Online jewelry’s growth restraint

Ronen Shnidman

U.S. online jewelry sales have increased rapidly in recent years, but observers note that thin profit margins and consumers’ reluctance to buy jewelry online have prevented the Internet from becoming a major sales channel for jewelers.
Many customers still need to see, feel and fall in love with the stone instead of just focusing on a diamond’s specifications,” explained Susan Posnock, the director of public affairs and education at Jewelers of America (JA).  “They want to go to a retailer who can help them feel confident that they are making the right purchase.

Much of the excitement about online diamond jewelry sales is due to the dramatic growth witnessed in recent years. De Beers estimates that 13 percent of women’s diamond jewelry purchases in the U.S. were made online in 2013, compared with an estimated 5 percent bought online in 2006.

Posnock noted that Internet sales are not only growing for pure-play online jewelers but also among traditional bricks-and-mortar jewelry retailers. Brick-and-mortar retailers are going online in order to meet the expectations of their customers and remain competitive regardless of the specific channel that customers use to shop, she said.


However, McKinsey & Company cautions that despite this growth, ecommerce will remain a small fraction of total jewelry sales during this decade. In a survey of 20 leading jewelry executives, the consulting company concluded that ecommerce would constitute no more than 10 percent of fine jewelry sales and 15 percent of fashion jewelry sales worldwide by 2020.

While the major U.S. jewelers are all selling online, Simeon Siegel, an analyst at Nomura Securities, suggested that they are aware of these limitations as online sales account for a very small portion of their total revenue. Signet Jewelers, the largest specialty jeweler in the U.S., reported that its online sales accounted for less than 4 percent of its $3.52 billion total country sales in 2014. Moreover, Siegel points out that between 30 percent and 40 percent of those online customers chose to pick up their purchases in the store.


“Ecommerce would constitute no more than 10 percent of fine jewelry sales and 15 percent of fashion jewelry sales worldwide by 2020.”


What that tells you is that even many Internet savvy customers view part of the jewelry purchasing experience as something that cannot be done entirely online,” he said.

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Source Rapaport