Blame the recession: in recent years one of the favourite topics in the tabloid press has been to accuse millennials of having sunk the jewelry business. Without wealth, yet with new investment values, young people today aren’t interested in diamonds or emeralds.
Thank the recession: as every cloud has a silver lining, other demographic groups have actually increased the demand for luxury products, that is, once the first repercussions of the financial crisis had been overcome. This can be added to the rise of the upper and middle classes in countries like China, keen to invest in jewelry and western brands.
Currently, annual global sales figures for the jewelry sector reach 148 billion US dollars, which have a growth rate of 6% per year, and will reach 250 billion dollars by 2020. As far as online jewelry sales statistics go, digital channels still represent a small margin within the industry, just 5% of the market, forecast to increase to 10% in 2020. But that doesn’t mean the scene hasn’t already started to change.
Some of the trends that have recently challenged the jewelry sector include brand internationalization, the development of new omnichannel strategies and the fast fashion movement: of high speed, high class consumption.
The process of searching and shopping online is becoming easier by the day, and luxury categories like the jewelry sector that have normally been difficult to access, have discovered a novel way to reach a wider public.
Why not drop in to Tiffany’s for a peep at their diamond earrings? It’s no longer an impossible dream, now that you can find them online – even if you’re wearing trainers and have no intention of buying. Of course, what’s even more interesting is that users who do have an intention to buy, are also being drawn in. Many brands selling top-of-the-range, super-expensive jewelry have gone on to collaborate with big brands like H&M in order to attract the attention of a select public by presenting special collections.
According to an Oracle survey, 47% of sellers recognise that sales strategies involving smartphones have increased the value of their average user’s shopping basket for both online and offline purchases (thanks to the online searches users are able to make while in the shop).
Although online sales figures appear to be low, the jewelry industry is becoming a pioneer in adopting new technological solutions for ecommerce. As it’s neither an essential product nor within everyone’s reach, jewelry retailers realise they have to cultivate their main selling point: a sophisticated experience that gives access to something unique and personalised. This is much harder to achieve with products in heavy demand, like pencils or trainers.
Furthermore, this ecommerce boom in the jewelry industry includes not only new but also vintage and reconditioned jewelry, which sell for similar or even higher prices.
An earring, a necklace or a ring are rarely bigger than the centre of a mobile screen – that’s why jewelry looks so good online, and even more so with the extra support functions and search options that cannot be easily accessed at a physical jewelers’ shop.
These are the key design factors in ecommerce that empower jewellery:
Product descriptions can include sufficient technical details to bestow a degree of credibility on the seller, and a completeness of information about the item (such as measurements, composition, alloys, weight, lustre, and even ways to combine the jewelry with styles of clothing), that would be tedious and time-consuming to achieve through enquiries made in person.
YIELD includes a guide on their website to choosing jewelry by colour, skin tone and sensitivity, value of the metal, durability and strength.
By shopping online, you save a lot of time when comparing variants of a given item of jewelry, whether by colour, or type of stone or metal; which then means you can choose additional customising features, such as engravings or gift wrapping, at your leisure.
But even more important than data are online images, which provide access to a level of detail for each piece of jewelry impossible to attain by normal viewing. 360 degree photography and zoom lenses permit the user to inspect a piece from every angle, without need of a magnifying glass, without tarnishing it nor feeling watched by the sales assistant. Jewelry datasheets that include this kind of high-value images result in better sales conversions and fewer returns.
Being a very expensive product, comparing jewelry prices online is much more advantageous than going from store to store.
If the purchase is made online, jewelry has the considerable advantage of being small and easy to send, less likely to suffer damage or breakage in transit; though having said that, it does require more complete and expensive insurance.
The following are some of the technological trends in ecommerce that are having a noticeable impact on the jewelry industry:
The promise that ecommerce holds for the future of the jewelry industry, includes online catalogs not having the standard limitations of a physical shop, where it’s impossible to display everything (due to security reasons and because some pieces are exclusively made by order).
Top class jewelers are already taking the leap and investing in equipment for 3D design, which will shorten the time taken between the design being requested by the user and its subsequent manufacture.
A craft jeweler follows the same production model whether for individual orders or for very small editions. But their capacity for investment in these new technologies is negligible, while manual production continues to be slower. This means having to raise prices substantially to compensate for a shortage of available production time, which in turn limits ‘supply’, yet needing to keep a solid basis of ‘demand’, with a waiting list.
Thus small jewelers need to take advantage of the marketing resources offered by ecommerce, rather than its technological aspects. To boost their output, they can focus on a very specific target and thus avoid competing with big brands and commercial channels that tend to appeal to both the general public and those with great purchasing power.
Also, small-scale craft jewelers find it difficult to financially sustain an ecommerce model, since marketplaces like Etsy, Artfire or Amazon Handmade take high fees from their sellers, who then have to charge at least three times the cost of their materials to make a profit.
In order to survive, some craft jewelers form an alliance with some of the big commercial chains who are willing to host smaller brands, providing display services in exchange for a cut of their profits.
It’s not all bad news, though. To the benefit of craft jewelers, there’s a widespread upsurge in preference and demand for products that are Fairtrade, local, from sustainable and certified sources and avoiding overexploitation. Estimates suggest that the growth of the ten biggest jewelry brands in the world will be thanks to the acquisition of local brands: thus the advantages are reciprocal.
Jewelry remains a fashion accessory; and as the fashion industry has reached an almost shocking renewal rate, these rapidly changing trends force brands to continually offer new products if they wish to maintain the customers’ interest.
In the jewelry business such a fast pace doesn’t seem at all practical, since unlike your average tee-shirt, expensive products can’t be turned around so frequently nor manufactured at such short notice.
Cheap jewelry brands are able to sustain a faster pace of production and release, fueling the fast fashion trend and preference for the latest, seasonal favourites in design, metal or precious stone. According to some research results, nowadays fewer than half of all jewelry buyers consider brand name to be a decisive factor in choosing what to buy and according to Mckinsey, by 2020, 60-70% of sales in the jewelry sector will be unbranded products.
What then are the most persuasive points for online jewelry shoppers?
Many of the newer websites work by buying lower-quality jewelry wholesale and from cheap providers such as Aliexpress and Alibaba, although there are a few higher quality alternatives like SaleHoo.
Low-price online shops create a very broad catalog and chase all kinds of customer profile, therefore the best means of counter-attack is to develop a very specific niche (e.g. bridal tiaras, cufflinks, piercings, pet pendants...), and to build a brand, especially making use of ‘ambassadors’ such as influencers or celebrities.
Meanwhile, the jewelry industry's classic players maintain their exclusivity, selling only on limited channels (namely their own website and some affiliated channels like Harrods). However, promoting visits to the high-street store, even from the website (where though many pieces are displayed, they may not actually be bought online) leads to the disadvantage that not everyone has access to a nearby boutique or wants to go there.
Adapting to ecommerce presents an unavoidable challenge for big and small jewelry businesses alike; as much for the dangers of becoming outdated in this technological environment, as for the fierce online competition, and the habits and demands of the modern user.
The best way to gain momentum is to take the digital leap and organize your online sales using a Product Information Management software such as Sales Layer: try this 30-days demo to polish your catalogue and make it sparkle in all your channels.