January 31, 2001
Online Jewelry Sales on the Rise
Ice.com is profitable in December, QVC ranks no. 1 in customer service and Ashford.com makes strategic business moves
With the recent demise of such jewelry sites as Denmans.com, Adornis.com and Miadora.com, it's easy to start believing that selling jewelry online is a lost cause. It's hopeless; no one can do it. People just aren't buying jewelry online. Or are they?
Recent market research studies and reports from some jewelry e-tailers show online jewelry sales are on the rise. According to the National Retail Federation and Forrester Research, online jewelry sales experienced the largest increase from November to December than any other shopping category. Online jewelry purchases jumped from $56 million in November 2000 to $179 million in December 2000.
Despite the sales increase, it's still hard to know if online jewelry sales can be profitable. While most pure-play e-tailers have yet to see a profit, Ice.com, a jewelry e-tailer based in Canada, was profitable in December. That's not a great achievement for bricks-and-mortar stores that are use to making a profit, but it's a big deal for e-commerce. In December, Ice.com saw its sales jump an amazing 848% on a 334% increase in traffic, compared to Dec. 1999. Unit sales advanced 735% while the average sale price increased 110%. Sales for the two months ended Dec. 31 where up 935% from the same period in 1999. But why is Ice.com doing so well when other jewelry sites can't even tread water? According to Ice.com, it's because it built traffic and sales while reducing individual transaction costs and moving its offices out of a high cost area in California.
Ice.com isn't the only Web store doing well. QVC.com, which consistently lists jewelry as one of its top selling categories, recently ranked no. 1 in customer service and delivery among e-tailers by Forrester Research's General Merchandise PowerRankings. QVC beat Amazon.com and BestBuy.com, which usually fill the top slots. QVC even ranked second in the site features and the transaction categories. Its secret to success, the company says, is it makes its customers happy.
Ashford.com is seen by many as the true test of whether luxury goods can be sold at a profit online. It's hard to tell how well Ashford is doing because the e-tailer is secretive about its numbers and business practices. While analysts don't believe Ashford will show profit soon, there are some hopeful signs. This month Ashford renewed its marketing alliance with Amazon.com, after making some necessary changes to the agreement. Now Ashford will offer its merchandise to Amazon's more than 25 million customers over the next year through several marketing programs. Marketing will be through e-mail and package inserts rather than online links. In addition, Ashford recently announced it's acquiring Guild.com, which sells original contemporary art. This expands Ashford's product line and gives the company more cash to work with.
Overall, it's still hard to gauge how jewelry sales will do online in the long-run. If current trends continue, bricks-and-mortar stores with an online presence will lead the way, and pure-play e-tailers will need to cut costs to find the road to profitability. The predicted economic slowdown may slow online sales, but it won't stop them. The dreams of selling online at a profit have not failed; it will just take more time to make them come true.
- by Julia M. Duncan