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Editor's Desk

There's nothing easy about e-commerce

While most people are stuck with the notion that their store should, or must, have full e-commerce capabilities, COLEBY NICHOLSON has something to say.

Last month I wrote about how SEO scammers prey on small businesses, including jewellers. I discussed how you probably receive emails guaranteeing your store will appear on the first page of a Google search, which is obviously claptrap. If someone searches for your store name and you don’t appear on page one, you have far greater problems than SEO!

This month I would like to deal with the notion that your store should, or must, have full e-commerce capabilities. You see, research suggests small retailers are abandoning the belief that they must excel at physical (bricks-and-mortar) retailing as well as online retailing.

I don’t think anyone would doubt that large, traditional retailers must excel at both– Myer, David Jones and JB HiFi are a few that must compete in all channels – but is it equally important for small jewellers?

Before going any further, all my observations presuppose that your website is first rate, conforming to current tends such as responsive design, where the page adapts to fit the device in use. Assuming your website also addresses basic SEO practices then the issue is whether you need a fully-fledged e-commerce capability.

"Research shows that jewellery purchased online is not as popular as one would imagine being the 21st on the list of retail product"

This is where things start to get very expensive. Sure, there are plug and play options that can be considered but their advertised costs never reflect the final cost of full functionality, and once you have the design done, you will need an SSL Certificate for credit cards, a payment gateway or payment provider and, in some cases, an online merchant bank account. You’ll also need a shipping company like Australia Post to deliver your products.

The costs are high so are they all worth it? Would it be better to invest your time and money elsewhere?

Well, it comes down to sales. How much more will you sell by offering e-commerce to your customers? Do they need such convenience? Jewellery is generally not a recurring purchase. Unlike FMCGs, customers who buy a ring are unlikely to purchase another online in any short length of time.

According to the Australian Retailers Association, online shopping accounts for around 7 per cent of total retail sales ($285 billion) but this includes services such as airline tickets, which are basically no longer done at a store level. When was the last time you purchased a ticket from a travel agent to fly interstate?

If online shopping accounts for only 7 per cent of all retail sales, how much of that is jewellery and watches? And if it’s an insignificant amount in the scheme of things, by how much do you need to increase your store sales to offset the cost of implementing an e-commerce platform?

Indeed, KPMG research shows that jewellery purchased online is not as popular as one would imagine being the 21st on the list of retail product.

A 2016 UK study by Barclaycard found that six in 10 retailers were negatively impacted by consumers’ propensity to return unwanted items, while one in five businesses increased the price of items to cover the cost of managing and processing customer returns. The ease of online shopping and free returns has fundamentally changed the way people shop and Barclaycard’s research found that 30 per cent of shoppers deliberately over-purchase then return unwanted items.

The problem is such that some small businesses are actively turning away from online trading. According to Barclaycard’s research, more than one-fifth (22 per cent) of bricks-and-mortar retailers choose not to sell online due to concerns about the costs of managing deliveries and returns.

I don’t believe that independent jewellers are doomed if they decline to offer e-commerce. Quite the opposite, in fact. If you weigh up the development costs and the ongoing fees and management to offer online shopping, the better option for most stores is to leave it to the big boys. Go back to basics and focus on good, old customer interaction, excellent advice and product knowledge.

The largest indicator that there’s life in traditional retail is that once online-only businesses are now opening bricks and mortar stores.

It’s back to the future, all over again!

Coleby Nicholson

Former managing editor • Jeweller Magazine

Coleby Nicholson was publisher and managing editor of Jeweller magazine for over 12 years. He has covered the jewellery industry for more than a decade and specialises in business-to-business aspects of the industry.

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