This post is by Igor Nusinovich, the CEO and co-founder of Valigara.
Now is an exciting time for jewelry sellers. Global sales are expected to grow by 5% to 6% each year, reaching a projected $250 billion by 2020. Consumer demand fell during the last recession, but it has since recovered and is now stronger than ever.
Demand has increased, but so has the level of competition. The wide variety of businesses who sell jewelry – including designers, retailers and manufacturers – now have to cast their net wider to find a receptive market and generate healthy sales.
In this guide I will take a broad look at the world of selling jewelry online. I’ll provide a primer on the main categories of jewelry that are sold, then look at the businesses that sell them and the latest buying trends.
I’ll cover the challenges faced when selling jewelry online, and the most important sales channels including Amazon, eBay, “alternative” online marketplaces, and independent webstores.
View Top Multichannel Management ToolsJewelry categories
Jewelry spans a very wide range of price points and uses, from “fast fashion” pieces made from cheap materials and selling for a few dollars, through to the finest diamond jewelry selling for many thousands.
Each category is unique because buyers look at “hard” characteristics like design and price, but there are also many emotional factors in play when they buy. Here’s a quick roundup for those less familiar with the industry.
- Fashion jewelry: inexpensive items, often bought to complement a specific outfit. Made from alloys plated with precious metals, and crystal stones. This accessories are bought quickly, rarely as a gift, and with relatively low emotional involvement in the purchase process.
- Handcrafted jewelry: unique items created by individual jewelry artists and designers. Typically sold in independent boutiques and handcrafts marketplaces like Etsy. Buyers are interested in the materials used, which are often non-precious, as well as the crafting technique and the design itself.
- Fine jewelry: relatively expensive pieces, made from solid precious metals and precious gemstones. Sold by established jewelers, both in bricks-and-mortar stores and online. Fine jewelry can also be defined by the cost of raw materials, which typically make up 80% of the cost.
- Diamond jewelry: the most expensive category, but still highly in demand. Today, 18% of diamond jewelry is bought online. Traditionally family businesses, established brands, and companies with abundant capital reserves are the main players. The bridal market – mainly engagement rings – remains the largest segment of the diamond jewelry market.
- Niche categories: there are many other types of jewelry that do not fit naturally into the main categories above. These include vintage and estate jewelry, men’s jewelry, children’s jewelry and others. Some of these niches have strong demand and can be attractive growth areas for online sellers.
Who sells jewelry online?
The range of businesses who sell jewelry online is just as varied as the products sold, ranging from jewelry designers working alone to large manufacturers experimenting with direct-to-consumer selling.
- Handcrafted jewelry designers: these are highly-skilled people who are passionate about the art of designing and producing handmade jewelry. They typically sell their pieces through social media and ecommerce websites like eBay, Etsy, Amazon Handmade and smaller “targeted” marketplaces such as ArtFire and others. Due to production limitations, designers do not compete on price or by using technology automation. The main focus (and reason for existence) of these businesses are their unique designs, which are the driving force behind the community-based sites where they sell.
- Pure-play online retailers: businesses who specialize in selling jewelry products online. These “e-tailers” have directly entered ecommerce, without leveraging an existing bricks-and-mortar business. Some sell “no-name” jewelry by partnering with manufacturers or dropshippers, while more advanced players offer lines of their own design. By tracking online trends and understanding ecommerce technology, they produce their own “signature” product lines, in the fashion, fine or niche jewelry categories.
- Bricks-and-mortar retailers: we see these offline retailers being forced online to adapt to the changing needs of buyers. They have to completely update their marketing skills in order to succeed. These retailers are mostly small family jewelry businesses who select just one marketplace or other channel to sell their products online. Larger jewelry retailers with multiple stores are also online, and are more able to exploit ecommerce opportunities.
- Large manufacturers: expanding to direct online sales has been common for large players in the US and Europe for a long time. A relatively new trend in online retail is for Chinese factories to start selling directly to foreign consumers. We see this happening less in jewelry, as most manufacturers still prefer to operate as production partners to domestic retailers, due to high demands in logistics and customer service. But with success on domestic Chinese marketplaces such as Tmall, we may see them expand to Western marketplaces in the future.
Trends in buying jewelry online
Jewelry is usually an emotionally-driven purchase, and that makes buyer preferences and behavior hard to predict. Most people will take their time to select jewelry for important life-events, such as engagement and wedding rings. Other jewelry purchases, while still emotional, are made on impulse. And then again, a small number of people will buy jewelry as a long-term investment, without any emotional component.
In the case of fine jewelry and diamond jewelry, buyers often decide on the gems first and then select the setting in order to gauge how much they are willing to spend. For buyers and sellers alike, the price is important because the cost of the materials can be 70%-80% of the total product cost.
Jewelry is not just an ornament, it goes deeper than that. For buyers, their jewelry is strongly connected to their sense of self, and is a way to express who they are. The buyer’s personality, the occasion, the design, the price, and the sales channel all play a part in the experience of buying jewelry.
Here are the main trends we see in buying jewelry, and how they relate to online retail.
From “less is more” to “more for less”
Several years ago, it was common to think “less is more” when buying jewelry. Consumers were willing to buy a single piece of fine jewelry on just a few occasions in their lifetime, even if it cost them a pretty penny.
In the last twenty years, with improvements in production technology, we have seen a shift towards low-priced fashion jewelry, mass-produced in China, Thailand or India, allowing buyers to build a collection of jewelry for relatively little outlay. Essentially, the trend has become “more for less”, mirroring the explosion in cheap, almost disposable clothing that is often called “fast fashion”.
But the trend is varied in its effect. For the fashion jewelry category, it means that people can buy all the items in a given collection because the price is so affordable. For fine jewelry, much less has changed.
Fast mobile purchases
Mobile devices have made online jewelry purchases easier. Before the mobile age, either a special effort was needed to visit a jeweler, or some of the magic was lost by sitting down at a desktop computer. Now buyers can view product photographs and access information 24/7 – a good fit for the emotional and sometimes impulsive nature of buying jewelry.
Mobile devices allow buyers to search for a wide array of jewelry within a few clicks, so the overall buying process has become quicker and more convenient. High-DPI mobile screens are particularly well suited to viewing small, finely detailed products like jewelry. On the other hand, the switch to mobile can make in-depth research less comfortable.
Overall, we observe that the entire process of browsing, researching and selecting jewelry is twice as fast now as it was three years ago, when buyers had not really started to transact through mobile apps and websites.
Millennials
One interesting trend for a number of jewelry sellers is the behavior of Millennials – the generation born between the early 1980s and around 2000. There’s more than 80 million Millennials in the US alone, and they are the most tech-savvy group of consumers.
