Bricks-And-Clicks Strategy Will Dominate E-Commerce

International Data Corporation (IDC), a Framingham, Mass.-based information technology research firm, says that the U.S. online jewelry market (e-commerce) will grow from $77 million in 1999 to more than $1 billion in 2004. The research contends that people who shop online are becoming increasingly Internet-savvy, to the point of feeling comfortable with a $1,000 online purchase.

“The market will defy the conventional wisdom that says consumers would want to see and hold fine jewelry before they plunk down large amounts of money,” says Jonathan Gaw, a research manager with IDC’s consumer e-commerce major purchases program, who conducted the research.

Many factors contribute to this conclusion, Gaw says, including the increasing number of jewelers going online with Web sites, the cost savings of buying products online, technology improvements, and the lack of pressure felt by consumers buying online.

In addition, Gaw says that brick-and-mortar stores that move online will have a significant advantage over both jewelry “pure-play” e-tailers (companies that exist only on the Internet) and brick-and-mortar stores in other industries. He cites two reasons for this: name recognition of the jeweler and the service that accompanies a fine jewelry purchase, such as repairs.

“The high price tags mean that customers will probably always require some hand-holding and assurances during the process, and they will have the security of having a store to which they can return merchandise,” Gaw says. “It will benefit those who have ‘bricks-and-clicks’ operations.”

He adds, “I’m concerned about the pure-play online player. In this market you need to create relationships with customers. It’s not the same as selling tires. You can’t just throw a lot of money on a Web site and expect to be successful.”

Other research on consumer shopping patterns supports the IDC findings.

For example, an Andersen Consulting survey of Mother’s Day shoppers reveals that 43% of Internet users are uncomfortable purchasing gifts from pure-play e-tailers. Only 1% said they prefer to shop with Internet-only companies, while 36% said they would rather shop at brick-and-mortar Web retailers. Their main reasons for choosing brick-and-mortar retailers include ease of making returns or exchanges, familiarity with the product, and familiarity with the retailer’s name and reputation.

Giga Information Group Inc., a New York-based information technology consulting firm, predicts that by 2002, multichannel retailers-those that sell over the Internet, in stores, and through mail-order catalogs-will dominate Web sales.