Couture Jewelers: 96% :-( about the Internet

[Garry H (Cut Nut)]

From IDEX news:

According to Whitney Sielaff, editorial director of VNU Jewelry publications, 96 percent of participants at the first conference noted they are worried about the impact the Internet is having on the diamond side of their business. In fact two thirds polled noted the Internet is responsible for a reduction of business in their stores. Something the charmistic Glenn Rothman, CEO and founder of Hearts On Fire delved into during his address.
"A consumer that visits a diamond/jewelry website for education prior to purchasing at a brick and mortar store will spend 23% more on a diamond engagement ring," he noted. "Besides," he continued "what message is a guy giving when he buys an ''internet'' diamond." "Stop worrying about the Internet and stay focused on what you do best. Our biggest problem isn''t the Internet, its mindset." he averred.

Go to this newsletter http://idexonline.com/NewsLetter.asp?id=150 and the story is about the 6th or 7th down the page.

GH Comment - this is what Leonid has been saying - 80% research on the Net, 90-95% buy in stores.
Many of those who buy on the net are either put off by store staff ignorance and out of date diamond info, or the buyers are geeky engineer types who prefer the Internet as a buying format to actually dealing face to face with real people..

 

[Regular Guy]

Garry,

That is a very interesting piece, and Rothman is not only savvy but smart.

The suggestion that, first of all, jewelers actually don''t have to do anything, and can still reap the benefits of the exposure that their customers have had from the internet is an insightful view, and a gift to his audience, that can be shared, if with spin, then with a spin supported by what looks like genuine data.

Further, though, the model offered suggests a viable actionable strategy for jewelers, which -- although they may do this somewhat reflexively, they need to get better at -- which is to treat customers that show evidence of substantial education differently than those without that training. In other words, they should bootstrap the benefits of what learning has already taken place, and step from there, rather than sticking with some solidified rap, based on treating all customers as untrained and the same.

As I''ve suggested before, GIA''s documentation of proportion data will open this wide, and although there may be continued opportunity to argue about what is and is not excellent...that GIA will include this data, associated with a qualitative descriptor, will mean that what has up to now been a closed matter for some (i.e., those silly arguments about the pointlessness of associating proportions to quality of cut, since no one agrees on what ideal is anyway), will suddenly be a reasonable talking point.

Finally, Garry, pointing to your comments on both another neighboring thread, as well as to a theme of concern for you recently, I wonder if you can use your graphical skills to document the kinds of concerns you have about this mis-match you''re worried about between AGS & GIA coming into conflict on their systems for what is the best. I still think that for more than 90% of actuals, AGS''s ideals will continue to be a subset of GIA''s ideals, representing the best of the best, and the general presently existing relationship between these two agencies and how they are regarded will simply continue that way.

 

[hearts set]

MMMMM....let me look into my crystal ball.

Wait...while I commune with the spirit world.

I see....I see a gorgeous cute, funny, charming, irresistable, sexy, brunette (that''s me)

oh! and a young man who wishes to present her with a respectable diamond ring...his budget $4K, no $5K...yes $6.5K!!!

I see him sweaty and nervous...so much for something so small, yet so important!

What is this?? The young woman sits by her man at the computer desk...Research!!!!!!!!!!!

Now, I see them pounding the pavement going from store to store...she''s disappointed....

Now Look!! She''s smiling and laughing!! I see a tiny box!! Do the intitials WF have any significance to you??

That was fun. I sensed a lot of confidence in that address. THere is very much still a place for B&M stores, but in my experience, the consumer wins with online purchase of a diamond.

What "message" did that send to me?

That I ain''t marryin'' no fool.

(and I''m the lucky one with a bigger and BETTER ring than I could have ever hoped for)

 

[Garry H (Cut Nut)]

Ira I think if you play with GIA''s Facetware http://facetware.gia.edu/ (warning: this might contravenetheir rules) and compare to many of the AGS graphs on HCA for AGS candidates, you will find the shallower combinations of AGS roughly = the shallower GIA proportions. However we know that GIA will have considerably steeper and deeper combinations, like pav 41.4 and crown 36 etc.
If you are a diamond cutter you can have at least a 3% better yeild than AGS will allow.

Guess what? If you were a cutter - and you can make a .97ct AGS ideal or a 1.00ct GIA Excellent? it''s a no brainer Ira. That is why there are 22 times more 1.00ct than .95 to .99ct diamonds (last ime i looked).

(But hearts set will not buy it

)

 

[Regular Guy]

Date: 9/24/2005 7:47:40 AM
Author: Garry H (Cut Nut)
Ira I think if you play with GIA''s Facetware http://facetware.gia.edu/ (warning: this might contravenetheir rules) and compare to many of the AGS graphs on HCA for AGS candidates, you will find the shallower combinations of AGS roughly = the shallower GIA proportions. However we know that GIA will have considerably steeper and deeper combinations, like pav 41.4 and crown 36 etc.
If you are a diamond cutter you can have at least a 3% better yeild than AGS will allow.

Guess what? If you were a cutter - and you can make a .97ct AGS ideal or a 1.00ct GIA Excellent? it''s a no brainer Ira. That is why there are 22 times more 1.00ct than .95 to .99ct diamonds (last ime i looked).

(But hearts set will not buy it

)

Well...never mind that this heart would...and also, apologies for the distraction from the article and point you introduced, but...
I don''t see that we are disagreeing with each other. This is basic set theory, where, for sets A & B, set B includes A, plus more. Previously, you introduced another confound, where some very shallow options in AGS would be accepted as excellent, but rejected by GIA, and while this does go against this simple presentation of set theory, I think in terms of actuals, these would readily number less than 10%, and could approach 0.

Kind of like jewelers and consumers are asked to be college admissions counselors, right? And where students from High Schools #1 & #2 each present with all As, but where you will value the scores from School #1 more, based on the pedigree, but moreover, the standards, that that school stands by.

But, this is not new. Nevertheless, what must be the perceived confusion, is that not only are AGS and GIA being compared to each other, but they are both using the concepts of "cut & excellent," but meaning somewhat different things. I just think simple set theory will account for the difference, in the large part, and life will be good.

Cheers,

 

[WinkHPD]

Ira,

Accepting your proposition that some will grade better in one lab than the other and most will grade well in both, I expect that larger cutters with the resources to determine maximum yield based on both sets of parameters will cut the largest stone possible to obtain the top grade in either lab and submit it to the appropriate lab.

Smaller and specialty cutters will cut specifically to the best of the best specifications of one lab. Smaller retailers, will form affinity relationships with these smaller dealers when possible so as to carve out a niche in the market.

Of course the majority of cutters will just keep cutting the same ol same ol, because that is what the majority of chain stores are willing to pay for. Something that is at least pretty to sell to the masses. It is SO EASY to forget that we are a tiny fraction of 1% of the market because we actually care.

Wink, who wishes more people came to study diamonds and cared about what they learned...

 

[aljdewey]

Date: 9/24/2005 1:32:04 AM
Author:Garry H (Cut Nut)


Besides,' he continued 'what message is a guy giving when he buys an 'internet' diamond.' ---Glenn Rothman, CEO and founder of Hearts On Fire

Hee hee......the message I get from a guy who buys an 'internet' diamond is "What a SMART guy!"

He's smart enough to do a little homework and get the most for his money.

Sounds like someone needs to clue in Glenn that all 'internet' diamonds are not created equal, and he is making a grave mistake lumping them all together.

The quality of goods stems from the SOURCE, not the conduit that connects you to the source (internet). I can order a shirt from LL Bean over the internet.....does that make it an 'internet' shirt? No. The internet is simply the method I chose to connect with them; I could have called or mail-ordered too.

The 'internet' enables consumers to reach many more sources---some with fantastic quality such as vendors here---and some with sub-par quality. As we do with local businesses, it is up to us as consumers to do the homework and separate the good from the lacking.

Poor Glenn needs to step into the 21st century.

 

[thelittleguy]

This is hilarious...the fact that many B&M stores try and sell the illusion that buying a stone via the internet somehow "cheapens" the love with which it is presented...

As long as "all-knowing" jewelry CEO's try and sell this BS to consumers they can count on gen-x'ers spending more and more money online while avoiding B&M shops like the plague.

You think it's bad now? Wait until more of the upcoming, internet savvy generation is ready to buy engagement rings. I don't need a MBA to tell you that Glenn Rothman.

Oh...One quick question for Mr. Rothman. What kind of message does one send after they have blindly walked into a jewelry store and overpaid for a mediocre stone? Just wondering...

 

[Mara]

Hehe ... ''an internet diamond''...that''s funny. It''s not like diamonds are grown on the internet. You could buy a GOG or a WF or DCD diamond that is viewed online, OFFLINE in their store or at their facility. People can still do the offline shopping with an internet or online vendor. I think that is part of the education that goes on here. Just because it''s a stone you see on your monitor does not mean it cannot be viewed in person.

 

[YoungPapa]

Garry,

I have a question.

If it''s true that the internet is still only 5% of sales, is that supposed to be 5% of ALL diamond sales, or 5% of the engagement market? Putting the question another way, do you think that only 5% of all 1.00ct GIA graded ideal cut G-VS2 diamonds are sold online, or is the real percentage of THAT product higher?

Also, assuming the internet is still such a small slice (which seems to be universally agreed upon), are jewelry stores REALLY feeling the internet pinch or only complaining more loudly about their woes? I read conflicting articles - one saying the independent jeweler is having a tough time and another saying the aggregate number of independent jewelers hasn''t changed.

Lastly, if people really are doing so much research online and then buying from stores, why are the big chains doing better than ever? You would at least think that people would shift AWAY from the malls and TOWARDS the independent that stocked (or at least was willing to bring in) the better quality goods...

 

[Garry H (Cut Nut)]

Jim I said "90-95% buy in stores".
Chain Stores include Zales and Walmart and probably Costco et al -
I have heard that department stores are loosing to independants and independants are definitely loosing margin because of the Internet.

It is likely that if those estimates are correct, that a bigger % of 1ct GIA'' G VS loose diamonds is going to the Internet by quantity, but by dollar value the Internet sales for this stone are probably not a good measure.
Say if there was 100 stones a month to the Internet at $500,000, there may be 700 stones at $5M in B&Ml stores.