Largely dominated by diamond jewelry, the United States is the world's largest jewelry market. However, regionally, Asia Pacific holds the largest jewelry market globally, with China and India being the largest contributors. In Asia, the online jewelry market grew at a CAGR of 62.2 percent between 2011 and 2014.
As consumers become more comfortable shopping online, the growth of the online jewelry market will only continue to increase. The shift to e-commerce can benefit the jewelry industry in a number of ways. More and more consumers are shopping online, and e-commerce allows retailers to expand their reach, increase brand awareness, and ultimately grow their sales. But, along with these benefits, there are many challenges that are inherent to e-commerce stores, and jewelers need to be able to rework their operations for online and global sales.
Maintaining Real-Time Visibility
Retail supply chains are more complex than ever, and expanding a business to e-commerce only makes them more multifaceted. Meanwhile, today's consumers have higher expectations for order fulfillment, and supply chains, though becoming more complex, have to meet these demands to maintain customer satisfaction and brand loyalty. Consumers must be able to track their order from purchase to delivery and expect their order to arrive promptly and safely. Slow delivery times make shoppers more likely to abandon their cart. On the flip side, timely deliveries make them more likely to recommend a retailer to others and write positive reviews. As any online business knows, many online shoppers refer to online reviews before making an online or in-store purchase.
Any glitch in the supply chain can affect the downstream, which is why maintaining real-time visibility of the entire supply chain is so important, especially for e-commerce. Jewelry retailers must employ a supply chain management solution that enables them to monitor their supply chain in real time, so they can immediately resolve any issues and respond to customers to keep them updated on their order.
Thinking Local While Going Global
Many online retailers are looking to tap into international markets by taking their e-commerce operations global. Research shows cross-border online consumer purchases are rising 28 percent a year and will reach $1tr by 2020. Almost half of online shoppers will purchase across borders by 2020. The United States is the top destination for online shoppers making cross-border purchases, as consumers often seek products that are made in America. With cross-border e-commerce, producers can sell directly to the consumer, while consumers have access to better quality and selection, greater product availability, and more transparent pricing.
Especially when it comes to the luxury jewelry market, shoppers seek the upscale products made in the United States and Western Europe. When running a multi-country operation, jewelry retailers can't use a universal plan; each individual market requires its own strategy. While retailers should remain consistent in their branding, they need to appeal to the local consumer. Global e-tailers must consider the local customs, language barriers, and consumer needs of each market, and adjust their sales approach and even possibility their products as needed. To be successful, retailers must think locally when it comes to their advertising, customer service, and payments.
One of the biggest challenges associated with global expansion is order fulfillment. Before expanding their e-commerce presence to a new market, jewelry retailers must devise the most cost-effective strategy for getting their products into the hands of consumers quickly and efficiency, as well as managing returns. To accomplish this, a retailer may choose to use a global fulfillment contractor or partner with local warehouses to handle local logistics.
The modern consumer cares about sustainable packaging and practices— and this doesn't just mean the young hipster. In a recent survey nearly 60 percent of respondents said green packaging is important to them, and 61 percent said they take green packaging into account when choosing where to shop. Similarly, 55 percent have considered an e-tailer's overall carbon footprint, while 64 percent have considered the sustainability of supply chain practices when choosing between brands. Consumers prefer product packaging that utilizes eco-friendly, recyclable, and bio-degradable materials. They also prefer packaging that doesn't have wasted space or use unsustainable filler materials to accommodate for that empty space.
There's a clear push among retailers and consumers to make supply chains and product packaging more sustainable. But, for the luxury jewelry market, finding a middle ground between sustainability and sophistication can present a challenge. This is why some eco-friendly packaging practices that have become the norm in other industries have yet to become the industry standard in the luxury jewelry and fashion markets. Whereas other markets can compromise elegance for eco-friendliness, the luxury jewelry can't make similar sacrifices. For upscale jewelers, the product has to feel glamorous and alluring, so there's the obstacle of using sustainable materials without forgoing luxury.
Additionally, apart from jewelers providing lab-grown gemstones, many of those selling real diamonds don't know where they're sourced from. This presents a challenge as consumers want to ensure the brands they are purchasing from use sustainable and ethical practices. Consumers want to know their diamond wasn't mined in poor working conditions and that their jewelry piece was sustainably produced.
Today's jewelry market is becoming increasingly global and competitive. To stay relevant in a competitive market, many jewelry retailers are choosing to move their business online and even expand to global markets. While there are several challenges associated with these types of growth, as long as retailers have the right strategy in place, the move can really pay off for their business.
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