Selling trust online

Only a small percentage of people who use the Internet to shop diamonds and jewelry actually purchase online, said Leonid Tcharnyi, the founder of Pricescope.com. Tcharnyi spoke about how the Internet is changing the retail landscape to a standing-room only crowd of retailers—some of them skeptical and angry about his Internet site—during a seminar at The JCK Show ~ Las Vegas 2005.

“About 80 percent of your customers are visiting the Web, but less than 5 percent are buying,” he told the audience. On BlueNile.com, he said, less than 1 percent of users buy on the site. On Pricescope, about 2% of users actually buy on the site.

“People learn on the Internet,” he said. “They learn about what they want and how much they should pay for it, then they go to the store to buy it.… They want to buy locally.… They want to talk to a real person to feel confident about buying diamond jewelry. Instead of trying to distance yourself from the Internet, you should try to use it.”

He also told the audience that the Internet has totally changed the relationship between customers and retailers. He noted that online advertising messages don’t come from corporations down to consumers. Instead, there are discussions going on between consumers and companies. And the Internet provides a near-endless stream of information, making users better informed and better educated. What this means is that consumers “are now in control of retailing,” he said.

To attract these newly empowered consumers, he told the audience, retailers need to be involved with those customers online, whether it’s through their own Web site or at other places on the Internet where jewelry consumers meet, including chat rooms and message boards.

“The Internet is all about sharing information—all information,” he said. “Your markets are there, and you should be there too.”

He said retailers should not be selling online but should be online to listen to what their customer have to say and to share information with them. ‘They don’t want a press release from the company,” he said. “They want to talk to the company.”

Developing a dialog with consumers earns their trust, which creates value.

“No matter who your customer is, the value the customer receives is peace of mind and trust,” he said. “With this, you add value. At this stage, this is something you can brand. And you can charge for it.”

He continued, “Many people when buying diamonds and expensive jewelry are afraid. You address this fear being open and sharing your information. If your customers feel you are open with them, fear will go away and trust will come.”

During questions, one audience member charged that Pricescope capitalizes on the trust that has been earned and nurtured by retailers and uses that trust to undercut retailers. About half the crowd applauded the remark.

“I’m not creating this market,” Tcharnyi responded. “If there is a need, people will appreciate someone who fills this need.”