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Traditional Retailers vs Internet Traders

In the February 2009 edition of Jeweller there’s yet another article about seemingly evil “internet diamond traders”, ruining the industry for everyone. Although the article is primarily about why internet traders shouldn’t be allowed to join the JAA, the focus is about the argument against internet traders.

As with many of these debates, traditional retailers simply get their facts wrong in regard to internet traders. Below are the arguments put forward by the traditional retailers, along with my clarification.

Internet traders drive business to their sites by pitching a price message.

This may be true for some internet sites, by our “message” is not one of price anymore – rather we offer the best cut diamonds and quality settings at a reasonable price, all through a comprehensive, but easy to use website. By going from trying to be the cheapest, to offering quality and value, our sales have increased and so have our profits. It isn’t a coincidence that those internet sites still pitching the lowest price message are the ones who are struggling or have gone out of business.

Anyone can play the price game, even a traditional retailer. However, one must wonder why traditional retailers are worried about losing clients who base their purchasing decisions solely on price. We certainly are not.

Internet traders argue that without large overheads, they are able to offer much lower prices. This is not necessarily true and creates price uncertainty in general.

Many traditional jewellery retailers are hopelessly inefficient. The fact of the matter is, is that the rent for a shop in the centre of Perth costs upwards of $50,000 per month, even more in larger capital cities. Add salary for staff who are paid to wait for customers and you have a massive amount of wastage, all of which must be added on to the price the customers pay.

If traditional retailers want to create price certainty, then they must:

  • Be more open with their prices.
  • Buy their own stock and stop filling their shelves with goods on credit.
  • Be honest and open about the quality of their goods.

Jewellery Store

Internet traders are less regulated than retailers and they often get away with making unchallenged assertions.

If anything internet traders are more regulated. Almost 100% of the diamonds sold online are certified, and most of these are GIA certified. Again it’s no coincidence that after years of GIA certified stones being sold online, they are now starting to become popular with traditional retailers. Add to this the fact that most internet traders offer generous refund policies, and the fact the consumers are protected by credit card chargeback rules, it is not very often an internet trader would sell a “dud”.

As for unchallenged assertions, I have heard them all – from fluorescent diamonds will go black to internet traders only sell fake diamonds. The problem with retailers making these ludicrous statements is that their typical customer will not go back to the internet and confirm the validity of these statements, whereas an internet customer can simply google any statement made via email.

Internet traders are forced to reduce jewellery and diamonds to the status of a commodity.

If by commodity, they mean publishing prices and being honest with regard to the quality of the diamond, then yes, that is true. Unfortunately, it is in the traditional retailers’ best interests to hide the quality and real value of a diamond. This can be done through the use of bright jewellery store lights, high pressure sales tactics as well as discounting and bogus valuations.

Many internet traders simply sell loose stones. This encourages corners to be cut such as the use of faulty certification and the quoting of stones that are not in inventory.

Again this is a false assumption. Most, if not all internet traders sell settings as well as diamonds.

As stated before, the internet is leading the way with respect to certification.

With respect to quoting of stones not in inventory, there are very few retailers who have a reasonable enough inventory of that they own to allow them to service every single request for a quotation they receive. The difference with internet traders is that instead of going to a high priced local wholesaler with an inferior quality diamond, they access the global market to find the best quality stone for the best price.

Internet traders do not provide the service of retailers and when problems arise, they are inaccessible and can easily choose to disappear.

Internet traders provide a different kind of service. This does not mean that it is inferior to traditional retailers. For example, we have invested tens of thousands of dollars in our own lab. This provides extra service such as sarin reports, ASET images, microscopic photographs and videos. This adds value to our website, which allows customers to view and buy rings and diamonds all from the comfort of their own home.

We also provide comprehensive warranties for our diamonds and rings. For our diamonds in stock, we have a 30 day money-back guarantee and a lifetime upgrade policies. For our Crossfire diamonds, we also have a 1-year, 80% buyback policy. The only other retailer I know of who comes close to offering these sorts of guarantees is Tiffany & Co. In addition to this, if there is a problem with a setting, the customer can easily send the ring back to us (at our expense) for rectification or we can recommend an appraiser or jeweller in their local area that can sort out the problem.

Unfortunately, as is almost always the case with the debates, it seems that traditional retailers are simply using internet traders as a scapegoat for poor sales, or loosing the diamond sale, whilst having to make the setting. The fact is, it is internet traders who are innovating, improving the quality of their goods and their efficiency, whilst traditional retailers are stuck in the same mindset as they had 20, 30 or even 40 years ago – that is – setting up expensive stores, whilst acquiring diamonds on credit, all to create that mystical illusion that is synonymous with the diamond industry.

One Response to “Traditional Retailers vs Internet Traders”

  1. IPC_Program Says:

    It was interesting.

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