The husband and wife team of Jonathan Downing and Megan Meinerding of Fruchtman Marketing presented ways that jewelers could compete in the online marketplace in a presentation titled, “Build Your Brand Promise in Cyberspace.”

Meinerding reminded consumers that even though Web sites like Blue Nile are doing very well, 95 percent of all transactions are still done in brick and mortar stores.

“Brick-and-mortar stores will never go away. Why? Because it’s the social experience, it’s recreational, it’s fun, it’s a hobby, it’s the kick the tires that you can’t get online; and it’s instant gratification,” she said.

Combining an online and brick-and-mortar presence has advantages over pure-play e-commerce sites, and instead of battling with these sites by selling the same jewelry, they suggest that retailers should compete in areas where they have a better chance of success.

Among the largest sellers on e-commerce sites are pendants, studs, and loose diamonds. What they haven’t been able to sell is fashion and custom jewelry.

“Fashion jewelry and custom jewelry are not being sold online because they haven’t figured out a way to do it,” Meinerding said. “Instead of going toe to toe look to the … are not being served online, fashion and custom jewelry and brands. Don’t compete in a spot where you can’t win.”

She continued, “Retailers can sell for less. More turn, less capital. Consumer don’t care about inventory turn and streamline distribution. They only care about price. E-tailing is only a distribution method. It really does not bring new customers.

Downing added, “It’s commoditizing diamonds. It’s not fashion. It’s not taste or higher-margin items. … They’re competing on price. You can’t compete on price.”

She added that jewelers are getting smarter at building “hybrid” Internet and store operations and are taking back some of that business.

“Know and accept that you will not replicate the success of blue Nile,” Downing said. “Don’t react out of fear on the react on your strength.”

JCK