Investing in e-commerce for jewellery retailers


Bachelor Thesis, 2011

34 Pages, Grade: 1,3



List of Abbreviations

List of Figures


1. Introduction

2. Aims and objectives

3.1.1 E-Business
3.1.2 E-Commerce
3.1.3 Website
3.1.4 Online-Shop
3.1.5 Information architecture
3.1.6 Critical / Important success factors



6.2.1 Chances, difficulties and risks for jewellery retailers
6.2.2 Important success factors for jewellery retailers in e-commerce






List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: E-commerce grows factors

Figure 2: Evaluation Model Heinemann

Figure 3: Killer differentiators


Purpose: The purpose of this study is to develop a basic guideline for jewellery retailers for an investment in e-commerce by handling the important success factors, difficulties and risks.

Design/methodology/approach: Firstly, analysing previous results for important success factors, difficulties and risks general in e-commerce. Secondly, expert interviews with four e- commerce start-up managers and one consultant for the jewellery industry to analyse the special challenges in e-commerce for jewellery retailers. Thirdly, by combining these results and appropriate solution approaches based on the expert interviews and further literature developing a basic guideline how to handle these factors at an investment in e-commerce.

Findings: Many general e-commerce success factors, difficulties and risks in e-commerce apply also for the jewellery retailers. For jewellery retailers the picture quality, page design and customer trust is more important as in other industries.

Limitations: The focus of study and guideline is on e-commerce for B2C jewellery retailers, there is no examination about product development or selection. Furthermore it is focus on the behaviours in western Europe and excluded the gems market.

Practical Implication: The study helps jewellery retailers at their investment in e-commerce by facilitate to handle the important success factors and difficulties, as well as to protection for pitfalls by using the developed guideline.

Originality/value: The study developed unique guideline for jewellery retailers for an investment in e-commerce.

1. Introduction

“What’s my ROI on e-commerce? Are you crazy? This is Columbus in the New World. What was his ROI? - Andy Grove, chairman of Intel” in Westland (2000), today Andy Grow is senior advisor for Intel.

Of course the ROI should be important for an investment, but an investment in e-commerce is a so long-term investment and is influence by many unpredictable factors, that it is impossible to say something about an exact expected ROI for jewellery retailers previously, but it is an investment in the future of retail business. E-commerce change the way people do business especially retail business all over the world and influences more and more industries. In 2006 in Germany 60% of the population buy product and services online, rising tendency, according to an research of the “statistisches Bundesamt” according to Stahl (2007). The market grow rapidly, Stahl (2007) forecast a growth from 2006 to 2010 of 62.2% for the B2B sector to € 636bn and a growth of 215.22% for the

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: E-commerce grows factors source: Mintel (2010a) B2C to €145bn.

Today according to Mintel (2010a) internet penetration in the UK is around 70% of the population and shopping is one of the main activities in the internet, 90% of the surveyed by Mintel (2010a) have bought something in the last year. Most of them said, that they bought more and more online. By the factors shown in figure 1 is assumes that a growing proportion of e- commerce of the retail business. For small and midsize enterprises (SMEs) electronic commerce is a great opportunity, based on the easy accessibility of the Internet to reach more customers, Kathuria (2007). The most enthusiastic group of ecommerce is between 25 and 44 years old, Mintel (2010a). On the other hand the jewellery industry has a relatively old structure, with a focus on long-term customer relationships and normally a relatively small potential customer base, supported by signetjewelers (2010). At the point of sale, emotions have a big influence, when the customer can see and touch the jewellery. Many traditional jewellery retailers think about to invest in ecommerce, but they do have only a vague idea of what this means and what is crucial to make the investment successful.

2. Aims and objectives

The aim of this study is to help jewellery retailers to get a better understanding about an investment in e-commerce and what this involves. The study will develop a simple concept- guideline for jewellery retailer of the important tasks and steps to implement an e-business, the focus is on the important success factors for inception of an online-shop as well as handling of difficulties and risks, by starting an e-business, based on literature, earlier studies and expert interviews.

3. Literature review

3.1 Definitions

3.1.1 E-Business

E-Business is define according to Amit (2001) as a firm that has a least 10% of its revenues from transactions conducted over the internet.

3.1.2 E-Commerce

E-Commerce is define by Kalakota (1997) as buying and selling of information, products and services via computer networks.

3.1.3 Website

A website is define by Jendryschik (2009) as a continuous online offering of a provider, which usually consists of multiple sites, which can be achieved by one or more domains. All sites of a website are characterized by consistent navigation and graphic design.

3.1.4 Online-Shop

An online-shop is define by Niedermeyer (2010) as a commercial website which offers visitors the electronic purchase of products and services. Furthermore Ennen (2008) explained that it is based on software with shopping cart functionality.

3.1.5 Information architecture

According to Reiss (2000) till today there is no recognised scientific definition of information architecture, but the most best description is: “information architecture deals with the arrangement of browser-based information (more specifically, the internal relationships between individual web pages) so visitor can do whatever they came to do with as little effort (and confusion) as possible”.

3.1.6 Critical / Important success factors

Critical success factors are the few important things that must go well at a project or an entrepreneurial investment to ensure success at the project, according Rockart (1979). At these factors the management should pay particularly attention in order to achieve the goals , Hackney (2000).

3.2 E-commerce Background

Electronic commerce, also known as e-commerce or eCommerce, means using communication technologies, like the internet and a computer for the automation of commercial transactions. In 1979 Michael Aldrich invented the first online shopping system by connecting a domestic television by a telephone line to a transaction-processing computer, Aldrich (2011). But the truly success story could not until begun, before Tim Berners-Lee in 1990 create an Internet-based hypertext system (URL, HTTP and HTML), which allows an easy-to-use interface for the world wide web, Moyer (2009). So in the mid-1990s the phenomenal growth of the internet began, followed in the late-1990s by e-commerce, according to Vulkan (2003).

3.3 Information Architecture

Information Architecture is the framework and heart of a website, it is the organization of content and functionality, the labelling system and the navigation scheme, according Rosenfeld (2002). The importance of information architecture at the web is often underrated and ignored, demonstrated by millions of websites which look amateurish, according to Reiss (2000). Good information architecture is the key to get visitors confident and archive the goals of the website, it’s the “invisible” layer for the one-to-one relationship with the visitors. According to Karat (2004) in a typical e-commerce site, the information architecture specifies: ]The major organizational scheme of the site, eg. by topic or by audience. The product organizational system eg. by price, by brand, by category, this helps users to find what they want. The labels used for the product categories and functionality. The global navigation, this are the links across the pages, eg. Shopping cart, search and the major organizational schemes. The local navigation, this means how users navigate within a product category. The contextual navigation, this means how users navigate across the major sections to get to “related items” and how the business enables “cross-selling”. Examples for cross- selling could be additional special gift packages or greeting cards, but also suitable earrings for a chain.

3.4 Jewellery retail market

According to an U.S. Industry Report about the jewellery industry from ibisworld (2011) the US market is $29,644bn in combination with an KPMG study (2007), which says that the US jewellery market is 30.8% of the world market, this means the jewellery world market is around $96bn. In the US are according to firstresearch (2011) 28,000 retail stores, which means an average turnover of around one million dollars per year per store. The UK market was 2010 in a research project on Mintel (2010) £4.8bn with 7,300 retail stores according to signetjewelers (2010), which means a turnover about £650,000 per year per retail store. The small turnover shows that the jewellery retail market is based on many relatively small jewellery retailers.

3.5 E-commerce for the jewellery industry

Jewellery industry magazines inform and discuss e-commerce in the last few years. E- commerce is a great sales opportunity for jewellers to allow consumers to shop 24/7, to reach a wider customer base and so to increase market share, according Martinez (2006). But there are also negative aspects for jewellers, because Matz (2010) “When jewelers have an e- commerce website, they`ll show their prices and lose customers because the only way to compete online is by price”, he says, he will beat the internet with free jewellery cleaning and minor repairs for life. At the other hand persons like the co-owner of Day´s Jewellers Kathy Corey says that the “an e-commerce website forces us to offer a better in-store experience”, so offline and online sales go hand in hand, in Matz (2010). And Ankit Shah from India says in the DiamondWorld (2010) “ Online trading has made it possible for us to find prospective customers in each and every nook and corner of the world. It has solved the problem of time difference and distance”. This shows, that e-commerce can be a good opportunity, but do not has to be the only way to do business for jewellery retailers in the feature. 3.6 Gap in the literature There are no information for jewellery retailers about the important steps and difficulties by investing and implementing to an successful e-business.

4. Research methodology

The first step will be examining the different results of previous studies about e-commerce important success factors, as well as advantages and disadvantages for e-commerce retailers, in general. Of course, these results are not specific for the jeweller industry, for that reason the main purpose of the secondary research is to create a base for the second step, the primary research. The primary research will be expert interviews with four managers of e-business jewellery start-ups and one expert interview with a consultant for jewellery businesses. The goal is to examine which factors are critical for success, what are difficulties and hurdles by implementation of e-commerce for jewellery retailers, furthermore approaches of the experts to handle this. The interviews will be structured and documented at paper to ensure the traceability. Approaches from the literature review and the results of previous studies, allows developing a structure for the interviews, but the nature of expert interviews allows furthermore to get information about how the characteristics and special features of the jewellery industry influence the success factors and to get approaches to practical implementation experience. The questions asked first general introduction information about the person and inception of the e-commerce, than the experience about important success factors as well as difficulties, special features, effort and success. The selected companies of the experts were SMEs start-up online retail companies, because they are recently in the process and have up to date experience by developing an ecommerce business in the jewellery industry. The last step will be to combine the results of secondary research and primary research to develop a basis guideline for jewellery retailers of the important tasks and steps to handle the important success factors, as well as the hurdles, difficulties and risks for jewellery retailers by implementing e-commerce. The guideline will be based on the solutions of the interviewed experts and furthermore on literature to handle this challenges.

5. Desk Research

5.1 E-commerce success factors

Success factors are those factors, which make the decisive contribution for success of the operation. The most famous research on success factors in e-commerce is from Heinemann. Heinemann developed the following model to determining the important success factors in e- commerce.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Evaluation Model Heinemann, source: Heinemann (2010a)

Heinemann (2010a) evaluated with his model more than 250 online commerce companies and 200 international best practise case studies. Furthermore Heinemann used expert interviews and experience based on 20 consulting projects to develop these eight success factors:

1. “The unique appeal of the e-shop and a clearly defined value proposition”
2. “Extensive use of communities and social networks”
3. “Excellent and fast self-service and searching “
4. “Maximum customisation and personalisation of customer interactions”
5. “System and supply chain excellence”
6. “Best possible security standards and reputation”
7. “Supplementing the online lead channel with supporting sales and communication channels”
8. “Sourcing concept and strategic alliances”

At the factor shop appeal, Heinemann(2010a) is wondering why the “flagship store model”, which is a big part of the brick-and-mortar commerce, is not common in online commerce, especially of possible technical capabilities like 3-D pictures with zoom function to make online shopping even more entertaining. But at this point, there is also a strong academic opposite site, most famous Jacob Nielsen (2004), states for systematic functionality in the practical’s way. Nielsen do not think that websites should be pretty, they should useable and says about his own website, that he is proud of how ugly his site is. Bail (2002) meets this point in my option best, by supports an appealing and functional design.


Excerpt out of 34 pages


Investing in e-commerce for jewellery retailers
Catalog Number
ISBN (eBook)
ISBN (Book)
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598 KB
jewellery, investing, Guideline, E-Commerce, Erfolgsfaktoren, Online-Shop
Quote paper
Sascha Kurth (Author), 2011, Investing in e-commerce for jewellery retailers, Munich, GRIN Verlag,


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