Amazon’s Jewelry Store - Things To Come Have Arrived

Amazon.com has officially announced the opening of its online jewelry and watch store. So? Though a big seller, why should this be of any special interest? The significance lies in several factors.

For starters, note the following from Jeff Bezos, founder and CEO of Amazon. In a message to visitors to the site he promises to “pass the savings”.

This is a common statement in retailing, but in this case he also tells us how they plan on doing it. According to Bezos, a “typical jeweler” mark up is 60% - 100%, depending on the buyer’s negotiating skills. Amazon, Bezos promises, will typically mark-up diamond jewelry by less than 15% of cost and even less for high-end pieces.

How can he do it? Well, Bezos is no shy guy. He tells us “the costs of buying, handling, and shipping a piece of jewelry aren’t much more than those of selling a book...”. In other words, Amazon is using its know-how, purchasing power and strategic abilities from other products and applying it to our field.

Online jewelry sales are alive and well and operations such as Diamond.com, Ice.com, and eBay are prospering. Blue Nile, another successful outfit, reported a $27 million profit last year on sales of $129 million and is now planning to go public. How will Amazon’s store impact these guys? Will the competition cause them to lower prices, make their operations more efficient, or encourage them to increase advertising? Yes, yes, and yes are the likely answers.

What does it mean to the smaller operations, some of which are mentioned in our web reviews? Just like in any other industry and field - online or not - the entry of another big guy is not necessarily bad news. But it does mean that to capture market share there is plenty of hard work ahead. A greater emphasis will need to be put on consumer confidence, recognition, quality of service, quality of goods and maybe even pricing.

We, as an industry, have turned a corner. The web is obviously here to stay, and as a market place we have to negotiate wisely both on the Business-to-Business playing field and the Business-to-Consumer. But beyond that, a strong message is sent to offline retailing - the game has changed and to succeed in the future we have to take this into account.

Keep those emails coming in. If you have a question, suggestion or a comment to make, by all means drop me a line at: edahn@idexonline.com.

IDEX Web Review of Amazon.com’s new store:

www.idexonline.com/portal_FullMazalUbracha.asp?id=22398