones and settings, and preferably taken from multiple angles and in real-life settings to provide reference and scale.Combining Digital Marketing and DataBig e-commerce brands have big digital marketing budgets for paid search, PR campaigns, integrated apps, and dynamic websites, and each of these is developed and deployed based on detailed data analytics – site traffic and behaviors, user demographics and engagement, etc. Independent retail jewelers typically have limited marketing budgets, which makes the direction of digital marketing dollars critical. Too often, inexperienced digital marketers spend heavily on broad PR campaigns and splashy websites that do not deliver the brand engagement and conversions to justify the spend. Independent jewelers moving online must start with a data-centric approach, using online tools to capture and analyze information on customer demographics and behaviors, popular styles and price points, and campaign engagement and effectiveness. With this information, new e-commerce brands can direct limited digital marketing budgets most efficiently and effectively.The Case for Third-Party AggregatorsTo remain in business, many retail jewelry stores hope to offset declining in-store sales with online sales – however, with limited digital marketing expertise and a crowded luxury e-commerce field, the return on the upfront investment required to create a new online presence and brand is far from certain. Third-party aggregators may offer an alternative e-commerce access point for independent retailers with neither an established online brand nor the appetite to make the capital investments to build and market an online platform from scratch. Independent jewelry retailers can piggyback aggregators’ established e-commerce platforms and digital marketing activities to access a broad online audience for their inventory. Third-party aggregators should offer an established brand presence, professional photography, seamless order processing, and robust data analytics.[author]About the Author: Jennie was born with an eye for glittering beauty and a family history in fine jewelry, and was disappointed by the mass-produced and over-priced fine jewelry available online. Jennie started Kavador to make this right – to create an accessible and transparent online fine jewelry marketplace, with pieces curated from the vaults of high-end jewelers and collectors, bringing these treasures to light at extraordinary value.[/author]