Gem and Jewelry Traders Hasten Adaption to Tackle Disrupted Business World
Nowadays, gem and jewelry traders face many challenges from economic instability, swift changes of consumer behaviors, rapid technological advancements and global trends resulted from consumers, traders, manufacturers and environments. The aforementioned factors force changes. If businesses fail to adapt to the changes, they will disappear from the market. Those succeed in adjusting will survive. Thus, in order to move ahead of the changes, gem and jewelry entrepreneurs must constantly adjust and be prepared. Different adjustment alternatives for entrepreneurs are features in this article.
1) Manufacturing Base Relocation
The prolonged trade war between the US and China raised costs of companies with manufacturing bases in China. As a result, companies including gem and jewelry ones started to relocate their manufacturing bases to other countries with lower costs. Although the US and China reached their first phase of trade agreement in December 2019, the agreement does not contain enough element to ensure an end of the trade war. Many perceive it as a temporary trade war truce. As the situation remains uncertain, companies will keep seeking new manufacturing bases.
Many countries are likely to be targeted for gem and jewelry manufacturing relocation. Thailand, the world’s leading gem and jewelry trading and manufacturing center has renowned centuries-long diamond and colored stone cutting skills, great skills in jewelry production and competitive wage rates. India is another attractive country with experienced workers possessing diamond and colored stone cutting/polishing skills, globally recognized jewelry production capacity and relatively low wage rates. Vietnam has been receiving attention from many foreign investors because of its abundant workforce and low wage rates. Moreover, the country’s industrious workers have development potential due to the country’s strong foundation in handcrafted gold jewelry production. Investors can be granted trading privileges from free trade agreements and Generalized System of Preferences (GSP) in exporting to Vietnam’s trading partner countries of which privileges are still valid, for example, the US and European countries.
Additionally, entrepreneurs may consider investing in Southeast Asian countries. Myanmar has deposits of premium quality colored stones--rubies and blue sapphires-- which are highly sought after in the global market. The country’s gem and jewelry industry has been under development beginning. Despite having abundant low wage rate workforce willing to work, production skill development is still needed. Indonesia is a country with great workforce with fair craftsmanship skills and moderate wage rates. The country is also known for being the world’s foremost silver jewelry producer. These countries also implement foreign investment promotion policy by offering privileges in various aspect to attract oversea investors. Thus, they are great choices for those who are looking for new jewelry manufacturing base.
Recently, social and environmental responsibility as well as business operation with righteousness and transparency trends have often been addressed in different medias. Consumers, particularly younger generations in the US and European countries, place importance on the issues. Before making their decision to purchase a product, consumers ask about a gem and jewelry item’s origin. Therefore, related agencies as well as gem and jewelry traders give priority to operating business with righteousness and transparency as well as care more about social and environmental impacts.
As for gem and jewelry products’ origin inspection, IBM employs a blockchain system to track jewelry supply chain. De Beers uses a blockchain technology to inspect diamonds’ origins. Everledger has collaborated with Gübelin and many companies to develop a blockchain system, Provenance Proof, to track origins of colored stones. The system has been available for use among related partners. Moreover, Alrosa and Everledger have launched, WeChat Mini, a program tracking origins of diamonds from mines to retailers. However, the uses of such technologies are still on an initial stage. They still need to be improved for better efficiency. Thus, entrepreneurs should adopt a system, which inspect routes of gem and jewelry products or buy/import raw materials for gem and jewelry from companies which provide goods origins. They may consider joining Responsible Jewellery Council or RJC, which forms standards or code of practices for transparent and ethical business operation, to show intention to follow the transparent and ethical business practices. At present, RJC has around 1,100 members. Its annual membership fee rates vary according to business categories.1
If entrepreneurs want to avoid social and environmental impacts from mining, they may shift to recycled gold and gemstones. Many traders across the world have joined the recycled jewelry trend. An example of successful traders is Hoover and Strong, an American brand, which launched a jewelry collection called Harmony Metals and Gems. The collection received positive feedback from customers. Moreover, entrepreneurs can also use lab grown diamonds and colored gemstones.
Various technologies have been used in different businesses for product and service development to fulfill consumer demand. In gem and jewelry industry, innovation and technology has been gradually applied because the industry is a craft economy and creative economy, which most of its manufacturing process depends on skilled and creative workers and meticulousness. However, it cannot be denied that technology is apt to increasingly play an important role in the industry. Thus, if entrepreneurs can apply technology into their businesses, it may create success opportunity. On the contrary, if they fail to promptly adapt to technological and innovative changes, their businesses may risk disappearing from the market. Examples of innovations and technologies initially used in gem and jewelry industry these days are as follows.
3D Printing is a technology which started to play a role in jewelry production from the first to the last step. It reduces jewelry manufacturing process, costs and time, so products can be distributed to the market faster. The technology creates three-dimensional jewelry prototypes from collected design data for unique design concepts and diversified prototype designs. The 3D printing technology can also quickly produce multiple jewelry prototypes of various designs in one
3D printing process in jewelry production from the first to the last step.
3D printing trend in the industry is booming and it is likely to grow further in the future. ReportLinker predicted that the global jewelry market using 3D printing technology would grow 26% in 2023. This is because the technology does not just expand designers’ creativity enabling companies to produce products in various designs, but it also fulfill modern consumers’ demand for products expressing their individuality or customized products. Consumers can design and create their own one-of-a-kind pieces. Currently, many companies around the world use 3D printing technology in their businesses. For instance, Orori, an Indonesian company with an online store offering a service allowing customers to print diamond or colored stone jewelry with their desired diamond and colored stone shapes and jewelry patterns from choices available on the company website, which supports display on computers and smart phones. The store will then produce diamond and colored stone jewelry with a 3D printer after receiving customers’ orders. In 2014, American Pearl, a famous brand from New York, announced that it would produce 3D jewelry. Its customers can design their own jewelry with 3D printing technology.
3D printed jewelry by American Pearl
CNC laser cutting engraving machine for jewelry
A sample result from ROSI’s analysis
Digital Ring Sizer called PerfectFit is an application designed by Radius Technologies and compatible with IOS and Android mobile phones. The application provides accurate ring size measurement within one minute. It can be used by turning on the application on the phone then choose your gender. Place a finger on the screen and press on the plus or minus sign to define finger circumference. PerfectFit supports every e-commerce platform on mobile phones.
ERP Software is a program, which many companies in gem and jewelry industry uses in business management from production, design, inventory management, sales analysis, customer relationship management, company financial and accounting management, product packing to product delivering.
SynthDetect is the latest tool invented by International Institute of Diamond Grading and Research (IIDGR) to inspect loose and mounted gemstones. The tool can examine colored and colorless gemstones of any sizes. The innovation won the 2018 Industry Innovation of the Year for Diamond Testing Technology from JNA Awards. In addition, companies in the US, Europe and India created diamond inspection tools of different qualities and prices for entrepreneurs to choose.
4) Online Gem and Jewelry Trading
With increasing popularity of online shopping among modern consumers, every business, including gem and jewelry business, has hopped on the e-commerce bandwagon. Although jewelry selling through online and digital media channels accounting for only 5% of the overall jewelry market, it has been expected to reach 10-15% in 20202. Orbis Research estimated that from 2018 to 2022 the global online jewelry would grow with an average rate of 15.69%. However, some customers will not instantly buy jewelry online. Instead, they will search for product information and compare prices on the Internet, look and touch real product pieces, before making their decision. Therefore, entrepreneurs should not completely cut off traditional stores. Merging both channels or omni-channel should be done.
Current online product trading includes opening one’s own online store or placing products on e-commerce platforms. The followings are some major gem and jewelry trading platform. ETSY is a website suitable for handcrafted jewelry with a product listing fee of 0.20 US dollar for each item and transaction fee of 3.5%. The Wanelo Shopify is an e-commerce application on mobile phones with store opening fee starting from 29 US dollars per month. BigCommerce, a platform fitting for small business, offers 3 types of stores with fee rates of 29.95, 79.95 and 249.95 US dollars per month. TrueFacet, a platform selling used or secondhand products, requires 18-20% fee from sellers after a purchase is made. eBay, a very popular platform, provides service to sell new and used products. Sellers without store subscription are offered free 50 listings, excess listings are subjected to 0.30 US dollar per listing. Store subscription fee starts from 19.99 US dollars per month. Sellers of every type on eBay have to pay 10% fee per item when their item sells.
Examples of jewelry listed on ETSY and TrueFacet
Additionally, there is live stream selling method, which has become extremely popular in China and Thailand. Sellers sell their products live through e-commerce website with a live stream function such as TAOBAO or Facebook. Many sellers started selling products through short video clips by telling information about products on IG Stories or placing products through social media platforms. Entrepreneurs should study each trading channel in order to choose the most appropriate channel and sell their products on various channels to expand opportunity in boosting gem and jewelry sales.
5) Social Media Marketing
In this increasingly fast progressing digital world, consumer behaviors have changed tremendously. Consumers in this era usually search for product information online before making decision. They also expect prompt response from sellers. Therefore, social media marketing is the best choice in sharing daily information, special offer announcement and important news about products or services, which consumers cannot find on other places, as well as interacting with customers right away. Thus, it is the most popular marketing channel among every business. Favored social media platforms for gem and jewelry marketing are Facebook, Instagram, Twitter, YouTube and Pinterest. Entrepreneurs should post information during the periods with the highest response potential, for example, on Facebook, users have the highest response during weekends.
Small and big jewelry brands have increasingly turned to social media marketing. Brands with success in the marketing approaches include BVLGARI. The luxury jewelry brand launches marketing campaigns through Instagram (8.4 million followers) and Facebook (3.40 million followers). David Yurman, a famous American jewelry brand, carries out marketing activities on Facebook (624,430 followers) and Instagram (353,000 followers).
Instagram of BVLGARI
6) Business Partner Collaboration
Under intense competitions, it may be hard for a business without a partner to be successful, if the company does not have enough strengths. Entrepreneurs started to employ strategy of collaborating with partners, which could be partners of different businesses to enhance each other’s strengths. For example, QVC, a retail company with the largest and the most diversified platforms of the world, carries out its primary business as a shopping channel on TV. It has expanded its marketing channels to social medias such as Twitter, Facebook and Instagram. The company also sells products on its e-commerce platform. Though QVC does not produce its goods, it is a supplier of different products, including gem and jewelry products from manufacturers, to sell through its platforms. QVC has a long-termed collaboration with its jewelry business partners, namely Kelly Hoppen and Liza Snowdon. Therefore, manufacturers with weakness in marketing channels can increase sales by collaborating with partners with solid marketing channels.
Partnering with non-benefit agencies or organizations such as social agencies or educational agencies to implement projects aiming to help the society and environment, highly concerned by modern consumers, will build good image and trust for a company and its products. This will eventually boost brand value and promote it much extensively. For example, Pandora, the world’s key silver jewelry brand has partnered with UNICEF in a fundraising project to help children affected by catastrophes around the world to protect and promote children’s rights, so they can live safely, healthily and receive quality education to develop their fullest potential. As such cooperation will become more important, entrepreneurs should adopt it with their businesses for sustainable advantages and business opportunities.
Furthermore, entrepreneurs and/ or business operators need to adapt to survive by using the mentioned alternatives. Personnel of gem and jewelry industry also have to adjust as job conditions and skills will be changed in the future. This is due to rising percentage of technology usages in gem and jewelry business. Workforce in the industry have to possess “new set of skills” – skills for working with machinery involving technological innovations. If they want to remain in the industry, they must learn more technological skills.
Existing and future challenges and changes make adjustment to cope with changes become an undeniable solution for business and workforce. Failing to adapt now, they will become stagnant and eventually fall behind.