November 1999

Managing: Technology

Clicks and Mortar

Polygon members discuss Internet strategy at conclave

Know your competition and rethink the way you do business, Internet experts told retail jewelers at the recent Polygon Internet Conclave in Seattle, WA.

To commemorate the millennium and address fast-changing business structures, Polygon of Dillon, CO, dedicated its regular membership meeting to a slate of seminars about doing business on-line. Retailers and suppliers debated their own Internet business strategies.

Jewelry and the Internet

A customer walks into your jewelry store with printouts of diamond selections from Internet Diamonds, the well-funded company that claims to be the largest retailer of diamonds on-line. The list price for the customer's desired diamond is only $100 above your cost for a diamond of the same characteristics. Do you let the customer walk or lower your price to compete?

This question started the conclave's "war room" session, moderated by Rich Goldstein, president of iJeweler, Austin, TX. Audience members were divided on how to handle the increasingly common issue.

The Internet allows customers to be just as educated as the average salesperson. "When customers come in with that kind of power, things change," said one jeweler. "You'll eventually make money from this guy on other things – someday, you'll have the chance to sell him pearls for his anniversary or something. But don't lose him to the Internet." Many agreed jewelers will make their margins in the future with add-on sales, custom designs and mountings, repairs and appraisals.
But a few audience members strongly opposed price cutting. "What if word gets out you're discounting?" asked one retailer. "Someone who's been a loyal customer for 10 years may ask why you didn't give him the best price." Others pointed out that, as retailers, they sell service. "Retail will always exist – people wouldn't still go to Nordstrom," where they get great service but pay much more.

Do it Yourself

A "clicks-and-mortar" strategy, combining the power of a retail store with the power of the Internet, will help traditional jewelers survive in the age of on-line retailing, said Polygon President Jacques Voorhees. At the very least, he said, retail jewelers must:

• Get a Web site with a good Web site address.
• Advertise your URL in your telephone book ad and on stationery and business cards.
• Put an e-mail link on your Web site so customers can reach you; read and answer your e-mail regularly.
• Collect e-mail addresses of customers and e-mail a greeting to them monthly.
• Add samples of merchandise to your Web site.

If you'd like to do e-commerce on your site, it doesn't make sense to offer standard merchandise on a national basis because the competition is so fierce, Voorhees said. Instead, promote specialty goods and custom designs.

Also develop plans to deal with Internet competition. Investigate industry resources on the Web. Set a policy on whether you'll match Internet prices. Emphasize the trust and stability inherent in buying from a community jewelry store, and play up what you can do that the Internet can't. "Your salespeople can smile," Voorhees said. "Deliver a shopping experience."

– by Stacey King

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