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The Internet - Practical and Better - Is Back
National Jeweler Editorial - Page 20
Just months ago, the word “Internet” wasn’t uttered in polite
society. The subject was taboo, and any abject souls unfortunate enough to be
connected with it were pariahs. Men could pick fights in bars by referring to
someone’s mother as a Webmaster.
Because online shoppers can move so easily from retailer
to retailer, price is indisputably a factor. Yehuda, with its market position
of offering clarity-enhanced diamonds at significantly lower prices than
untreated diamonds of similar appearance, is launching a consumer site
to exploit that strength. Like Jewelry.com, the site will not sell directly
but will drive shoppers to affiliated retailers. Yehuda says it will spend
$1 million over the next year on advertising to attract shoppers to the
Pre- and post-2000 played out a classical case study of euphoric speculation in
the boom-and-bust cycle of the World Wide Web gold rush. Toward the end of the
manic stage, even the most conservative investors were hard-pressed to resist
throwing their hats into the ring. Venture capital poured into tech start-ups
characterized by business plans with attractive facades but little depth or founding
in reality and, often, executives with paltry experience to execute them. But
the emperor, it turned out, wasn’t wearing any clothes. And when the illusion
crashed and burned, the fire was stoked by vault-loads of feel-good paper wealth.
Average Americans looked on dazed as their nest eggs vanished. The Internet went
from sexy to loathsome at broadband speed. In hindsight, the same people who had
leaped aboard became the Net’s most acute critics. Internet jokes edged their
way into stand-up routines. The lesson: Don’t hit an American in his wallet.
Dread and Anguish
The early days of the Web—let’s say 1997—were marked by dread
and anguish. Traditional brick-and-mortar jewelers quickly grasped the potential
for outsiders virtually anywhere on the planet to invade their local markets.
I recall one nationally recognized jeweler pleading, “Can’t National
Jeweler do something about the Internet?”
“Pure play” jewelry retailers appeared. The names of those dot-coms
are nearly forgotten already, perhaps banished from memory—Adornis.com,
Miadora.com. The premise, as in so many Web concepts, was basically, “If
you build it, they will come.” And these companies based merchandising
strategies on expectations that vendors would vie for inclusion. Instead, established
jewelry retailers “convinced” manufacturers to circle the wagons,
countering with their own “official” industry site. That site, Enjewel,
succeeded in keeping the beast at bay, undoubtedly contributing to the newcomers’
downfalls. Considering that small to midsize companies invested tens of thousands
of dollars in Enjewel, there was surprisingly little outcry upon its own demise.
Perhaps it was a case of “money well spent.”
Also stacked against the first generation was the problem that Web users’
expectations substantially outpaced the technology. Download times were painfully
slow over dial-up modems, especially for jewelry photos, a necessity for online
jewelry retailing. While the concepts of escrow payments and return policies
were being developed, they were far from ironed out. Moreover, consumers were
yet skittish about online credit card payments. It was all just too new.
No longer. Throughout the entire boom-and-bust cycle, virtually linked communities,
like worker bees or carpenter ants, droned onward, building their colonies in
a distinct parallel existence to the get-rich-quick-on-the-Web crowd. Those
who stuck with the Internet understood intuitively what the rest of us can see
now that the shininess has worn off and the grief has passed: The communications
opportunities created by this medium represent nothing less than a quantum leap
forward in interactive efficacy.
Critically for jewelers, many of the same average citizens who invested and
lost, while they may have resisted admitting it publicly—and probably
stopped referring to it as “surfing”—continued to build their
levels of online comfort. The Internet has quietly evolved. And Joe Public has
learned how to use it and relies on it as casually as he does a cell phone,
fax machine or voice mail.
Many users now access the Internet via high-speed connections—DSL lines
provided by their local phone companies or cable modems spliced off their TV
lines. And after their virginal fears of buying over the Net proved unfounded,
“users” have converted to “consumers” in droves. According
to the National Retail Federation, online retail sales grew 48 percent last
year to $76 billion and are expected to hit $96 billion for 2003.
The time is ripe for a new generation of jewelers online. And they’re
beginning to arrive, schooled by the failures of the past and much more practically
attuned to the true merits of the medium. For one thing, it’s become readily
apparent that many consumers prefer the ease of online over traditional shopping.
How pleasant to buy birthday, anniversary or holiday gifts from an armchair
in the privacy of office or home. How nice to pass the hours browsing self-purchases.
How much easier to seek product information at arm’s distance rather than
approach a high-pressure salesperson, or perhaps to be better armed when you
Birth of a New Generation
These realities seem well understood by Blue Nile, a darling of online retail
analysts that is closing in on the $100 million annual sales milestone. The
company claims it sells diamonds for 20 percent to 40 percent below “standard”
retail price. It also is posting successive profitable quarters.
Andin International, a leading colored stone jewelry manufacturer for the
majors sector, now claims more than a million users for its Jewelry.com site,
a URL the company bought from the fallen Miadora.com. The company has convinced
Sears, J.C. Penney, Macy’s and Zale to participate and has broadened its
colored stone offerings by forging partnerships with De Beers sightholder Schachter
& Namdar and gold giant Aurafin-OroAmerica. The retailers gain another tactic
for driving sales, while the manufacturers add a valuable merchandising tool
to offer their big customers and prioritize their product among active jewelry
Because online shoppers can move so easily from retailer to retailer,
price is indisputably a factor. Yehuda, with its market position of offering
clarity-enhanced diamonds at significantly lower prices than untreated diamonds
of similar appearance, is launching a consumer site to exploit that strength.
Like Jewelry.com, the site will not sell directly but will drive shoppers to
affiliated retailers. Yehuda says it will spend $1 million over the next year
on advertising to attract shoppers to the site.
Ebay is a phenomenon in a class of its own. Not only consumers but jewelry
retailers and vendors are rapidly making jewelry a top category on the auction
site. The company says jewelry sales surpassed $400 million in 2002 and are
Others in the trade are using the Net for its educational value. Central to
the rebranding plans unveiled in June by the Platinum Guild International is
an overhaul of its consumer promotional site, scheduled for fall. PGI has also
launched a new trade site and has developed an intranet that enables the association’s
executives to chat, check one another’s schedules and share documents
from their far-flung worldwide offices.
The World Gold Council operates a high-impact consumer promotional site from
its international headquarters in London, and the U.S. office plans a fall launch
of a trade site that will offer extensive marketing, product and sales training
On the independent jeweler side, consider Shirley Beck of the Sapphire Gallery,
Philipsburg, Mont. Beck says her site is actually taught by the state as a case
study. More important, beyond driving store traffic, the company sells jewelry
Don’t be duped into believing the Internet has had its rise and fall.
Today’s savvy consumers rely on Web sites to make purchasing decisions
whether buying online or in-store. If you have no online presence, you’re
losing and will continue to lose sales to online jewelers, three-quarters of
whom are making profits, according to the NRF. Especially now, given the state
of the economy, that missed opportunity presents a bitter pill no one wishes