Columnists George Prout Applied Marketing 101: It’s time to start actually selling on the Internet (Part 1)

Applied Marketing 101: It’s time to start actually selling on the Internet (Part 1)

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I accept as axiomatic the premise that rapid change is typically easy to detect, whereas incremental change may be far more difficult to recognize. We can confirm the validity of this proposition by conducting the following demonstration: Place a frog in a container full of room temperature water, and then slowly increase the temperature at a rate of one degree centigrade every five minutes. Incredibly, the poor frog will allow itself to be boiled to death.  I have increasingly come to see similarities for us in the jewelry industry to the boiled frog, only we aren’t ever-so-slowly boiling in a tub of water. Instead, we are being boiled in an environment known as the Internet.

At the turn of the Century (yes, now that we are fourteen years downstream from 2000, I think it’s time to actually start using that phrase), most of us responded to the threat posed by the Internet by building (sometimes very expensive) Internet sales portals, given the fact that we had all been assured by “experts” that the Internet would destroy the brick-and-mortar jewelry retailing model. Only, that didn’t happen, did it? In fact, we all learned a valuable lesson, didn’t we? The mere availability of new technology doesn’t change business overnight unless consumer behavior similarly changes.

Now, if you were in the travel industry fourteen years ago, the Internet changed everything really quickly, essentially destroying the travel agency business model. And over time, the Internet has destroyed other industries, like the Blockbuster-style movie rental business. It is currently destroying the book store business model. And there is no question that the Internet has commoditized the loose diamond business, to the extent that your margins are probably much, much lower in this category than they were 20 years ago, even though the actual number of stores selling loose diamonds near you has probably declined during the same period. But you and about 20,000 other American jewelry stores are still in business, protected by the fact that a sufficient majority of consumers have still consistently chosen to buy jewelry, for whatever reason, in brick and mortar environments rather than on the Internet.

However, I now see sufficiently persuasive evidence suggesting that the consumer behavioral pendulum is swinging, in a big way, such that a re-examination of the whole Internet issue is justified. And as I examine the history of Internet jewelry retailing, some new realities are now becoming clear that you need to consider, and I have even come to believe that it’s now time for you to start to ramp up your own Internet retailing capability, or you may, like the frog, discover too late that the ambient temperature has become too warm to react.

Let’s start with the fact that many, many retailers at both the mass merchant as well as the independent levels simultaneously created websites designed to sell jewelry about 14 years ago, and they ALL failed. The vast majority of independents breathed a sigh of relief, recognizing that their stores weren’t being bulldozed by the Internet after all, and basically gave up or lost interest in the Internet as a selling model. Yes, they still have websites that essentially act as web-based brochures, and some of them actually do a terrific job collecting potential customers online, who are then directed into the store to make a purchase. But for all intents and purposes, the independent jeweler community recognized that their efforts to actually sell jewelry on the Internet were unproductive, and given limited resources and many competing priorities, they just stopped trying.

Not so the majors… and a funny thing happened during the past 14 years, as the major chains, department stores, and some savvy Internet-only players with the funding capacity to think long term actually invented jewelry retailing models that were ready to cater to the slowly increasing number of consumers who were perfectly happy to buy their jewelry on the Internet. To the extent that today, there is a thriving, rapidly expanding jewelry business happening on the Net. For example, I recently learned that one well-known bridal brand’s website generated over 20 million dollars in sales last year. I’m not referring here to sales that started on the Web, and then were ultimately consummated in the jewelry store environment. These sales occurred completely on the Net. And websites like kay.com, jcpenney.com, and zales.com are now generating amazing quantities of online jewelry sales, measurable in the hundreds of millions of dollars.

The really spooky part is that if you plot the sales increases in the jewelry category that are happening on the Internet, the curve has become exponential. Which suggests to me that what we are really seeing is consumer participation that can be plotted on an elongated Standard Distribution Curve (a relative of the well-known Bell Curve), which corresponds to a fundamental marketing principle known as the Product Adoption Curve. What we’re seeing are segments of the consumer audience, known as Innovators and Early Adopters, embracing the Internet as a “New Product” in the form of a purchasing mechanism for jewelry. Which means that all of those “experts” who told you 14 years ago that the Internet was going to irrevocably corrupt and ultimately destroy portions of the brick and mortar jewelry retailing model weren’t actually wrong after all. They just didn’t understand the timing.

The good news is that if I’ve got the math right, the Product Adoption Curve for this whole phenomenon is sufficiently elongated that it will still take a number of years for the nightmare scenario to play out. In fact, I actually have wonderful news. It appears that you have sufficient time to develop a strategy to start actually selling significant amounts of jewelry on the Net. And I’m also convinced that if your store is well known and well liked, the added cachet that’s attached to your store’s brand identity will make it easier for you to do so.

But you must start now… this year… you must come to grips with the reality that there are two distinctly different methodologies for selling jewelry: The Brick and Mortar Model, and the Internet Retailing Model. And one of them is winning, while the other one is losing. And, unless you plan on retiring in the next 5-7 years, if you don’t figure out a way to participate in the Thrill of Victory by embracing the winning model, you may discover the Agony of Defeat - first-hand.

Anuj (Gems One president) and I have actually been thinking about this whole problem for quite some time, and I think we’re starting to get a handle on a solution. In fact, I’m working with a dedicated team right now on a model designed to help some of Gems One’s customers start actually selling significant amounts of jewelry on the Internet in their local communities to folks who are not just shopping on the Net, but are actually BUYING jewelry on the Net. We’ll start later this Spring by testing the model with about 75 of our customers whose websites are on the GemNet platform, because the logistical challenges associated with adding 10,000 pieces of jewelry to their websites are much easier to overcome since they’re all built on the same architecture. But by Las Vegas, we should have it worked out so that we can plug into just about anyone’s website. And we will have the Sourcing, Merchandising, and direct-to-the-consumer Fulfillment Capacity to actually make Internet Jewelry Retailing a reality for our customers.

I’ll explain the theoretical underpinnings as well as the practical elements in a future article. If you study what’s actually occurring in Internet Jewelry Retailing, as I have, it’s pretty interesting, and while very few companies have truly figured it out, the ones who have done so are selling tonnage. For now, all I’ll say is this: We’ll ultimately be looking for about 500 jewelers who might be interested in helping us serve 310 million American consumers in exclusive territories. If you’d like to be one of those jewelers, let me know.

Class Dismissed!


George Prout is Vice President of Sales and Marketing for Gems One Corporation, and can be reached via e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or at Gems One’s office at 800-436-7787.

 
 
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