Jeweler of Choice - a New Project (beta)

[fire&ice]

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On 10/9/2004 11:08:31 PM Feydakin wrote:

I understand the local competition thing Gary.. We are a small market with 6 independant jewelers that we consider competition and a few mall guys that we tend to ignore.. The only reason for us to be online is to gather customers that are not local to us.. We use local media (radio, tv, billboards etc.) for local advertising..

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But Steve, I view this as cheap marketing. Most of my friends are unphased by advertising. This is so much more of a hands on marketing tool *and* your making money doing it - not spending money. When I looked at the list in my area, I forgot that one of those on the list is one I haven't visited in a while though they advertise everywhere. It's a form of exposure. People choosing that option *are* in the market to buy & buy *now*.

 

[fire&ice]

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On 10/10/2004 12:35:49 PM Feydakin wrote:

The setting of prices is the number one reason not to participate.. If there is one set price for the online stone, and we don't get to say what that price is, why would we want to be involved?? We would be relying on someone that does not know our business, our overhead, and our methods of pricing, to set a price on a stone we don't even own..

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But, assuming that you have no overhead (no carrying costs - surely these "appointments" could be handled on off peak - idyll time when you are paying the employees anyway), to me, if you are making a set profit, what would your risk be? Also, I think you are targeting a former unknown client. If you sell your stones for less, then sell them one of yours once they are in the door.

This isn't your inventory; so, why would you want to control it? Again, it's just gravy & a possible way of getting people in the door.

Years back, I decided to carry a line of new tiles as a side biz. They were excellent quality & at a very low price point compared to my inventory. I would order. The tiles would come. I had to agree to price at their retail. To my surprise, I would pay my rent w/ this gravy item. And, had some people start to collect vintage tiles. The tile company had me in their data base. I had people seek me out. People that prior to this did not know I existed. I guess what I am saying is how is this any different than deciding to carry a new designer line?

 

[denverappraiser]

I’ve not been involved in retailing for quite a few years and the rules have changed dramatically in that part of the industry. I may not be qualified to discuss it but I’ll try to be useful.

The marketplace sets the selling price. In order to land the sale, it is necessary to be competitive with the other dealers in your market. Mall stores tend to compare themselves with other mall stores. Internet dealers tend to compare themselves with other internet dealers. Standalone jewelers are on the fence in between. In almost every case, jewelers and dealers are buying from the same or similar sources. Assuming that the dealer is a capable buyer, they will get better prices on things that have been purchased into inventory than they will on consignment goods. If a jeweler paid too much for a particular stone, this was a mistake, and it’s a mistake that all have made. Hopefully infrequently. If they then refuse to sell it at the market price and therefore carry it in stock until the prices rise to an acceptable level, they are making yet another mistake. It prevents them from investing their money in something else where they could make better profits and it prevents them from having merchandise that is appealing to their customers. It's a double whammy. This trap causes the death of many retailers, including many jewelers. Garry, your comments about jewelers who have merchandise in stock for which they paid too much seems like it may be tied to this issue. I agree wholeheartedly with you comments about the skills of employees and the different styles of merchandising. Internet selling is not for everyone, or even the majority. I really don’t know how to advise retailers to deal with the internet issues and I get asked about it regularly. This is the reason I’m participating in this discussion. I think there’s a decent chance that this will evolve into something of real value to both the industry and the diamond consuming public.

The stones in this database are, by definition, stones that are offered for consignment to the retailers. It will be necessary for the store to prequalify the customer before they incur the costs associated with bringing in a consignment stone and they may very well have stones in stock that are suitable for that customers needs. This process sets them up for charges of ‘bait and switch’, especially if the stone they are selling is perceived as a lesser value.

If the store declines to bring in a stone for any number of good reasons, the customer can also be left with the impression that an offer was made and that the store reneged on the deal. In an industry where their reputation is their most valuable asset, this kind of thing can be disastrous. If they avoid this by bringing in stones whenever they get a request, it will be seen as a disservice by the wholesaler, in addition to being costly for the retailer. The wholesalers keep track of how many stones they send out to a particular store and how often those result in a sale. Not surprisingly, they prefer to do business with stores that have good track record of making sales. If this ratio becomes unacceptable, they will simply stop selling to that particular store or they will raise their prices to reflect the new reality of their relationship. If the store is not selective about which stones to bring in, they risk damaging their own supply chain.

Garry, I gather you will be participating in the JoC program and that you are not a participant in the main database. How are you going to handle these issues in your stores?

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[pricescope]

Valeria:

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The vast majority of automatic results are not relevant in a blatant way.
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Can you please explain why they are not relevant? Diamonds are not aacording to the search criteria? Jewelers are not from the selected area?

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I love that blank Google interface... could we see one of the like here?
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You mean Google like presentation of the diamond search or vendors or both?

re: a lot of space. it is easy to make it smaller

let's do it more compact.

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Yorur invitation for buyers to nominate jewelers reads “ we will review the business in 24 hours”. Why give the time? It just makes me wander what on Earth can you do about it on such short notice. Unless this is based on some widely accepted norm I am not aware of… of course.
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No, we say "Tell them to subscribe for free trial as a retailer at pricescope.net. They will be reviewed within one or two business hours (EST)." It means that if you found a diamond and want your jeweler to get for you, he/she can subscribe and get an access to the database in one-two business hours. Then your jeweler will contact the real diamond vendor who will do their own thorough credit checking before shipping the stone to your jeweler. If your jeweler has a good credit and recomendations he/she can get the stone for you the next business day.

 

[fire&ice]

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On 10/10/2004 2:09:53 PM denverappraiser wrote:


The marketplace sets the selling price.

In almost every case, jewelers and dealers are buying from the same or similar sources. Assuming that the dealer is a capable buyer, they will get better prices on things that have been purchased into inventory than they will on consignment goods.

The stones in this database are, by definition, stones that are offered for consignment to the retailers. It will be necessary for the store to prequalify the customer before they incur the costs associated with bringing in a consignment stone and they may very well have stones in stock that are suitable for that customers needs. This process sets them up for charges of ‘bait and switch’, especially if the stone they are selling is perceived as a lesser value.

If the store declines to bring in a stone for any number of good reasons, the customer can also be left with the impression that an offer was made and that the store reneged on the deal. In an industry where their reputation is their most valuable asset, this kind of thing can be disastrous. If they avoid this by bringing in stones whenever they get a request, it will be seen as a disservice by the wholesaler, in addition to being costly for the retailer. The wholesalers keep track of how many stones they send out to a particular store and how often those result in a sale. Not surprisingly, they prefer to do business with stores that have good track record of making sales. If this ratio becomes unacceptable, they will simply stop selling to that particular store or they will raise their prices to reflect the new reality of their relationship. If the store is not selective about which stones to bring in, they risk damaging their own supply chain.

Independent Appraisals in Denver----------------

So, you are saying the issue is w/ the suppliers. But, if these suppliers are willing to list their diamonds, certainly they don't expect a sale & understand the game. They expect exposure to a new audience for their supply. The reverse can also be true. I won't buy from some people when what I buy from them doesn't have a good consistent track record. Isn't this the nature of the market? Or, are diamonds an anomoly?

Also, a good retailer should have a handle on who is a tire kicker & who isn't. Not by the way they dress; but, by their sincere interest. It's inate. Yeah, there exists some surprises; but, usually retailers know. Or at least they should. Maybe in my perfect world.

I'm not trying to disagree with you or Steve as I have respect for you a business people. But, from an outsiders perpective, I'm seeing more of the same. An inability to see potential creative marketing rather than retreat & continue to do business the same way as business as usual.

My point, maybe you don't want this client. But, this client is out there looking for a home. Chances are they won't be attracted to your store on their own accord. As a consumer, if the store gets in the stone I insist on seeing, I see it & then see something more appealing in their own inventory, why would I think this is the bait & switch? Do people really shop that way & think those things? Give some consumers credit. And, by the very nature of having a store front, you have to deal with the nuts. They aren't all on the internet. And, in the end, if one has the same suppliers, who cares whether the stone sells from inventory purchased from said vendor or from the consignment list. Isn't the goal to sell stones & bring people into your store? Quite frankly, most people want a turnkey service. And, from my tenure here, people aren't looking at someone throwing in a setting. Have you seen some of the settings that people purchase

Hefty sums of money being exchanged in that department.

Again, to an outsider looking in, it just doesn't seem like one is looking at the picture as a whole. Just finding "holes" in the picture.

But, I like to try new things. And candidly, I don't know your industry. I just don't see this as a recipe for disaster. All these negatives can surely happen with *anyone* walking in off the streets. On PS, I see more serious interest than the average Joe walk-in.

 

[denverappraiser]

Shooting holes in it is exactly what is called for here. Leonid is trying to invent something that has never been done before. The benefits are obvious, the problems are much more subtle. Steve and I seem to have taken up the unpopular position. In some sense, it’s a shame because neither of is actually a retailer (I’m retired and he’s an employee) and so neither one is really going to be in the position of needing to bet our business on this. I would love to hear from some of the real retailers out there who have storefront that will be getting customers calling from this. Yowahking and Bearman, are you guys reading?

I disagree that this is just another advertising venue. Customers are being given an expectation that they can buy a particular diamond in that store for a particular price or, alternatively, that the store charges higher prices than they actually do. Either way, the customer is getting a negative impression that store can’t control and a customer who feels that they have been mistreated can be very costly for a good store. Pricescope amplifies this effect considerably.

The supplier side is a separate issue that I thought should be mentioned because the retailers and their suppliers have a symbiotic relationship with one another. The retailer is expected to filter out the tire kickers and to close the sale and the wholesaler is expected to supply access to an appropriate inventory. The whole consignment issue is a source of great stress already and I see this as aggravating it. For a store that can make the sales happen, they will love it but I think it will be difficult.

For what it’s worth, I talked it over with my old store and they side with you. They’re planning to participate.

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[Garry H (Cut Nut)]

I wrote this off-line - they are answers to 5 hour old posts

Neil Beaty, DenevrAppraiser>>


Good question Neil. I would love to do it, but cannot now (it is only for USA, not even Canada at present) because I live in Australia. But I would like Leonid to list me and Melbourne and I can then at least get a feel for the customer interface first hand. But it is not that

Fire & Ice you have answered all the issues I had with Steve Feydakins comments – the value of a local customer who turns into a jewelry junkie (like F&I) vs say my 3 families in Perth – the other side of Australia - is far greater. If you look at your sales geographically you will find that most are able to easily drive to you. As you leave your epicenter the sales by area will fall. In our case we are on the East side of Melbourne and we have more business coming from the away from City side – because people tend to go “into town” not away from town to do their shopping. I want to get customers from within that area that I already draw from, because I know my staff can hook them for life.
As to doing your own thing on the web – have you not realized that there are many thousands of new visitors to Pricescope each and every day, 365 a year? 1% of them are from your area. You could make 2 new sales a week and 1 new top clients a month. The lifetime value of these clients could be more than $1,000,000.
Why is this so important?
Who researches a small purchase?
People who find and use Pricescope are, by and large, buying large diamonds. (HEY, how good was that?)
Want to sell me services from your Internet company that can beat the leads you will get? (I wanna live in Amer-i-ca)

 

[fire&ice]

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On 10/10/2004 8:57:59 PM Feydakin wrote:

As Neil said, this is exactly the time to shoot holes into the project.. If they are not discussed well from all sides while in beta, they could lead to serious issues once it goes live..

Another issue, while I'm thinking about it.. Again, related to pricing.. We know we are competitive with online and local pricing.. We've done the surveys to prove it.. But, if someone looks at the diamond search, and sees 4 or 5 local stores with the exact same diamond, at exactly the same price, how does that help us?? Yes, there may be a review process set up, but like any review process, how can we be assured that it's accurate??

Just some more things to think about

Steve
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I'm all for punching holes in this. But again, from the outside looking in, I'm seeing an inability to see the potential of doing something *different* in this *trade*. It's a constant theme IMHO.

The benefit to having 4 or 5 jeweler's having the exact same diamond at the exact same price? Well, it's better than not having the stone listed at all. Without it, you may have *no* chance of a sale. And, as a consumer, I'd pick the store that I can relate to the most. Or the one that carries the setting that I like. Or the one with a custom guy on staff. Or the one that provides the best service for me.

If I didn't know the jeweler, I'd visit a couple and do recon. to see who I liked.

So, you say your pricing is competitive. Good. Then, why is the published price a problem?

In all honesty, I'm really confused why the price listing & lack of control is so problematic. As jewelers, one must deal w/ price control daily. Vatche settings case in point. If a jeweler deviates from Vatche's pricing stucture, their "dealership" gets yanked. I understand that diamond pricing has more intricacies; but, if a price is set, you have an out - the price is the price & may not be reflective of your pricing structure. As a consumer, I can grasp that concept. I don't see that you are selling something as much as you are providing a service for a fee to a consumer you may not have reached otherwise.

I know I am not the average consumer as I do buy for a living. But, I don't think I think too much differently. I'm high on this because it is nearly the route I went to purchase my stone. Except I had to find someone who would work with me on this added value basis of cost plus fee (i.e. - there was no joc program in place). I did not want to buy an expensive item like this sight unseen. Plus, he's a GIA, GG whose well versed in diamonds I respected *his* opinion. It was a win for him in that he knew he had a sale. Under no circumstances did I expect this "deal" on all his inventory. And, 50% of the time on my visits, I would purchase something from him for my inventory.

I can certainly understand not wanting to try something you think may be detrimental to business. But, if a price is listed & one adhere's to that price, it seems pretty straight foward to me as a consumer. And, I understand that it is a hybrid product & not business as usual. If all parties (suppliers, jewelers & consumers) are on board & understand the game, what misunderstandings can arise?

All that said, and to add another monkey wrench, I wonder if it is reasonable to ask the consumer to pony-up the shipping costs should a sale not be consumated?

Again, IMHO, for this to work, the ground rules have to be etched in stone. I believe that the price is the price is important from a consumers point of view.

 

[fire&ice]

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On 10/11/2004 12:45:16 PM Feydakin wrote:

The 'web' store listed a particular diamond for $10,900.
The same stone under the 'local jeweler' seach was $15,600.
I found that stone from the wholesaler that actually has it for $10,200.

Now, without knowing the wholesale cost, and being a web experienced buyer, why would you give me an extra $4700 for that diamond? Also, if we were to actually sell that stone our price would most likely be around $12,000 and not $15,594.. Does this help explain the problem I have with having someone else set the price??

Now, what if the pricing was different?? Say the search says I can sell you that stone for $10,500.. You call me and I say no way will I sell that stone for that little profit.. Or, what if that virtual stone was gone?? Now I could be accused of listing things for sale that I don't own (we've seen those threads here before)..

And I'm all about disagreeing.. Whether any of our ideas are used or not, it will make the local search project more effective.. Leonid surely understands the whole punch it full of holes and see if it still floats scenario..

I just showed our owner the searches and he laughed out loud at it.. Without some way for us to set our own markups on stones, we just don't see it as useful.. A simple field where each store can set thier needed markup may go a long way to solving this particular issue.. But then how do you know the actual cost so you can set a fair markup, or, are we expected to simply add our markup to whatever the web sellers are selling at and hope they aren't selling at cost??

Again, I am pointing all of this out from a single point of view.. We are apparently a fairly unique store.. The more time I spend in this industry the more I see how we are different from the majority of stores out there..

Steve
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O.K. valid points all. But, perhaps it's my bad as assuming makes an... well you know.

I was under the assumption that these stones weren't on the regular data base search. I was under the assumption that these were different suppliers that one couldn't cross reference.

I was under the assumption that the mark-up was not 40-50%. Geez, at that mark-up *all* bets are off. On line diamond buying here *I* come. I can get that deal anywhere. And, I know some of my listed stores don't work on that markup.

I was under the assumption that the wholesale price was readily available to the retailer. No one can adhere to a price in that vacuum. Absolutely agree. But, if you know the stone is going to cost you 10k & the price can be set at 12k, I don't see anything wrong with adhereing to the price (though you may have stones in your inventory that you can negotiate a better deal with the supplier thus making you more competitive). Your business just can not be as subjective as mine.

And, I guage price pretty well. I can't imagine that the wholesale price would be that loosy goosy.

Also, this selective list must be very up to date w/ regards to any change in sales status or price increase from the supplier. I think it also should be disclosed whether the diamond is in inventory or out on memo. Or, are all the stones always out on memo?

Yes, I can see your very concrete problems with the senerios you laid out. But, what if my assumptions were actual? Or, I wonder if my assumptions can be actual?

Again, I'm still seeing this as selling a service & not selling an end product so to speak. A service that could be turnkey (a definite win for the store).

Steve, the reason I value your opinion is that your store seems to have it right. Trust me, as a consumer, some jeweler's are on a different planet. But, your owners seem precisely to be the kinds that this would work.

Funny in my area list, I see some of these jewelers being able to make it happen. Others, with their sales force & business practices, that simply wouldn't work. I see this only working w/ owner on site smaller venues. One on my list, though a very nice store, has bridal registry, china patterns & is owned by a conglomerate. Not going to work.

So, the question is - what if the wholesale price is concrete, and some of my other assumptions were actual -how's about then?

 

[pricescope]

First of all, guys, I appreciate any comments (both pros and cons).

Steve,

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All the arguments aside, I decided to run a search on a 2ct diamond..

The 'web' store listed a particular diamond for $10,900.
The same stone under the 'local jeweler' seach was $15,600.
I found that stone from the wholesaler that actually has it for $10,200.
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I found it rather unlikely. Could you please post or PM me the diamond details to avoid any errors?

 

[pricescope]

Thank you for clarification, Steve. Definitely, price at B&M will be higher but there are several scenarios in this case.

1. Retailer can match the web price and also make money on settings and wed bands.
2. Offer an alternative from their own inventory
3. Worst comes to worst, jeweler can say "No, I cannot match the price". According to the stats only 5% of consumers will buy from the web. It means consumers will either settle on some intermediate price or go to another jeweler.

As Jeff Corey from Days Jewelers said in Vegas, it is more about personal relationship between customer and jeweler.

 

[pricescope]

Fire&Ice

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I was under the assumption that these stones weren't on the regular data base search. I was under the assumption that these were different suppliers that one couldn't cross reference.
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There might be some overlapping what’s wrong with that? Jewelers assume that if the same stone is listed cheaper in the web, a buyer won’t pay more in the store. I disagree. If it would be so consumers won’t even go to the store. When buying a diamond price is not #1 criterion.

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I was under the assumption that the mark-up was not 40-50%. Geez, at that mark-up *all* bets are off. On line diamond buying here *I* come. I can get that deal anywhere. And, I know some of my listed stores don't work on that markup.
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As we find out, there is no 40%-50% markup.

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I was under the assumption that the wholesale price was readily available to the retailer.
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Yes this is true. Of course the diamond cost is available to the retailers.

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Also, this selective list must be very up to date w/ regards to any change in sales status or price increase from the supplier. I think it also should be disclosed whether the diamond is in inventory or out on memo. Or, are all the stones always out on memo?
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Not necessary but it is possible. We tried explained it: "The diamonds do not all come from the same place and can be on hold or sold – expect to be offered alternative stones."