Jewelry Retailers and Manufacturers Struggle for E-commerce

Send Date: 2012-02-19 19:20:42

Source: www.jewellerynetasia.com

Jewelry Retailers and Manufacturers Struggle for E-commerce

There’s a lot of friction in the U.S. between jewellery retailers and jewelry manufacturers and brands regarding best practices and profit-sharing when it comes to e-commerce.

Retailers say that jewellery manufacturers and brands should bring their retail partners along as they sell directly to consumers online. Manufacturers complain that they are turning to the Internet because working through retailers is difficult. Among their complaints is retailers demand that their merchandise be placed on memo and since they haven’t paid for the product up front, they aren’t aggressively selling it. Jewellers also complain about the terms that manufacturers and brands often demand. In fact, the jeweller-manufacturer relationship has always been like a tug of war.

The bottom line is consumers want the best product, for the best price with the best service. Whether they find it online or in store doesn’t really matter to them.

The other thing to note is that consumers are perfectly comfortable with buying products online, including jewellery. Consumers in the U.S. spent a record $161.5 billion online, a 13-percent increase from 2010. Among the top performing categories for the year was jewellery and watches.

In this battle over how to best profit on the Internet, it appears to me that the manufacturers and brands have the upper hand. In many cases they have the finances and scale to quickly convert to an efficient e-commerce operation. Brands, whether or not they sell online, have social media programs. Retailers, for the most part, lack the finances and manpower to create and manage an efficient e-commerce operation with social media support, and shipping functions.

The other advantage manufacturers have is they make the product. Thus, they control the distribution.

Certainly smart manufacturers and brands see the advantages of working with a robust retail network. A quick example is Pandora, which sells their immensely popular charms and other jewellery through independent jewellers and its own branded retail stores. The company doesn’t sell directly to consumers online. The relationship isn’t perfect, but for the most part retailers are happy with the product, if not always the support.

If they are not doing so already, manufacturers and brands should at least have a system in place where retailers can order and pay for new products online.

There have been several attempts by manufacturers to develop an e-commerce platform that includes retailers. To my knowledge—whether it was developed by diamond dealers, jewellery manufacturers or brands—not one has worked. There was one large jewellery manufacturer who spent about three years trying to get its retail partners to invest in a joint e-commerce platform in which they would share the profits. The retailers declined to participate.

The problem as I see is that while these manufacturers claim that to the consumer the process was seamless, it really wasn’t. There was always an extra step involved—just enough of a reason for consumers, who use the Internet for its speed and efficiency, to leave the site.

If a manufacturer can create an e-commerce platform that could tie in retailers in a way that consumers could use, that company would be sitting on a pot of gold.