Diamonds and the Internet

The sale of diamonds over the Internet is a topic retail jewelers need to address, because it isn’t going away.

Blue Nile and Amazon have made big splashes in the business media with their assessment of the opportunity that “high-margin” retail-jewelry business offers. Retail jewelers have taken a defensive position with regard to Internet sellers, assuming that these heirs to the “dot-com bomb” (see “Jewelry Dot-Bombs,” JCK, April 2001, p. 92) will conclude the same way. Some have ignored the threat; others have threatened suppliers who provide product to Internet sellers. Both tactics ignore primary, significant advantages retail jewelers have: assortment, selection, personal knowledge, community standing, and trust. To compete against the Blue Niles and Amazons of the world, those advantages need to be leveraged and communicated to frontline sales personnel.

Sales-staff training is essential to responding to any competitive attack. Your sales staff’s ability to size up a customer and judge how to deal with him or her is critical. Different types of customers require different techniques. For example, type-A personalities don’t want to be told what to buy. They want information. The salesperson conveys the information that leads the client to the correct decision. The difference between a $9,000 and a $12,000 diamond ring is more than $3,000! Telling such a consumer that one diamond “speaks to you” and the other doesn’t is nonsense. It’s that kind of sales misinterpretation that resulted in the launch of Blue Nile in the first place.

The Internet’s contribution to the world is readily accessible information. A consumer’s ability to interpret the information is relatively limited. The consumer can get the basics, and the grading reports tend to objectively level the playing field. Like anything else, however, interpreting grading reports requires specific expertise consumers do not have. Product knowledge and people knowledge combined with an effective strategy of dealing with the competitive reality of the Internet client addresses the situation.

What is such a strategy? One way is to, in effect, call the client’s bluff. Imagine what would happen if you were to offer a type-A personality the opportunity to buy a diamond comparable to one he or she just pulled up on the Internet at the exact same price. “Just hand over your credit card.” It is an effective technique to place the client at a decision-making point, according to Mark Moeller, owner of R.F. Moeller Jewelers in Edina, Minneapolis, and St. Paul, Minn. It provides the opportunity for a jeweler to demonstrate the differences between your diamond assortment and program and what is available on the Internet.

Competing is the essence of the retail jewelry business. Responding to a competitive threat by accenting the differences in your product, service, and quality, and facing up to price challenges have been done before against catalog showrooms, discounters, and television marketers. The Internet provides many advantages to consumers, but if their primary difference is price, Internet sellers will learn quickly enough that this is indeed a competitive, dynamic industry.

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