Among other events at the Las Vegas Show there was a workshop on the problems related to online market competition held by Jonathan Downing and Megan Meinerding of Fruchtman Marketing.
Meinerding reminded that even though Web sites like Blue Nile had a brisk business, 95% of all transactions were still done in brick and mortar stores.
“Brick and mortar stores will never go away, because it’s the experience and feelings that you can’t get online,” Meinerding explained.
A merchant combining an online and brick and mortar presence has advantages over pure-play e-commerce sites. Instead of battling with these sites selling the same commodities, the consultants suggest that they should compete in areas where they have a high chance of success.
Among the largest sellers on e-commerce sites are pendants, studs, and loose diamonds. What they haven’t been able to sell is haute couture and custom made jewelry.
“Internet sites have not figured out a way to do it,” Meinerding explains. “Instead of going toe to toe look to fashion and custom jewelry and brands. Retailers can sell for less. More turn, less capital. Consumers don’t care about inventory turn and streamline distribution, they only care about price. E-tailing is only a distribution method. It really does not bring new customers.”
Downing adds, “E-commerce is commoditizing diamonds. It’s not fashion, taste or higher margin items. It is competing on price. You can’t compete on price.”
The announced merger between online jewelry company Novori and jewelry manufacturer Zalemark should serve a visual illustration of a combined approach to business (retail + Internet).
Zalemark’s General Manager Steven Zale informed that this agreement was part of the company’s plans to expand their brands strategy and boost sales.
“While the brick and mortar retail channel will remain a primary focus, we believe the Internet will create new opportunities to expand our product selection and drive traffic to the independent retail stores as well as Novori’s website. We expect this new marketing initiative will allow us to generate new revenue streams,” Zale noted.
Mark Neild, Novori’s CEO, referring the problem said, “We will develop and manage the official jewelry websites for Zalemark’s major brands utilizing our existing online strengths and technologies to drive online sales for those brands. Simultaneously, we will be distributing these brand products through over a thousand brick and mortar retail locations throughout the country giving us a major revenue stream.”
The cooperation of these companies yielded its first result, which was the presentation of a jewelry line released under the fashionable label of Badgley Mischka at the Couture Show in Las Vegas and given a highly cordial welcome.
