IS THE INTERNET A NEW KEY TO RETAILING SUCCESS?

The Internet – that mushrooming web of computer networks – is fast turning into a giant electronic shopping mall. Retail sales on the ’Net totaled $2.4 billion last year and are expected to hit $4.8 billion this year. A third of all United States retailers now use the ’Net for merchandising, and the number grows by the day, if not by the hour.

Where does the jewelry industry fit in? Though relatively small, it’s one of the ’Net’s fast-growing retail categories. Online jewelry sales came to $38 million last year and should reach $56 million this year, according to Forrester Research Inc., a leading Internet consulting firm in Cambridge, Mass. True, that’s tiny compared with annual jewelry sales of some $35 billion, but business is building rapidly. Online traffic now doubles every 100 days, and electronic jewelry sales will soar 250% to at least $140 million by 2001, Forrester predicts.

Direct sales are not the only way the Internet increases a retailer’s revenues, though. Surveys show that most Internet users go online to comparison shop or gather information about a product – and then subsequently buy it through traditional channels. Some 90% of Internet users say their online research affects future buying decisions.

An advantage for small jewelers. Internet search engines already list hundreds of Web sites for all types of jewelry retailers. Many are major firms, such as QVC (whose iQVC site has not one but two jewelry sections), Zales Jewelers, Sears, or Barry’s Jewelers. But don’t be discouraged.

The advantage of the Internet is that “it levels the playing field” and makes the independent jeweler competitive with all other, and larger, retailers, says three-store jeweler Jack Van Dell of West Palm Beach, Fla., who went online early this year. “It doesn’t matter what size you are. For the viewer, everything is perception. You can work out of a closet in a New York apartment, but if your page is professionally done and sophisticated, the viewer assumes that you are [a major player], too.” As Brenda Reichel, owner of Carats & Karats, a two-person store in Honolulu, puts it succinctly, “My Web site puts me on a better footing to compete with anyone, anywhere.”

Consumer habits are definitely changing, says Jacques Voorhees, president of Polygon Inc. in Dillon, Colo., the largest Internet service company for the jewelry industry. As he sees it, consumers in coming years will “segment between those buying online and those buying in stores, but whichever segment he caters to, a jeweler will need to be online. The issue is, what can the jeweler do to remain competitive?” The answer, Voorhees says, is that “a Web site can be used as a bridge between advertising and the physical store,” generating online sales or providing information about your business and merchandise that brings people in.

But as the Internet gets even more crowded, what can an individual jeweler do to make his or her Web site stand out? Here are some tips from store owners who have used their sites to increase sales.

  • Specialize, specialize. Rather than promote everything in your store online, cater to a specific market or clientele. Concentrate on estate jewelry, diamond rings, men’s jewelry, pearls, or some other niche. Remember, Internet search directories rely on keywords to find Web sites and thus are the ultimate in target marketing.

In Honolulu, Brenda Reichel’s Web site (www.caratsandkarats.com) receives orders from around the world for the Hawaiian Heritage jewelry (combining traditional Hawaiian and English design) that it promotes. “We get up to 15 e-mails a day from people who see the site and want to know more about the jewelry,” she says. Van Dell, with stores in both Florida and California, goes after affluent, horse-loving clients online (www.vandell.com). Though he’s a traditional, full-service jeweler, he promotes his custom-made 14k, 18k, and platinum equestrian jewelry ($100 to $10,000 retail) on his site. “We’re going after a niche market,” says Van Dell, who plays polo, shows horses, and first began making equestrian jewelry for friends 25 years ago. “If I put up everything [in the stores], I’d just be competing with everyone else. But no one is doing a lot of what we make. So, in my Web site, I focus on what I’m novel in.”

Sterling flatware, much of it estate, is the primary product on the Silver Queen Web site (www.silver-queen.com) of Belleair Coins, a jewelry store in Belleair, Fla. “Jewelers don’t carry silverware much anymore, but people want it for weddings and gifts, and we have it. We’re the experts,” says co-owner Pat Arbutine, who’s responsible for the site. The store, which grosses $10 million a year, half of it in flatware, spends $500,000 annually on advertising in major Sunday newspapers and in bride magazines. “Every ad carries our Web address,” she says. Designed to be a cyber version of the store, the site provides everything a viewer needs to know about silverware, including pictures, patterns, and prices.

  • Build trust. Web consumers want assurance that online retailers are reliable. According to recent surveys, online shoppers say “lack of trust” is the top reason they don’t engage in electronic commerce and that online validation of Web retailers would increase their confidence about buying from those they don’t know.

Some jewelers handle that by posting testimonials from satisfied customers. Others go further. They’re literally up front about their reliability, posting their credentials on their home (opening) Web page. The Certified-Plus Diamonds site (drostes.com) of Droste’s Jewelers, Evansville, Ind., for example, posts a “Credentials Box” on its first page with links to Better Business Bureau Online, the American Gem Society site, and even its bank and credit references.

Another option is to sign up with one of a growing number of independent online groups created to protect consumers. Oregon jeweler Ron Elsey’s online Tradeshop Inc. (www.trade-shop.com), for example, is listed with the new Association of Ethical Internet Professionals and prominently carries a link to that site (www.mavens2.com/aeip/aeip.co) on its home page.

The Jewelry Box of Fort Knox, Ky., (www.thejewelry-box.com) posts its membership in the “Public Eye Certified Safe Shopping” channel (www.thepubliceye.com), an Internet directory of retail firms. Membership in it is the “cybernet equivalent of the Good Housekeeping Seal of Approval,” says Web Week magazine. Participating companies must demonstrate “extraordinary commitment to customer satisfaction,” based on reports by customers and undercover shoppers; agree to monitoring; openly display their customer-satisfaction records; and provide proof on demand that their businesses are trustworthy and reliable.

  • Local or global? Sure, the Internet is worldwide, but should your Web site seek an audience that is international – or national, regional, or local?

Many jewelers seek customers across the United States or around the world to complement local business. Van Dell’s site, for instance, is specifically designed to be “a global marketing tool” to reach its jet-setting customers, he says. “With it, we keep them informed of new designs and concepts, and they can e-mail or call us and say, ‘I want that.’ ”

The Certified-Plus Diamonds site of Droste’s Jewelers is “definitely designed for a global market,” says co-owner Greg Droste. While its two full-service stores cater to Evansville (population 500,000), its Web site aims at “the millions reached by the Internet.” Thanks to its large online inventory and user-friendly design, the ambitious approach works. It has had significant sales domestically as well as in Canada, England, Australia, and Singapore.

On the other hand, says Polygon’s Jacques Voorhees, too many small jewelers assume that simply being online will bring them national or international business. They would be smarter to “address their local market,” he says, rather than competing unsuccessfully with “monsterjewelry.com” sites for business that relies on wide selection, low price, and heavy volume.

To reach a hometown market (called “local Internetting”), put your Web site address onto local Internet search engines and in your Yellow Pages ads. “Put maps and pictures of your store on your Web site so people can find you,” Voorhees advises. “List your hours of operation and personalize the site with pictures of your staff. Put your e-mail address and phone number.

“To see who is viewing your site, put on percent-off coupons that they can print out and bring into the store for purchases. Periodically survey customers on where they heard about you and include your Web site as one of the places to check.”

  • Be user-friendly. Since most viewers will know little about gemstones or jewelry, make your site informative and useful. Droste’s Certified-Plus Diamonds site is a good model. On its home page, it has the names and descriptions of all major diamond cuts and shows the difference between an average and a very fine cut. Pull-down “menu bars” explain such consumer-puzzling terms as “table size” and “girdle thickness.” The site even enables a viewer to “customize” the diamond he or she wants (by shape, price, weight, etc.) from the store’s online inventory of 7,500 stones. “We want to give good information to the public,” says Droste, “[because] when they come to make a purchase, half the time they don’t really know what they are looking for.”

  • Add personal touches. There are other ways to personalize a site and keep people coming back. Many stores post their newsletters, jewelry tips, or jewelry-related news. Hamilton Jewelers, which has two stores in New Jersey and one in Florida, maintains a list of its stores’ upcoming promotional events on its site (www.hamiltonjewelers.com).

Silver Queen.com posts engagement, wedding, and birth announcements and photos, and even recipes sent in by viewers. “We want to be ‘Martha Stewart Online,’ ” jokes co-owner Pat Arbutine, “but, really, things like this return people [to the site]!”

The Jewelry Box Web site offers a “moderated jewelry discussion group” for the public as well as monthly “Book of the Month” selections dealing with jewelry or jewelry care.

Eric’s Diamonds & Fine Jewelry in Chippawa Falls, Wis., (www.ericsdiamonds.com) offers a free “Occasion Reminder” online service to its customers. A user fills in an e-mail form with the reminder he wants to receive (i.e. Ann’s birthday is Oct. 12), his e-mail address, and the date or dates when he wants a reminder (not the occasion date). The store will alert the user to as many occasions as he wishes. Why? It’s a subtle way to remind users that gifts for those occasions can be purchased through the store, which will assist in any gift-buying situation.

An excellent way to personalize a site is by inviting e-mail. Indeed, say Internet advisers, every jeweler’s Web site should have e-mail capacity (as well as a phone number and address) so viewers can contact the store with queries and orders.

But don’t let the e-mail messages pile up. Answer them promptly, even if it means designating a staff member to do so. That develops rapport with the viewers, keeps them informed about sales in your store, and reassures them you’re a reliable retailer. “If you don’t answer your e-mail every day, you shouldn’t be on a Web page,” asserts Brenda

Reichel of Honolulu’s Carats & Karats. Lazy responses to e-mail not only can cost a jeweler potential customers but also can cause Internet problems. “You’ll be ‘flamed’ and your name will be put in Internet newsgroups as being unreliable and not a good retailer” to deal with, she warns.

  • Maintain it. Of course, simply having a Web site doesn’t make it a useful business tool. It must be regularly maintained and updated. Van Dell, for example, changes the jewelry items on his site at least every 30 days. Belleair Coin’s Silverqueen.com brought little business until Pat Arbutine took it over herself. “Prices were never changed; no one ‘worked’ the site,” she says. Now, it’s constantly updated and has moving signs and animated icons, new services – and many more users.

  • Promote your site. “Spending money to develop a Web site and then never putting it in your Yellow Pages ads is just nuts!” says Jacques Voorhees, president of Polygon. He and other Internet specialists also urge putting your URL (Web site address) on all your business cards, store materials, promotional material, and advertising. “We put ours in all our print ads and information and on search engines like Yahoo and Alta Vista,” says Van Dell. “We also link our site with those who share similar markets or clientele, such as makers of saddles and equestrian equipment.”

The payoff. Yes, a good Web site requires time and attention, but if it’s well thought-out and well maintained, it can significantly increase profits.

Silver Queen.comnow gets thousands of “hits” from across the United States and generated $3,000 in sales in June alone. For Reichel, the Internet has “brought a lot more business than I would have imagined, adding 20 to 25% to our baseline.” Just as important, with her local economy in a tailspin because of the sharp drop in Japanese tourism, her Web site “has kept me in business.” Meanwhile, Droste’s Jewelers has seen traffic, inquiries, and diamond sales on its site continually grow in the past three years.

“Our site is a success,” says Droste, “and we expect it to keep growing as the Internet becomes more a part of the average American home.”

Getting your own site

Surprise! You probably already have one – and it’s not costing you a cent.

In an arrangement unique to the jewelry industry, most major associations in the trade offer free Web sites to their members. They’re designed and maintained, under contract with the associations, by Polygon Inc., the industry’s largest Internet service provider (www.polygon.com).

The free sites’ designs resemble that of the association with which the jeweler is associated. Each includes the jeweler’s name, address, phone number, and logo as well as company information, news, and consumer information – all provided by the association – plus pages where merchandise can be presented. The sites are expandable and can be customized by Polygon, by a Web site designer, or by the jeweler.

So far, there are some 15,000 free jewelry store Web sites online. To find out if yours is one of them, contact your trade association or Polygon at (970) 468-1245.

If you choose to create a new site on your own or to enhance your bare-bones Polygon site, you’ll find Web designers in your local Yellow Pages under “Internet Services” or “Computers” (subcategories “Consultants” or “Access Providers”).

With the surge of businesses going on the Internet in recent years, site start-up and monthly maintenance costs have risen. However, depending on how detailed your site is (the amount of information, graphics, pull-down menus, and animated icons), the start-up costs (including design and some promotion/marketing) can run from hundreds to thousands of dollars.

In addition, the site has to be maintained. If you don’t have a Web-savvy relative or employee who can do this, it can be handled by your server (the company that puts your Web site on the Internet). Depending on the company and the size of your site, monthly maintenance fees run from less than $100 to several hundred dollars. A source of information about Web site decisions is iJeweler, an Austin, Texas, firm that deals in Web services and consulting for independent jewelers. It can be reached at (512) 444-8070 or via e-mail at richg@jeweler.com.

How fast is the Web growing?

Recent online industry, jewelry trade, and government reports say that:

  • In 1993, there were about 3 million Web users worldwide, most in the United States. Today, 100 million people (two-thirds of them American) have access. Within three years, 175 million (a third of them American) will be connected. Personal computers linked to the ’Net are expected to increase from 32 million last year to 300 million by 2001.

  • Registered Internet URLs (domain names for

  • Web sites) more than doubled between 1996 and 1997 to 1.5 million.

  • 75% of small businesses use computers and 40% have their own Web sites, according to the National Federation of Independent Businesses. (For the smallest businesses, the figure is close to 1 in 10, other studies report.)

  • About 90% of retail jewelers use computers in business, according to the 1997 Technology Survey of the Jewelers’ Security Alliance, and two of five have access to the ’Net. Seven of 10 jewelers, regardless of size, expect the ’Net to become a more important part of their business within two years, says the JSA study.

  • Three-fourths of the 13,000 members of Jewelers of America use computers in business. A third of those are ’Net connected.

Retail Sales on the Internet*

1997 1998 1999 2000 2001
Jewelry $38 $56 $78 $107 $140
All online sales $2,444 $4,828 $7,924 $12,090 $17,387
* In millions of dollars. Source: Forrester Research Inc.

Who Shops the Internet?

  • Recent findings indicate that 64% of online shoppers are 40 to 64 years old and 68% are men.

  • One in three (32%) consumers with access to the Internet has bought a product or service online. Only 4% make more than 10 purchases a year.

  • 64% use the Internet to comparison shop or gather information about a product – and then buy it through traditional channels.

  • 90% said their online research affects future buying decisions.

  • 85% of men with access to the Internet go online regularly, compared with 64% of women.

  • Internet buyers spend on average $235 annually through online purchases.

Sources: Ernst & Young/National Retail Federation; Jupiter Communications; CommerceNet/Neisen Media Research