In the June 2010 issue of JCK, Kathy Corey of Day’s Jewelers and Daniel Matz of Diamond Mart discussed their differences on e-commerce enabled websites for retailers in the “One Topic, Two Opinions” feature. The print version of the exchange that appeared in the magazine could only contain a limited word count. Below is the complete interview transcription.
Kathy Corey, co-owner of Day’s Jewelers
Opening Quote: “An e-commerce website forces us to offer a better in-store experience.”
Business model: E-commerce isn’t for everybody. It’s a huge investment in time and money and takes several years to actually make money. If you’re a single store that’s strongly branded in a community this may not be the best business model. But, if you own multiple stores and have the inventory to support an e-commerce website, it can bring in and better educate in-market customers while opening your store to the rest of the country. For us, roughly 80% of our sales are out-market.
Online USP: We have the same challenges online as we do offline, creating a Unique Selling Proposition. BlueNile and Mondera have an appealing look and feel as well as usability. But for Day’s, there’s an important story to tell, that we’ve been a family-owned business since 1914. There are people behind the web pages and products who can service the customer by phone, email and in one of our many stores. We also contribute to industry-related charities such as “Diamonds for Peace” and source fair trade diamonds from Botswana.
Self-policing: For people who know us and trust us, they buy online. But if we fail to surpass customers’ expectations with each store visit, they may opt to buy from our e-commerce website or perhaps even one of our many online competitors. In order to keep people coming back, we have to keep improving the customer experience in our stores.
Buying online: The average price points of jewelry sold online are less than the average ticket sales in our stores. Online there’s little resistance to products under $400, but we have sold items over $1,000. Consumer confidence in the more expensive products like the Everlon diamond jewelry was a result of De Beers’ promotions and people’s trust in us. But, repeat business tends to come from bead jewelry.
Closing ratios: An overwhelming number of customers come into our stores saying, “I saw a piece of jewelry on your website.” We’ve found that with our e-commerce website it’s not so much about buying online, but the information and style options people can see on the website. This prequalifies the sale and reduces the time spent on a sales presentation by 25% to 50%. Day’s website has a “Like to see it in a Day’s store” feature. For the customers who use this online option, the closing ratio is 95%.
The future: The Internet is not going away. If anything, it will become more relevant. Roughly 6% of jewelry sold is purchased online, which is not a substantial amount. Over time that percentage may increase. But more and more people are using the Internet for education and still want that in-store experience. There’s a certain prestige in going to a jewelry store.
Diamond Mart, Assistant Manager
St Charles, IL
Opening Quote: “The best way to separate ourselves is to push what comes after the sale.”
Online/in-store: “The purpose of a website is to garner attention from existing and potential customers. When jewelers have an e-commerce website they’ll show their prices and lose customers because the only way to compete online is by price. A jeweler can’t sell online at the same price levels as their brick-and-mortar store. And, when customers see the price differences, you’ll lose them.”
“For an e-commerce website, all you have to do is maintain the website stocked with mostly virtual inventory. For a brick-and-mortar store it costs a lot of money to keep actual inventory in the store. The only way Main Street jewelers can compete with pure players online is to educate people so they know the reasons behind the price differences.”
Online competition: “The moment a retail jeweler adds an online shopping cart [to their website], that’s the moment they’re competing with the big dogs. And, the only way to compete online is by price. It’s just number to number as people look only for the best price.”
“On average, diamonds are $1,500 to $2,000 cheaper on BlueNile.com. People can’t see fluorescence or bad cuts online. Whether it’s loose diamonds or jewelry, I can’t tell you how many people have come into my store with an online jewelry purchase only to find out that had they spent perhaps twice the money, they’d have jewelry that looks three times better.”
Price Thresholds: “There’s a significant difference from smaller price points to buying a ring that retails for several thousand dollars online. If a retailer chooses to sell online, they need to figure out what prices are the most competitive for them.”
“People seem to be comfortable buying less expensive gift jewelry items [tennis bracelets and stud earrings] online from $300 to $800. Styles we sell in the store for these items range from $1,500 to $2,000. When people see the difference in quality and craftsmanship, money becomes less of an issue.”
Core Competencies: “When a jeweler has an e-commerce website he has to service two groups of customers with the same number of employees and resources. It’s like going to a fast-food place with a drive-thru window. The customers who take the time to park their car and eat in the restaurant are forced to wait while drive-thru customers get their meal first. That doesn’t go over well with the folks standing, waiting in line to be served.”
“Not many retailers have the resources to expand their business to such a wide [online] demographic. This could be devastating to the store’s level of customer service.”
“If a mom-and-pop store takes on an e-commerce website, they’ll absorb sales from all over the country. This puts their integrity at risk and they’ll cease to be that intimately-sized store. This may turn off older generations of customers because you automatically become a big player when you’re competing with big online companies.”
The Future: “Retailers have all the ammunition they’ll ever need to get customers to come in to the store, from an educated staff selling product to after-sales customer service. If jewelers guide their customers to make online purchases, they giveaway all that differentiates them from Net-based sellers.”
“Right now the industry is at a crossroad. Whether the industry goes completely online with jewelry purchases depends on which group has the most control, be it the big box retailers [Wal-Mart, JC Penny’s or Sam’s Club], independents or the chain stores. Jared’s and Kay’s are like the independents: they want customers coming into their stores. But if the big boxes take the lead, jewelry stores will go the way of video rental stores that folded with the advent of Netflix.”
Consumer Changes: “We’ve already eliminated most of the relationships between vendors and retailers. If we burn the other bridge between our clients and ourselves, there will be just a few online sources for diamond and jewelry purchases online. And, when e-tailers don’t have to compete with Main Street retailers, prices for online jewelry purchases will go up.”
“Jewelers should embrace technology, but should exercise restraint. Retailers are currently using iPhone apps. That keeps the customer engaged in the process of buying or the creative custom jewelry process. But jewelers still have to give customers a reason to come to the store.”
“Guaranties and warranties that are free. Jewelry cleaning and minor repairs for life for free: In-store events and personal service. That’s how I beat the Internet.”
Customer Convenience: “The relationship and history I have with a customer, along with a detailed profile in the store’s POS database, can be just as or more convenient than shopping online. All the customer has to do is send me an email, a text message or call with a request and I can do the rest. If that’s not convenience, what is?”
Opposing argument: “I can’t think of any reason a brick-and-mortar store should go online. Once you split yourself like that there’s no reason for customers to invest in your business. Is it worth the risk of damaging your business just to sell a few more diamonds each week to people who don’t know you outside your market? For me it isn’t.”Follow JCK on Instagram: @jckmagazine
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