China’s traditional tools of jewelry trade mainly include retail stores, franchises, TV shops and network sales. In the 21st century, the age of information, we can witness the development of an absolutely new pattern in jewelry sales - electronic commerce. For China it is rather new - in fact two years ago the success of jewelry trade in the Web here remained very doubtful. By 2010, however, many Chinese jewelry companies turned to be happy owners of web-sites shaped for online sales.
Nelson Ho, Vice Chairman of the Diamond Federation of Hong Kong, believes that e-commerce has the following major advantages for the jewelry industry:
Lower operating expenses
As a whole, expenses incurred by retail companies can be divided into three categories: transportation and delivery expenses; in-store expenses; advertising and marketing. Delivery expenses differ in a slight degree. By establishing an online store it is possible to achieve essential optimization of expenses doing without renting/purchasing a building, its furnishing and making it ready for work, skipping display equipment and samples, avoiding employment of sales personnel and spending for screen time (in case of TV sales), etc.
Smaller inventory
As a rule, jewelry enterprises have a significant need for capital. At the same time, e-commerce gives a chance to do business having a minimal level of inventory; in fact it is enough to post the image and description of a product on your site and there is no need to have its physical sample. Thus, online companies do not freeze their capital into inventories winning in this way a great competitive edge.
Deeper insight into market needs
By means of online tools jewelry business may receive an all-round picture of visitors’ behavior on web sites and better understand consumer preferences in the real environment. Daniel Zhang, financial assistant director general for TaoBao, says that approximately 100 million customers are registered on the site and that it competes head-to-head with eBay, the American public sales juggernaut.
According to him, “we can know what the customers prefer and what their shopping habits are via the information that the site supplies every day.” It needs hardly be mentioned that 100 million persons make up a more than representative sample in various marketing surveys. Businesspersons can thus receive quick feedback from their sites about sales in order to change and adjust their products and every other aspect of the marketing process.
More attractive prices for buyers
Owing to reduced operating and management expenses product costs in online jewelry stores go down and buyers have an opportunity to get their jewelry at much more attractive prices.
Quite recently, who would want to buy a diamond ring, a diamond bracelet, or wholesale polished diamonds and even rough diamonds through the Internet? With unclear security procedures and policies and a constant fear of theft or untrustworthy merchants that might not deliver the goods, we all approached the e-commerce sites with certain fears.
With the willingness of credit card companies and the launch of accompanying security services such as PayPal, e-commerce has become obvious and renewed the international commerce arena.
In recent years, with continuous development of e-commerce, some network diamond sellers appeared in succession, such as www.euyar.com, www.9diamond.com, www.zbird.com, www.popdiamond.com, www.kela.cn, etc, all of which began their sales by copying Blue and later shifting to individual operation strategies.
For example, kela.cn adopts a combination of online and offline operations, 9diamond.com concentrates on network + trial centers + brick and mortar stores, while model. zbird.com, however, employs a network + trial centers pattern. The popdiamond.com portal develops online cooperation with Industrial and Commercial Bank of China and China Merchants Bank to give their customers an opportunity to pay by installments.
Strictly speaking, the existing online brands are not wholly electronic, since they still have offline trial stores and brick and mortar stores. All this reflects the needs of the present-day consumption culture in China.
Experts believe that electronic commerce in China will develop at ever more accelerated rates spurred by both always higher Internet-technologies and stronger trust of consumers to such shopping patterns, as well as assisted by pro-active stimulation on the part of business.
However, this trend should not and cannot supersede offline retail stores. “Online shop is a necessary tool for a jewelry company,” the third-generation diamantaire and founder of the TD Jewelry Company in China, Eran Mandler, says. “But a Chinese customer also requires an opportunity to see a product personally, touch it and try it on in a shop. Firstly, they go online, check and compare prices, many of them print a picture of a desired product or book it online and then go to a real life shop and buy it there.”
New trends are gaining momentum in China at a high pace and in the near future we shall be able to see how jewelry retail here will be transformed in reality and which market participants will stake on e-commerce competing for buyers.
Olga Patseva, Rough&Polished, Shanghai
