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September 1999

Managing: Technology

A Digital Heads Up

Technology expert Don Tapscott says jewelers have to join the revolution – or they're toast

'You'd have to go back to the printing press for as great a change as the digital economy will cause," says Don Tapscott, author of The Digital Economy and Growing Up Digital: The Rise of the Net Generation. "And there's never been a technological revolution that's happened so fast." Tapscott says a billion people will be on-line by 2003.

Jewelers' roles in this? They have to change or "they're toast," says Tapscott, who spoke at the Gemological Institute of America's International Gemological Symposium in June in San Diego, CA Tapscott, who is chairman of the Alliance for Converging Technologies, doesn't refer just to selling products on-line. He says business-to-business buying and selling on-line is the wave of the future.

Why are these changes inevitable? Tapscott points to the children of the Baby Boom, sometimes called the Echo Generation, who began to be born in significant numbers in 1977. This new generation is large and will have a huge impact on the nation's commerce. These young people are thoroughly immersed in the on-line revolution. As they enter the workplace and become consumers, they will make purchases in the medium they feel most comfortable with.

That's not to say tomorrow's consumers won't shop at real stores too (this is a mall-loving generation, after all). But they will add Internet shopping to the repertoire of consumer buying habits. They also will expect toconduct business-to-business transactions electronically.

Tech Lessons
Tapscott says the Internet is teaching sellers of products many new lessons they have to understand and adapt to. Among them:

  • Companies can't just sell a product; they have to provide information too. Proctor & Gamble isn't just soap, he points out. It's also advice on how to clean, what can be cleaned and so on. A jewelry industry example: Tiffany & Co.'s Web site provides a 3-D explanation of a diamond's cut that makes it easy for consumers to understand this difficult concept.
  • Consumers demand more choices and more customization, which the Internet makes possible. Tapscott cites makeup and clothing Web sites that allow women to customize products. The parallel to jewelry could be custom designs that consumers create at your Web site, in collaboration with your bench jeweler and a custom design computer program.
  • Pricing is much more fluid on-line as price comparison sites become so popular. Haggling over prices could get more widespread as consumers increasingly have all the information they need to figure out what a seller paid for a branded product and how much they're willing to pay for it.
  • Successful on-line sellers will add value to their customer relationships that make price comparisons less relevant. Customization of products could be the key to added value. Instead of buying Mrs. Field's cookies, for example, an on-line seller could allow a visitor to create his own cookies, says Tapscott.
  • The Internet is often self-organizing rather than hierarchical. Wildly popular on-line auction sites, for example, offer a place where products are sold buyer-to-buyer rather than all transactions being controlled by one seller.
  • Retailers aren't the only sellers on-line, as many jewelers already know with chagrin. Manufacturers of products are finding the Internet an easy way to sell directly to their consumers without the retailer in the middle. This process, called "disintermediation" must be countered by "reintermediation," Tapscott says. This is where retail sellers create new value that makes it worthwhile for consumers to visit. Examples include guarantees, personalized services and product knowledge.
  • Alliances of businesses are working together to create new products from which they all profit. Because of the Internet, these alliances are much easier to accomplish. A local on-line bridal site, for example, becomes the place where the town's jeweler, dressmaker, limousine service and catering facilities are gathered together in a one-stop educational shopping mart for couples.

– by Peggy Jo Donahue



Copyright © 1999 by Bond Communications.



 

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