In a recent presentation at the JCK trade fair in Las Vegas, Melbourne based jeweller Garry Holloway stated that “We generally get 10 to 15 percent more than the Internet, but we get to keep the customer and get his family too…We see that as a fair trade-off.”
So what is a reasonable premium to pay to buy at a retail store, against the internet? 10 to 15 percent seems fairly reasonable to me, but the question then is what value is the retail jeweller adding to earn that 10 to 15 percent?
In fact, we, as well as a few of our competitors, could call ourselves retail and online diamond merchants. That is, we list diamonds from overseas (our International Selection), and sell them with a small brokerage markup, as well as keep our own inventory (our Signature Series), used mostly for local clients. Just by doing a diamond search, you can see that the prices in our Signature Series are anywhere between 5 and 15% more than our International Selection. In order to justify this markup, we do the following:
- Allow local clients to view and compare diamonds in person, online clients can download microscopic photos, videos and cut analysis from our website.
- Offer a hassle free return policy.
- Offer discounted settings.
- Give free laser inscription.
Other jewellers may offer a whole host of extra value such as free loupes, free ring sizing and polishing and a jewellery design service.
That said, the internet is constantly evolving, and internet merchants like us are getting smarter and offering more value such as:
- Better return and refund policies.
- More disclosure with microscopic photos, videos and Ideal-Scope images.
- Interest free financing.
- Faster shipping.
- Constantly lowering prices.
And it’s not just the jewellery industry – the brick and mortar video stores for example now have to compete online movie rental services, which two or three years ago mailed DVDs to their customers, but now offer them as an instant download.
So are brick and mortar jewellers doomed? The ones that maintain high overheads and prices whilst adding little value or worse yet, offer the same prices as the internet, may well be, but those that offer a fair and reasonable price that consumers appreciate will continue to flourish.