A Cure for Internet Anxiety

Web sites that sell discount-priced diamonds and diamond jewelry to consumers may be the biggest business threat retail jewelers have ever faced. Jewelry sales at sites like Blue Nile, eBay, and Diamond.com are booming, and Pricescope—arguably the most angst-inducing site of all—allows diamond suppliers and jewelry manufacturers to sell directly to consumers with very little markup.

But one diamond and diamond-jewelry supplier says it's on the side of the retailer. The company, Philadelphia-based G.N. Diamond, has a Web site that's designed to attract consumers to jewelry stores. The site, www.diamonddestiny.com, launched in January.

Direct to retailer. The Diamond Destiny site serves as an Internet shopping guide and educational tool for consumers who are interested in buying diamond jewelry. Like many Web sites, it offers loose diamonds and diamond jewelry as well as educational resources. Unlike a lot of Web sites, it won't sell to the end user, Asaf Herskovitz, G.N. Diamond's president, explains. Instead, it directs consumers to the nearest retailer who has the product he or she wants to buy.

"We view the Web site as a bridge that connects the consumer to the local retailer," Herskovitz says. "A consumer can log in, view jewelry and stones, and then find a jeweler in the area."

The site will offer G.N. Diamond products (diamonds and diamond jewelry) at reduced prices, which Herskovitz describes as up to 20 percent higher than prices at Blue Nile, the most expensive discount site, he says. "We sell for more than Blue Nile because we believe there is a service [that Blue Nile doesn't offer]."

"The bottom line is the Internet is not going away," Herskovitz says. "If you are using it and excited about it, now you have an educated, qualified lead, and consumers have a qualified retailer on the Web."

How it Works. A user registers with the site before purchasing a product. The customer selects an item and places it on his wish list. When the customer decides to make the purchase, he adds his ZIP code, which automatically generates an e-mail from Diamond Destiny with a store's name and contact information. That jeweler contacts the customer within 48 hours to schedule an appointment to see the product.

In the meantime, the retailer orders the item on memo from Diamond Destiny through a retailer-dedicated page. G.N. Diamond will send up to two stones on memo for five business days, reserving the right to recall the stone or jewelry piece at any time. If the exact stone isn't available, G.N. Diamond will send a comparable stone while trying to get the original. If the stone doesn't sell, G.N. Diamond will pay the shipping and insurance for the retailer.

Herskovitz adds that there's no reason a retailer can't sell other items to a customer once he's inside the store.

The site's educational information is written in an impartial manner, Herskovitz says, distinguishing it from the information typically found on other Web sites. "We left the words neutral because every jeweler has their own way of educating on cut and color."

Included is a brief history of diamonds, tips on diamond care, descriptions of diamond certification and laser inscriptions, an overview of the "four Cs," and a glossary of terms. "The glossary gives the end consumer a feeling that he knows what the jeweler is talking about," Herskovitz says.

The site also serves as an advocate for retailers. The education information contains a top-10 list of why consumers should buy their jewelry at local stores. Herskovitz also stresses that the name G.N. Diamonds does not appear anywhere on the site.

A selling group. Herskovitz says he's putting together a "selling group" of retailers for the Web site. As of February about 200 retailers—all G.N. Diamond customers—were part of the group. His goal is to sign up 400 to 500. Retailers' only purchase requirement is to buy enough G.N. Diamond stock for the year. There's no charge for becoming part of the selling group.

When two or more retailers do business in the same area, the site will use an automated process to rotate the retailers who respond in the ZIP-code search, Herskovitz says. Only one retailer will be contacted in each search. And the search engine is designed so users will be guided to the same retailer in subsequent searches.

The customer "won't be able to go to a different store," he says, describing his plan as a way to "level out the playing field" when jewelers compete in the same area. There are no exclusive retail relationships within areas.

William Glatz of William Glatz Jewelers, in Philadelphia and the nearby suburb of Jamison, Pa., is part of the group. Glatz, a customer of G.N. Diamonds, confirmed that the site is available to him without charge and said no effort was required on his part to become part of the selling group. When JCK contacted him in February, he had yet to get his first customer through the Web site, since its launch was only two weeks prior. But he is cautiously optimistic about the new service, hoping it will help alleviate problems with the retail diamond market.

"It's a good idea if it works," Glatz says. "With the way the diamond business for the average jeweler is going, it hardly pays to stock diamonds unless you sell one a week or every two weeks, because you don't make any money on it. The bigger the stone, the less the profit."

Aiming for Blue Nile. Herskovitz says he is going after the big Internet retailers, especially Blue Nile. He's designing an online advertising campaign on major search engines and working to ensure that Diamond Destiny appears at or near the top of Web searches. He's also looking at partnering with other large Internet retailers that sell related items. For Valentine's Day, he partnered with 1-800-flowers.com and is hoping to make the relationship permanent.

Herskovitz's goal for the first six months is to attract 300,000 to 600,000 unique users to the site. "We know that the pie is big enough and that a group of retailers is stronger than a wholesaler selling directly to the public," he says.

"If we all stick together, between the historical knowledge of the retailer and having a direct source and combining the two, we're going to give Blue Nile a run for their money."