The challenges facing independent retail jewelers have never been more acute. In 2016, nearly 1,200 retail fine jewelry stores in the U.S. and Canada closed permanently, a more than 50% increase versus 2015. These closures were driven by issues facing other brick-and-mortar retailers—the economics of managing staff costs and rent against steady declines in foot traffic as consumers move online—then compounded by issues specific to fine jewelers—aging buyer demographics, costly insurance and inventory investments.

Jennie Pastor, CEO, Kavador

Many jewelers have struggled to offset declining in-store traffic with online sales. Despite the enormous potential and promise of e-commerce for fine jewelers, the creation and operation of a successful online storefront for luxury goods involves considerable challenges. Creating a luxury online shopping experience requires significant investment and digital marketing expertise.

Challenges & Best Practices

Brand differentiation is difficult.

Outside of the ‘big brand’ jewelry houses, the retail fine jewelry market is extraordinarily fragmented with over 15,000 independent retailers operating in the U.S. alone. Creating an online brand that competes with established jewelry names (and large e-commerce brands branching out into fine jewelry) can be a daunting exercise. Retailers should make an objective assessment of their merchandise, past buyer demographics and brand “story” to determine potential differentiators to market to a targeted online audience.

Consumers must trust your brand.

Fine jewelry consumers rely heavily on the ethics of jewelry retailers to provide them with authentic merchandise, as most buyers can’t tell a diamond from a cubic zirconia with the stones in their hands! The required level of trust is multiplied for online jewelry sales—and in this age of rampant online fraud, providing consumers with assurances of authenticity and legitimacy is an ongoing challenge.

Jewelers can build trust and legitimacy with potential buyers through reputable media placements, membership organization badges, and partnerships with large, trusted companies. In addition, luxury consumers expect free, painless returns to get comfortable that online businesses stand behind their products.

Photography is the gatekeeper.

Whilst static images won’t ever fully capture the sparkle of a diamond, well-executed photography—from different angles, with live models to provide scale—can help consumers to have their imagination fill in the sparkle. Proper professional photography is expensive, but absolutely essential.

Digital marketing is a continuous process.

Large online brands spend heavily on paid search, multichannel advertising, PR campaigns, and sophisticated websites and apps. Independent jewelers do not have the budgets or expertise to engage in broad, high-volume digital marketing activities. With limited budgets, retailers should focus marketing dollars for maximum impact by aiming online marketing directly at their target audiences. Effective digital marketing requires continuous analysis and redirection to determine what works, assess the myriad choices, and make the most cost-effective decisions.

It all comes down to data.

Successful e-commerce brands thrive on the analysis and interpretation of data to drive decision-making. Online tools provide granular data about the behaviors and demographics of website users—the challenge for new online players is harnessing all this data through a robust analytics platform to drive increased site traffic and ultimately sales. Retail jewelers generally do not have the expertise or budget to manage online data analytics day-to-day.

The Case for Third-Party Aggregators

Many brick-and-mortar jewelers are eager to sell their merchandise online, but recognize the enormous investment required and the significant challenges to online brand-building. Rather than go it alone, some retail jewelers are instead partnering with established online storefronts acting as aggregators for smaller brands whilst handling the challenges outlined above. Jewelers should only work with online aggregators that specialize in fine jewelry and understand the luxury market. Such partnerships eliminate the need for individual brand-building and provide economies of scale, access to a robust website with professionally presented merchandise, and streamlined order processing.

Kavador is an online marketplace that sells jewelry supplied by independent jewelers.