If the COVID-19 pandemic has taught us one thing – it’s the need to adapt in business and rethink how businesses and customers interact moving forward. For many business owners, the reality of the unprecedented changes in customer behaviors has resulted in a dynamic shift in how they operate and market their products and services in a fast-evolving market. If you’re opening a jewelry business, you might be wondering what step to take next.
As this reality dawns, the debate on online vs. physical businesses has gained momentum, and the jewelry industry has not been spared. A study of the top 1000 online retailers in North America found that jewelry sales were up 14.2% in 2018. A total of 42 jewelry retailers brought in more than $5 billion in online sales. Over the last six months, there has been a spike in online jewelry sales, with purchases up 248% compared to pre-pandemic data.
While these figures may indicate the success of online stores, that’s only half the story. Online sales are, after all, only 15.4% of total retail sales in the 2018 study. Similarly, while online purchases shot up 248%, this covered e-purchases with in-store pick-up. Customers may like buying jewelry online, but they prefer collecting it in a dedicated store rather than having it delivered. So how do jewelers decide whether to open a physical or online store?
Every successful business is only as good as its bottom line. When considering whether to go online or physical, you have to consider the expenses of each. A small jewelry store may need $20,000 in initial startup costs. However, depending on location, this figure can go up to $100,000. That covers rent, overhead, stock, and insurance. In contrast, an online store will run you between $10,000 and $15,000. That includes the costs of building the e-commerce website, a domain name, hosting, and the initial stock.
On average, small businesses take two to three years before turning a profit. One way to get to that point earlier is to reduce expenses. For instance, if you’re selling beads as part of your jewelry collection, it’s advisable to buy wholesale beads instead of individual pieces. That applies both to online as well as physical stores, as bulk purchases tend to be cheaper. If you’re concerned about money, it’s smarter to cut down initial costs by starting online before considering a physical store.
The type of jewelry you sell will have a considerable impact on whether you should lean towards an online or physical store. For instance, it’s only recently that luxury jewelry brands began embracing online sales. In 2016, the watch and jewelry categories made up only 5.3% of online luxury sales. However, with more people embracing e-commerce, the jewelry industry has invested heavily in setting up online shopping sites.
Another thing to take into account is the sentimentality of the pieces. Take an engagement ring as an example – buying an engagement ring is a sentimental process. Most people aren’t satisfied with just knowing the carats and band on the ring. They also want to feel pieces and imagine what they’d look like on the fingers of those they love. Online shopping is a mostly impersonal experience that may not always suit buying jewelry that carries a sentimental value.
Understand Your Channel
Choosing online over physical or vice versa depends on how well you understand each space. There’s a reason why luxury brands invest in high-end locations and tasteful interior designs in their stores. You can also tell how hard online brands are working to make their platforms as appealing and user-friendly as possible. It all comes down to the psychology of design on consumer behavior.
Tasteful decor, great placement of pieces, friendly staff, and a comfortably furnished store may boost your sales and keep customers returning. Similarly, 24/7 service, augmented reality, and 360-degree product videos may bring and retain customers in your online store. When picking between online or physical, consider how comfortable you are working and designing around each space. Are you willing to learn and improve on your chosen channel?
Plan for the Present and the Future
Ultimately, choosing between an online or a physical jewelry store comes down to which one serves both your immediate needs while allowing your business to grow. If you’re worried about costs, then it may be smart to start online until you can comfortably move to a physical location. If you are more interested in curating a memorable experience, then a physical store might serve you better.
Where possible, having both is ideal so you can lock in on a broader market. Whichever way you decide to go, if you focus on offering your clients value, you will eventually succeed.