Marketplace Risks for Jewelry Businesses and How to Avoid Them

 

 

As a wholesale jewelry supplier, we work with thousands of designers around the world and we are able to notice when there are ups and downs in their sales, as it affects ours as well. We dug deeper and noticed that some shops suffered as they only sold on the online marketplace platform.  Don’t get me wrong, the online marketplace can be a great place to start or expand your jewelry business, but it can be risky if you are not prepared. If you are an individual designer or a small brand, you need an active sales channel that can reach a large volume of potential customers in a short time to start establishing your business.  The best and most economical way to do that is through online marketplaces, like ETSY. Within a couple of hours, you can have your jewelry products in front of millions of potential buyers and only have to pay a marketplace fee after you make a sale, so you don’t break your budget. It sounds easy enough but the online marketplace has changed over the past few years and there are more trends and risks to be aware of than there used to be.

   We saw for example that some customers with Etsy stores had sales drop to about half compared to 5 years ago. Why is that? One obvious reason is that every year the competition gets heavier and heavier on Etsy as more and more designers and businesses set up shop there.  With added competition, it is harder to get noticed and stand out in the crowd. Another issue is that Etsy has reported search glitches and Google Ad issues which immediately impacted sellers. Also, the way Etsy sets up its search keeps changing and that too affects sales performance.  For instance, in the upcoming month, if you offer free shipping on US orders that are $35 or more, you will become priority in their search results.  Vendors also have similar issues getting noticed on eBay, which used to be a top marketplace before Amazon and Etsy become popular.  It is hard to keep up with all the changes and it feels like you have to keep jumping through hoops to get noticed. As a rule of thumb, doing business on any marketplace will become harder and harder every year. That’s why marketplace is risky to your jewelry business if you heavily rely on it as your primary income source. It is important, even when your sales in the marketplace are decent, to establish more sales sources to help stabilize your business going forward. Below are some ways to do that.

1. The Multiple Marketplaces Strategy – Don’t use just one online marketplace; sell your jewelry on multiple marketplaces. Each marketplace has its own unique customer base so selling on different marketplaces can diversify your customer base and increase your potential customer reach. One jewelry design that is not selling well on one marketplace may have a better performance on another one. You also need to be cautious with this strategy. Each marketplace is different so you can’t just simply dump your product listings from one marketplace to another. You need to spend time researching and selecting suitable designs and pricing from your line for each marketplace. Also, managing multiple marketplaces is time consuming. You need to measure how much time and energy you can allocate to each marketplace before you start.

2. Website - You need your own website! Period. Your marketplace shop can be shut down or your shop traffic can drop suddenly for various reasons beyond your control, even if you are diligent in maintaining your shop. Marketplace companies such as Amazon and eBay can close or suspend your account for any reason, such as customer complaints or policy violations, even if they are not valid. If you have your own independent website, no one can shut you down and take away your organic traffic and loyal customer base overnight as a marketplace company can. Also, all the money and effort you have spent on your own website will be converted into your own asset, which could be lucrative if became successful enough to sell it.  The same cannot be said for a marketplace store. Below are several techniques you can use to help build up traffic on your website:

  • Organic Search Engine Optimization. I recommend researching or reading a book such as Jason McDonald’s SEO Fitness Workbook about what SEO (search engine optimization) is first before taking on this challenge. It’s not easy, but it is doable as you just need to make it a priority and a part of your regular business routine. 

  • Hire a SEO Consultant. There are many SEO firms out there, but since they can be quite costly, make sure you find one that is suitable for your needs.  A decent SEO service will cost from $3,000 to $5,000 per month to start and may cost more if you need extra sophisticated services down the road.  You will need to commit with a firm for at least a year to see any real results, but bear in mind since Google search engine keeps changing every year, you may need the firm for longer. It is a good investment in the long run so it is best to allocate some of your budget for this.
  • Paid Search Traffic. You can buy a Google Ad to help promote your business and get traffic flow started to your website. I would again recommend reading a book and doing research prior to doing this as it can be costly if you are not prepared.  For example, a Google Ad for jewelry will cost you $1 to $2 for each click. If you are not careful, you could easily waste hundreds of dollars in a single day. You can also hire a Google Ad consultant to help you run your ad and achieve better ad performance in a more cost effective manner, but they are more suitable for an established business or new businesses with larger budgets.

  • Social Media. A social media presence is probably the best bet for a smaller jewelry business with a limited budget. You have a better chance of standing out in the overcrowded jewelry brand world if you are creative and unique on your social media channels. We have seen many of our customers succeed and create awesome sales and traffic flow by using social media efficiently. Social selling is the new trend and will only get more complex in the years to come.  A social media account lets customers interact with you on another level and if they share your post with others, it’s like getting free advertising! The most used social media platforms for jewelry products currently are Pinterest, Instagram, and Facebook, so setting up accounts on those are ideal.

3. Traditional fair, events. Do not ignore local fairs and events. We have seen designers have success in local events such as farmers markets, music festivals, craft fairs, and fundraisers. Some are even able to land orders from big corporations due to appearances at these events. Before you exhibit at an event, it is best to do your homework and find out what the theme of the event is and the average attendee demographic.  That way you can pick which jewelry pieces are best suited to showcase at the event.  For instance, a country music festival would be a great place to feature music themed jewelry pieces as well as western themed and rustic looking jewelry. Fundraisers are a win-win as you can work with an organization to donate part of your proceeds to a meaningful cause while promoting your jewelry and brand.

4. Local Jewelry Retail Shows, Bridal Shows. Some local retail jewelry shows, like The International Jewelry and Gem Show that have shows in cities all across the country during the year, are great retail opportunities to consider.  It is best to visit the show as a buyer first to understand your competition, audience, style trends, etc. Then you can try exhibiting at a couple of shows to see if your products and price points are working.

5. Trade Shows. Do you offer your jewelry line at wholesale to specialty stores and boutiques? If yes, then you should consider exhibiting in wholesale trade shows. However, registering for a show is not cheap as most will cost about $2,000 to $6,000 for the smallest 10 by 10 foot display booth. You also need to take into account the cost of travel, hotel, food, etc. Many vendors may lose money in the first couple of years doing these shows because retailers want to observe their business and see if they are strong enough to survive in the industry. Once they see that you are established with a fine tuned jewelry line they feel comfortable spending their own money to try it. If the cost of one of these shows sounds too high for your business, consider working with other designers and sharing a booth. There are also marketing companies that can bring your products to shows and sell them on your behalf for a 20% commission. You can also contact wholesale showrooms that display jewelry from different designers to carry your products. These showrooms, like Susan & Company, can be found in major cities like NYC and have connections with many well known retailers.

6. Sales Representatives. Sales representatives are a good way to open up sales channels as they will use their connections and travel to businesses to show your products to their clients. They will take at least a 20% commission and you will need to provide jewelry samples for them to show. You can find sales reps in your local area or branch out to other cities.

   Not all sales channels mentioned above are for every jewelry business but it is best to diversify to reduce the risk to your business. You should keep trying different sales channels to see what is best for your particular jewelry line and price point and eventually you will find the right fit. A jewelry business with solid and consistent sales from more than one channel is more stable and healthier than one with just a marketplace shop. I hope this provides you an insight into marketplace risks and helps guide you to your own stable sales channel structure for your jewelry business.

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Comments
8/12/2019 11:31 AM
thank you! Great blog post, very helpful.
8/12/2019 11:39 AM
Great Post! Thanks so much!
8/12/2019 6:47 PM
Great article.  Thins Very informative for the folks that may not be aware of other marketing options.  After being on Etsy for 11 years, I also opened my own standalone site.  The influx of cheap jewelry and junk from China has diluted the traffic to my once very successful shop.