Khorunzhaya Iryna

Mahnonosov D.V.

Donetsk National University of Economics and trade

named after Mihail Tugan-Baranovsky

JEWELRY MARKET E-COMMERCE AND PHYSICAL SHOPPING

Today, the most popular ways of shopping for jewelry are visiting jewelry stores or browsing online catalogues. Both online and store shopping has its own peculiarities, its own loyal customers, however, the popularity of online jewelry shopping is rising. More and more people are starting to take advantage of online shopping, not only for jewelry, but other goods and services. According to US e-commerce overview 2004 to 2010, by 2010 online sales will constitute over $331 billion, growing at 15 % annually. For example, as could be seen in Figure 1, US online retail sales forecast shows that the number of online shoppers will continue to increase, rising at 45 % by 2009.

Figure 1. Online Retail Shopper Forecast: 2004 to 2009.

Jewelry shopping is tightly related to the experience customers want to have when they purchase expensive items in the largest and most famous stores. Since online jewelry shopping cannot provide them with this kind of experience, jewelry stores will not lose its popularity. Moreover, according to Beres (2008), customers are more likely to buy an expensive jewelry item from the website of the store they know, instead of some unknown website-based only retailer. Consequently, jewelry-store based retailers who have their own reputation and long-lasting relationship with their customers should not suffer from fast growing jewelry e-commerce.

If we compare the number of opportunities that both jewelry on-line and non-online shopping offers, we will notice that the second channel provides much more freedom of choice (alternatives), opportunities for price comparison, however, the first one- gives its users opportunity to interact and get a higher quality of information on the item.

Table 1. On-line versus In-store shopping

	In-Store	On-Line
Number of categories	Medium	High
Alternative per category	Medium	High
Information quantity	Medium	High
Information quality	High	Medium
Alternative comparison	Medium	High
Transaction cost	High	Low
Location of ordering	Low	High
Entertainment	Medium	Medium
Social interaction	High	Low

Source: Li & Gery, 2008

Jewelry market, its number of online shoppers should increase by 14%, by 2009. No wonder, that a majority of online jewelry retailers, like Tiffany & Co, Zale.com, J.C. Penny, are reporting fast growth in their web businesses, especially during the holiday sessions. Moreover, today jewelry retailers realize the importance of web as a tool for increasing their profit and, according to Jewelers of America, in 2005 over 19 % of jewelers were using e-commerce to increase their sales.

Figure 2. Have you ever made a purchase over the Internet? Global average.

Source: Nielsen, 2008

According to the Figure 2, the percentage of online jewelry shoppers all over the world is more than 86%, and will most likely continue to grow together with the variety of online shopping opportunities offered by the leading jewelry retailers.

Today Internet retailers are offering all kinds of products and services, starting from convenience goods, books, computer products, finishing with gifts and clothing. The most impressive fact which makes Internet retailing a highly profitable business is the level of sales, its number of customers and relatively low investment needed to develop this channel. For example, eBay, a-pure click business that markets a wide variety of goods, including jewelry, has maintained its sales of $1.7-1.9 billion.

Finally, according to Forrester (2004), over 29% of consumers, including jewelry customers, first check items’ websites and then visit stores to purchase them. However, there is another tendency that more than half of these online-offline customers buy the items they found from another store (Duncan, 2006). So, store shopping for jewelry still has its loyal customers, like those who want to experience the luxury of the store. Moreover, customers will still prefer to buy from jewelry retailers with a great reputation that have both online and store-based channels of distribution.