JD.com and Alibaba create indexes to identify Chinese shoppers’ spending trends, which help retailers gain insight.
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Goldspeed operates two call centers, one in New York and the other in New Jersey, and distribution centers in New York, Pennsylvania and California.
Goldspeed’s average ticket is $400, a reflection of its product mix of low prices and custom-made jewelry. It experienced growth of 1,000% from July 2001 to this July, Kugelman says. Customers range from senior citizens who call in orders from web pages that someone has printed out for them to young people employed in the high-tech business, Kugelman says.
And that is further indication that the online channel is becoming a mainstream way to purchase jewelry. “The hype has gone away, but that isn’t to say consumers aren’t interested in buying jewelry online,” IDC’s Gaw says.
Yet while pure-plays such as BlueNile.com, Ice.com and Goldspeed.com are success stories, their sales are collectively a drop in the bucket of online jewelry sales.
So who’s driving the rest of the year’s projected $1 billion-plus in jewelry sales online? To paraphrase Yogi Berra, it’s the multi-channel story all over again. Online retailers grounded in established non-web channels and brands are best positioned to get the vast share of the web’s sales of jewelry, as they do in some other produict categories. But the multi-channel retailers who are leading online in terms of volume aren’t necessarily those that are top of mind when it comes to expensive baubles. At top-tier jeweler Tiffany & Co., for example, catalogs have been estimated to deliver 10% of sales; web sales, significantly less.
“Tiffany sells a luxury experience, and it’s very difficult to translate that to the Internet,” Gaw says. “When you go into Tiffany you walk through those huge steel doors onto that plush carpet, and there’s a sales associate there to hold your hand through the process. You’re paying for all of that. And Tiffany online charges about the same as Tiffany offline, so what value am I getting by buying online?”
If there’s any category killer in the online jewelry space today, it’s probably Wal-Mart Stores Inc., which targets a broader audience and wins the title due to its sheer bulk. Though it doesn’t break out sales by either product category or by channel, Wal-Mart is acknowledged within the industry as the largest U.S. retailer of jewelry.
Total U.S. jewelry sales are estimated at $40 billion for 2002 across all channels, and specialty retailers focused largely or exclusively on jewelry sales will account for about half of those sales. Within that specialty group, Zale Corp., by its own reckoning, is the largest player, second in volume only to Wal-Mart.
The double whammy
The rest of the jewelry marketplace is national general retail chains such as J.C. Penney and Sears, Roebuck and Co., department stores and direct merchants including catalogers and TV shopping networks. Collectively, the online arms of all of these concerns will rack up sales that constitute only about 3.5% of total U.S. jewelry sales this year, according to Jupiter Research, keeping it one of the smaller categories in terms of online sales.
Online, the category of jewelry faces the double whammy of being a high-ticket item whose selection depends less on product specs than on subjective judgment, and by shoppers’ inability to try on before they buy. Retailers such as BlueNile.com and Ice.com win with a focus on defined niches, but national multi-channel retailers depend on larger economies of scale, and they can’t afford to define targets as narrowly. To make the most out of their online jewelry offers, they’ve had to get smarter about cross-channel marketing and merchandising.
In jewelry as in other categories, Wal-Mart, for example, no longer measures its web site’s contribution in terms of transactions alone but also in terms of its other key role as a product and line extender. WalMart.com’s overall strategy is to add products and services that build on the Wal-Mart store shopping experience. To do that in the jewelry category, WalMart.com has in the past year expanded both its assortment and informational content online.
“One of the advantages of the Internet is being able to access information easily, so we can provide that depth of information and the customer can make a more informed buying decision. And it also lets us offer product selection above and beyond what you’d find in a Wal-Mart store,” says a Wal-Mart spokeswoman.
While the company won’t disclose numbers, web site jewelry sales are up “significantly” from last year, driven primarily by sales of bridal and personalized jewelry, she adds.
In April, Wal-Mart added to its assortment Keepsake Diamonds, a nationally known brand. While the stores carry a selection of Keepsake diamond rings in both white gold and yellow gold settings, the web site offers every ring in both options. Sales in diamonds and other fine jewelry-gold, silver, precious stones and pearls-have gotten a lift on WalMart.com from the online jewelry learning center, a feature added last year, that offers extensive content on care, cleaning, quality criteria and selection. “Based on that, customers may choose to purchase online, or they may choose to go to the store after they’ve done the research online,” the spokeswoman says. “Either way, we are adding value to their shopping experience.”
Sales of so-called personalized jewelry, a new offering within the past year, also have been booming at WalMart.com. Shoppers now have the option of buying class rings on WalMart.com, customizing them according to their high school’s name and with the stone of their choice. Personalization also is the basis of rising sales of family jewelry, in which a mother may order a ring or bracelet, for example, with different stones representing each child. The web makes for easy placement of custom orders.