| Times are tough for everyone right now. And nowhere more than online jewellers. Since the stock markets collapsed 2 years ago, investors have been driving up the price of precious metals in their search for other commodities to invest in. While that may be good news for investors, it is most definitely not good news for jewellers.
Many jewellers have found that gold and platinum are now so expensive as raw materials, the finished jewellery is unsaleable. Many are turning to silver, which was once considered the poor relation in jewellery making, as a viable alternative for luxury jewellery. For the first time ever, silver is being set with diamonds and other precious stones in an attempt to keep the prices within the reach of the average shopper.
At Corazon Latino we are just one example of how online retailers are being squeezed by the current market conditions. We have learned, that to survive, you must adapt.
So how do you adapt to these brutal circumstances and survive?
One option, the simplest, but the most dangerous, is to reduce your prices. If you were overcharging during the good times, then that is most certainly an option. You can be sure, some people were, and they will be the first to slash their prices when times get tough. If you are simply buying standard products from a wholesaler, you may have no choice. While once, shoppers bought from the first site they came to, now they are shopping around, comparing prices and looking for the best deals. If you have the same jewellery that someone else has at a higher price, you are going to loose out. If you are smaller, and buying from the wholesaler at a higher price, you are now going to feel the pinch.
If, like us, you offer exclusive designs and different pieces from the majority of sites, then you are less vulnerable to direct comparison. BUT you are still vulnerable. To the shopper, a silver bangle is a silver bangle, and without a bricks and mortar store to allow them to feel the weight and quality, you are in severe danger of losing sales to cheaper, lower quality pieces. Now, more than ever, it is vital that you maintain and promote your product quality. Explain why your jewellery is different, give shoppers as much information as you can about the size, weight and purity of your raw materials; be they precious metals, gemstones or other items incorporated into your designs. Explain why your pieces are more expensive and why they are worth it.
You also need to take a serious look at your range, and your target market, and adapt the range to best meet the needs of that segment. When we started the business, 90% of our customers were women, looking to treat themselves to a piece of jewellery that was just that step above costume jewellery. Around the £75-£100 range ($100-$150 at the time). When the recession hit we lost almost all of these customers. Women were tightening their belts, saving their money and forgoing their treats while times were uncertain. If we had not adapted, we would have gone under. However, we were fortunate to have a loyal core of male shoppers who came to us for gifts, because of our quality and personalised customer service. They became our bedrock, and inspired us to create a male friendly range to match our already male friendly site. Now, despite losing our female clientele, and having less numerical sales, our business is up 40% v last year, with 90% now being men, shopping for gifts and spending on average twice what the women treating themselves used to spend.
Finally, you need to look at your costs. Are there areas where you are wasting money? Are you advertising simply because salespeople tell you you need to run multiple ads to see the benefit? Are you actually analysing your spend to see if you actually make enough profit on the uplift to cover the cost? Pay per click advertising is a classic example of this. I have no doubt that this is a highly effective Marketing tool, and critical to those who have not managed to get their site to the top pages of the search engines organically, BUT have you actually analysed the cost? We trialled pay per click advertising when we first started out. It didn't add up. With conversion rates for most sites at 1-2%, remember to multiply the cost of every click by 50 to 100 to see the real cost of every extra sale you get. Do you make enough money on each sale to pay for that?
So, how do you survive when times are tough? This is what we would do:
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