Starting a Successful Jewellery Business
© 2011 by Nirvana Wholesale
Chapter 1 When a woman decides she is going to start her own business, a jewellery business is often the first thing she thinks of. Visit any local market or Christmas Fair and you will see five or six stalls selling jewellery, manned by women of all ages. Wander down the side streets of your home town and you’ll come across little accessory shops with names such as Jane’s Beads or Emily’s Jewels. But here’s the sad part: most of these businesses will fail, or never amount to anything substantial. Yet jewellery does sell well. Women buy jewellery all the time. They buy it for themselves, they buy it as gifts for their friends, they buy it for special occasions such as parties and weddings, and they buy it on spec, just to feel good about themselves or because they like how it makes them feel. If jewellery sells so well, why do so many jewellery businesses fail? And how can your jewellery business succeed? This book is about starting and running a successful jewellery business. It will explain why so many of these new businesses fail. It will tell you what pitfalls to avoid so that you do not follow them into obscurity. And it will tell you what you need to do to make your jewellery business a success.
Who is this eBook written for? If you are thinking of starting up a jewellery retail business, this book is for you. If you are already running a jewellery business, successful or unsuccessful, this book is for you. This book is written for anyone in the jewellery retail business and anyone considering entering the jewellery retail business. Its purpose is to help you avoid the most common mistakes made by jewellery retailers, and to point you in the direction of success.
Who are we, and why should you take our advice? We’ve been involved in the jewellery business for over twenty years, starting out as retailers just like you, and later becoming wholesalers and then importers. As retailers, we sold jewellery in markets, at Christmas and summer fairs, at home parties, and in high street shops. As wholesalers, we sold and still sell to retailers across the UK and Ireland, where we experience firsthand the range of success stories and the corresponding long line of jewellery
business failures. We deal with manufacturers in the Far East, and have visited many of their factories and warehouses – the same factories and warehouses that supply just about every importer and wholesaler in the UK. As a result, we can spot a jewellery business that is likely to succeed based on a single encounter. That encounter may be a visit to a shop or stall, or it may be as simple as viewing the contents of a first wholesale order. We can spot a jewellery business that is likely to fail just as quickly. There is a lot of advice out there coming at you from a lot of different directions. You have business advisers telling you how to run your business, marketing advisers telling you how to advertise and sell yourself and your products, suppliers telling you how their stock will make you rich, and friends and family members telling you that everything you do will lead to success if you only persevere and don’t lose faith. While this advice has its place, it doesn’t help you with the fundamentals of running a successful jewellery business. It doesn’t advise you on dealing with the myriad suppliers who will pop up from even a basic internet search, it doesn’t help you chose which lines of jewellery to stock in your shop, or to determine what the average woman on the street will be prepared to pay for those lines. And it doesn’t help you to identify the many ways your business can go off the rails, or point out the signs that your new business is on the fast track to failure. We can help you with this. We have run successful jewellery retail businesses in the past, and we can help make your jewellery business a success. You may not like some of the advice presented in this book, you might prefer that things worked differently. You may even feel that our advice flies in the face of what you perceive to be good business sense. But the reality is: most start up jewellery businesses fail. If you want yours to succeed, you can’t do the things that every other jewellery start-up does.
What is a successful jewellery business? This may seem like a foolish question. After all, we all know what success is. Right? I’m afraid not. Success means different things to different people. For the stay at home Mom about to embark on a jewellery party business, success may be as little as an extra couple of hundred pounds a month to help pay the bills. For the young entrepreneur eager to see her name over a door, success might be a high street shop, followed by her smiling face in the local newspaper - a clear indicator for all to see that she is now somebody of substance and achievement. For the serial business woman, well used to the highs and lows of running her own business, success may be defined much more clearly, in figures on a balance sheet and strong and growing yearly sales. Ask yourself this: Do you want the appearance of success, or do you want the material benefits of success?
The appearance of success might lead you down the path of opening your own shop in your home town; investing many months of your time in setting everything up; negotiating a loan or a second mortgage with your bank in order to finance the shop fittings, the stock, and the first few months rent; and then proudly posing for photographs in front of your new shop on opening day, with friends and family alongside, cracking champagne bottles and patting you on the back. This is not success. Yes, you may have been successful in reaching your opening day, and navigating the obstacles banks and suppliers put in front of you that might have prevented you from opening your new shop. But your business has yet to achieve success. When a first time jewellery business owner strives to open their new business, this is often the picture they have in their heads. Success is measured in how things look on the outside, in how others perceive them and their business. At these early stages, success is rarely measured in actual monetary terms, in profit. True success can only be measured on the balance sheet. True success is governed by your sales figures throughout the year, your expenses, and what’s left over: your profit. This book is about starting a successful and profitable jewellery business. That business may very well take the form of a high street shop that would make your mother proud; it may involve running a county wide jewellery party business that has been growing by 300% a year for five years, with twenty consultants working for you; or it may be a much less glamorous market stall, set up without re-mortgaging your home, in the absence of champagne bottles and local photographers, but with a yearly turnover that dwarfs many high street shops.
Reality Check: True success in the jewellery business rarely comes with the outward appearance of success. In all the years I’ve spent selling jewellery and dealing with jewellery retailers, I’ve yet to find an independent high street shop that comes close to outperforming the best of market stalls.
We have encountered market traders who have turned over £5,000 a day, seventy percent of it profit, selling on a pitch that costs them only £60 a day. And we have encountered high street shops struggling to turn over £200 on a busy Saturday, only a few pounds of it profit. The owner of one of these businesses might sit on the board of the local Chamber of Commerce, while the other is unknown to other local businesses or personages. Which do you think is which? So ask yourself this: Do you want the appearance of success, with all the trappings and recognition that often comes with it? Or do you want to actually be successful, to make enough money to buy that new car, and to not have to worry about how much those new shoes cost? If what you are really looking for is the appearance of success, then I’m afraid this book cannot help you. If, on the other hand, you want to run a successful and growing jewellery business, then please read on, but be prepared to toss those flowery images of champagne bottles out the window.
Section II Chapter 2
Different Types of Jewellery Businesses Jewellery businesses are not like other businesses. You’re not tied to one tried and tested format. If you want to open a newsagent's, then the only real question is, where? A newsagents is a newsagents, and if you attempt something novel or different, it won’t be a newsagents any more. Likewise, a restaurant is a restaurant, and a florist is a florist. But one jewellery business is not like another. It doesn’t have to be, it doesn’t need to be, and in many cases it shouldn’t try to be. There are four different avenues available to you when setting up your jewellery business. 1. A Shop - bricks and mortar, with your name over the door. 2. Market Trading - street markets, car boots, fairs and festivals. 3. Jewellery Parties - hosted parties in private homes. 4. The Internet - eBay or your own eCommerce website. I will be examining each of these in detail, looking at the pros and cons, and then I’ll be making some recommendations. These recommendations will be based on my own experience as a supplier to jewellery retailers, and on the assumption that the kind of success you are looking for is the material kind, centring on turnover and profit, rather than the looser definition of success that comes with having your name painted over a doorway.
The Jewellery Shop In terms of jewellery retailing, a bricks and mortar shop on the high street is the most difficult, the most time consuming, and the most expensive sales avenue to get off the ground. It is also the most expensive by far in terms of operating costs. This, of course, would be perfectly acceptable if the gains were commensurate with the initial outlay and the ongoing commitments. But are they?
What is involved in setting up a Jewellery Shop? 1. Premises and Location
First of all, you need to find premises, and this premises needs to be in a location with a steady and impressive footfall. There is no point in locating your new shop down a side street or in an out of the way location, as you will get no customers. Retail establishments along the lines of jewellery and accessory shops rely on passing trade. Unlike with the Post Office, customers will not be prepared to leave the main shopping area to come find you. You need to be where they expect you to be, which is where all the other shops are. And this does not come cheap. Yes, it is possible to find perfectly respectable premises for a fraction of the busy high street price, but it will not be located in a major shopping district. It will be over the bridge, around the corner, next to the gas works. In short, it will be somewhere nobody ever goes, where passing trade is nonexistent. We’ve all seen the lonely jewellery shop in just such a location. If you’ve lived in a town all your life, you will no doubt have been surprised one day to stumble across just such a shop, tucked away down the end of a street you haven’t walked in ten years. But you had better hurry, because the shop will only be there for six months. After six months it will be boarded up, awaiting the next failed retailer who thinks they can do better. There is no end to the delusion of the start-up retailer, in particular the start-up jewellery retailer. Shoppers go to shopping districts to shop. Never forget this. No matter how much you love your jewellery and your new shop, it will not be unique or special enough to make shoppers change their most basic shopping behaviour. So your new shop will need to be on the high street or in the shopping centre. And that is going to be expensive. It will be expensive in terms of monthly rent, it will be expensive when it comes to business rates, and it will be expensive to run.
And most importantly, it will be expensive in terms of commitment. Most commercial rentals come with minimum leases of at least one year, which means you are committed to paying the set monthly rent and business rates for twelve months or more, irrespective of how your business might be performing. This lack of leeway cannot be over stated. For a new business, this sort of commitment seriously restricts your actions and your ability to change direction in response to your market.
2. Setup Costs
Empty shops are just that - empty. They have no display cabinets, no furnishing, no curtains on the windows, no payment till, in many cases, not even a toilet seat. That’s if they even have a toilet. All of this needs to be built, bought, or fixed before you can open your door and serve your first customer. You will need to hire a decorator, buy furnishings and fittings, and outfit your new premises so that it does not look like a charity shop. Not only will this cost a lot of money, it will take time. You should allow a number of days or weeks to prepare your new premises - days when you will be paying rent for your prime location, but will not be taking in any money. 3. Employee Costs
It would be impractical to open a shop in this day and age with only a single employee - yourself. Most shopping districts are open six, or in many cases seven days a week. You can’t close for lunch anymore, as lunch time is one of the busiest times of the day. You can’t close early to go the bank every day, and you most certainly should not close on Sundays often the busiest day of the week. This means you will need at least one employee to work alongside you – either full time or part time. Either way, this is a huge cost for a start-up business unsure of its ongoing and future earnings. You may be earning so little that your own income is in doubt, but you will always need to find the money to pay your employee. I am familiar with jewellery businesses where the minimum wage employee is taking home more than the business owner. And this is far from uncommon. 4. Additional Costs
On top of your rental costs and employee costs, you will have a host of additional costs to pay each month. There will be gas and electric bills, advertising bills, cleaning bills, merchant banking charges, credit card machine hiring costs, insurance, both liability and contents, losses through shop lifting and employee fraud. The vast majority of employee fraud is carried out by employees of small businesses, usually trusted employees. The primary criteria for fraud and theft are the ability to carry out the crime without getting caught (not difficult when they are left alone in the shop for one or two days a week), and the ability to rationalise
the action. It’s remarkably easy for a trusted employee paid minimum wage to feel entitled to something more.
So what can be drawn from this?
The setup and running costs of a shop in a busy part of town are huge and ongoing. Your jewellery business would need to have strong sales throughout the year just to break even, not to mention earning you a healthy profit and allowing you to grow your business over time. The problem is not that your business will not achieve this, though for most jewellery businesses this is indeed the case, but that you have no way of knowing in advance if your business will be sufficiently strong to prove viable. And with the kind of financial outlay necessary just to be in a position to open your doors on Day 1, not having a good idea if you will be successful enough to keep your doors open (the lowest level of success) is a dangerous position to be in.
How do you measure the potential of your shop before you open? There are many business advisers who will tell you how to do this. They will instruct you to stand across the road from your future premises with a clicker and count the number of people who pass by. They may even tell you to count the women, which would be more useful than counting all the passersby - as it is women who predominantly buy jewellery. Once you’ve totalled up these figures for different times of the day and different days of the week, you project how many of these people would typically enter your shop as they passed by. This figured could be anything from 1% to 5%, or more depending on how optimistic you might be feeling. From this figure, you extrapolate what proportion would buy something from your shop once they entered: 10%, 20%, whatever. And it is this figure you then use to project your turnover. There is a problem with this. The problem is not to do with the percentages, though their accuracy is certainly open for debate. The problem is that you have no way of knowing in advance how your jewellery will be perceived by your potential customers. They may find it unfashionable. They may find it more suitable for their grandmothers or for their young daughters with dyed black hair. Or they may find it too expensive or even too cheap (this can happen). What this means is that your entire financial projection for your first year of business will quite likely be based on figures that are wildly inaccurate. Your financial projection includes such things as ability to pay rent, utility bills, employee costs, and most important of all: future stock updates, upon which the ongoing success of your business depends. So if your first jewellery retail venture entails opening a shop in your local town, you will have no idea going in how successful or unsuccessful you will be. You will have no real idea
if you will be able to afford all the costs associated with opening that shop, and no idea if you will even be able to keep the doors open for those first few months. There are plenty of negatives attached to opening a jewellery shop, as we’ve seen, but are there any positives? Sure there are. You get to put your name over the door, and you might even get a write up in the local paper. And of course, your Mother will be proud of you. But seriously, there are success stories on the high street, and they are not all chain stores. There is a place for independent jewellery retailers, but without a huge amount of experience in the jewellery business, you would be foolish to consider this route as your first entry into jewellery retail. For now, let’s look at a different model of jewellery retailing, one that is never glamorised and comes with only a fraction of the start-up costs of a bricks and mortar shop: the Market Stall.
Market Trading What picture comes into your head when you hear the term Market Trader? If you’re English, you might picture an open field on a cold, foggy morning, full of cars and vans, with men and women wearing rubber boots and drinking steaming cups of tea poured from industrial sized flasks. Americans might picture a farmer’s market or a craft fair, where stalls are manned by leftovers from a bygone era with long hair full of beads, and flowery clothing. The reality is quite different. Market Trading is a loose term, and various types of selling fall under its banner. At its most general, a market trader is someone who sells from a moveable stall rather than a fixed premises or shop. The following are all Market Traders:
Stall holders at regular, weekly street markets Car boot sellers Christmas fair sellers Craft and other specialised fair sellers Stall owners at farmers markets Sellers at organised events such as concerts or festivals
Street markets have been a fixture of many towns and villages for centuries, with plots handed down from father to son, often staying in the family for generations. Though street markets have been in decline lately, as regulations tighten up retail environments and town centres undergo renovations, they are still the centre of many a market trader’s business. A typical street market in an average town might include stalls selling fresh fruit and vegetables, a selection of new clothing and footwear, second hand or damaged books, candles and incense, household cleaning products, and of course, at least one jewellery stall. The size of these markets is often fixed, with stalls in high demand and difficult to get hold of. An established stall at a busy weekly market can easily turn over as much as a high street shop on a busy day. Car boot sales on the other hand are very much a free for all, with no set pitches, and sellers who turn up that morning on spec with a car or van full of stock to sell. The car boot environment may be a field in the countryside, a large car park in a city, or a warehouse district at the edge of town. Some sales have become so well established that they have large indoor areas for selling, as well as toilets, cafes and telephones. The more popular sales often allow a core group of traders to leave their stalls set up for the following week, giving them all the benefits of an established shop without any of the overheads. Specialised fairs occur all over the country at different times of the year. Christmas fairs occur in most towns in early December, often kicking off the Christmas shopping season and providing a great opportunity to capture that Christmas trade at what is by far the busiest
time of the year. There are Summer fairs, Spring fairs, and craft fairs occurring somewhere just about every weekend. Craft fairs are especially popular amongst jewellery sellers, as they provide access to a market that is predisposed to buy jewellery, adornments, or handmade items. Farmer’s markets, though primarily for the sale of fresh produce, often allow a small number of traders to sell homemade jewellery. This does vary from town to town, and you would need to contact the market administrators to find out if there is a place for your jewellery stall, but if you have the opportunity, they can prove quite lucrative. The summer season brings with it a host of events such as weekend long festivals and afternoon concerts. Many of these events allow traders access to their grounds, and though admission is often quite expensive, can prove to be as lucrative as the weeks running up to Christmas.
True Story: I know of one jewellery trader in Ireland who sets up a stall at the National Ploughing Championships in the Irish countryside each year. Typical attendance at this event is around 200,000 over three days and their turn over is often as high as €20,000. All from selling costume jewellery and watches from a stall.
Stories like this abound, but you need to be careful when listening to them, and not assume that it will automatically happen to you, or that your first car boot sale will net you a four figure sum. There is as much variety in the turnover of market traders as there is in the turnover of shops on the high street and in the local shopping centre. For every trader doing well, there will be two who are just getting by, and two who are doing badly.
What is involved in becoming a Market Trader? No matter how you sell your jewellery, you will need to purchase stock and packaging. This does not change regardless of where or how you sell. The initial costs involved in market trading are very low, though this may rise over time as you expand your operation and become more successful. You will need some fold up tables. Though some markets provide stalls, you cannot rely on them being present, especially if the market is transient, which is the case for most festivals and yearly fairs. If you have the good fortune of landing a spot at a weekly street market or farmer’s market, you will usually need to provide your own stall. A stall, at its most basic, is simply fold up tables covered by an awning of some kind to keep out the weather. All of these items can be purchased quite cheaply at any large DIY shop. Alongside your basic stall, you will need large velvet coverings for your tables, as well as some busts and other jewellery display equipment. A dozen busts, some bracelet and ring
displays, and some display boxes for watches should not set you back much. Remember, if you start small, your initial outlay will be small. Upgrading from a pitch with one or two tables to one three times as large is usually a straight forward process, which means you can test the waters without spending too much on setup costs, and only increase your spend when you have proven that your stock sells and you can afford to do so. You will need transport. A car is a requirement for even the most basic market trading. You will need it to carry your stock, your tables and display units, and you will need it to travel to each different market. You do not need to buy a van. A hatchback with fold down seats is usually sufficient in the early days, though as you become more and more successful, and invest in more stock and larger stalls, you may decide to purchase a larger vehicle. Do not make the mistake of assuming you need to buy a van. Prove your concept first. Ensure you are selling the right stock to the right people at the right price and in the right location. You can do all this from a battered old Ford Fiesta. A common mistake amongst business start-ups - one not specific to the jewellery or even the retail industry - is that you need to have all the latest and best equipment, otherwise your business will fail. This is not true. If you do have money to invest, invest it first of all in stock, and secondly in improving your display. Your customers will not care about anything else. A small number of miscellaneous items will also be required: a hand mirror so that customers can see how a necklace or earring set looks on them, a cash box, a lunch box, and some warm clothing. You should also invest in some form of liability insurance, in the event that a customer trips over the leg of one of your tables and holds you responsible. In the UK, membership of the Federation of Market Traders comes with associated insurance. Membership doesn’t provide much beyond this, but it is a useful and quick way of ensuring you have sufficient coverage. And that’s it. Stall rentals are often very low - sometimes as little as £30 a day. There are no employee costs, no building and decorating costs, no advertising costs, no utility bills, and most important of all, no recurring costs such as a whopping monthly rent bill. If a particular market is not working out for you, you pack up, move on, and try out a different location with different customers the following week. It really is that simple.
Which type of market trading should I try? The easiest form of market trading to start with is car boot sales. A proportion of the sellers at each car boot sale will be new sellers, unsure of what they are doing or where to go, so starting here should not be that daunting. However, car boot sales are not great places to sell jewellery. Customers who visit car boot sales are looking for bargains. They often are unwilling to pay the true value of items, and so cannot be relied upon to bring in real profits.
So why do I recommend you start here? You need to get a feel for markets and market selling. You need to become comfortable turning up at a new location with a car full of jewellery and setting up in the early morning. And you need to get used to talking to customers about your jewellery. You will meet a lot of people at car boot sales, and many of them will stop and browse your selection. The downside is, they won’t buy. I’m telling you this as clearly as I can, because you need to understand the mentality of car boot buyers, and not assume that they are a true reflection of consumers as a whole. You could very easily visit a car boot sale, set up your little stall, stand in the cold all morning and into the afternoon, talk to hundreds of women, many of whom love your jewellery, and sell absolutely nothing. Be prepared for this. What you should take from two or three car boot sales is the experience of setting up, and the knowledge that lots of women have liked what you are selling. What you should not do is draw false conclusions that lead you to assume you are overpriced, or that your jewellery business will simply not work. Try the car boot sales, make very little money, and then move on to the craft fairs or the summer or Christmas fairs. Use the car boots as a training ground, and then graduate to the real markets. This is where the money is. After you’ve done a few fairs, and made some real sales, you might want to look into regular weekly markets, but you don’t need to do this straight away. The variety of fairs and events occurring each year is huge, and you can make a good living solely from selling at these events. Starting out as a market trader is cheap and easy. Initial outlay is little more than stock and display items. You can test the market without re mortgaging your home, and you are not committed to your business for any length of time if it proves to be unsuccessful. It might not impress your mother in law, and you are unlikely to feature in the local newspaper, but these are the only real downsides. What if you feel intimidated by crowds and cold mornings? What if the outdoor life is simply not for you? You could try the Jewellery Party route.
Jewellery Parties Most women have been to a sales party of one sort or another at a friend’s home. It may have been a jewellery party, it may have been a party featuring sex toys, or it may have been a Tupperware party back in the 1970s. The model is well established and it’s not going anywhere any time soon. It works. At its most basic level, a jewellery party is simply a small version of a market stall, hosted in someone’s house and featuring a captive market of potential customers, all of whom will be carrying cash with the intention of buying something, and all of whom will feel a certain obligation to buy at least one item from you. When it comes to sales opportunities, it doesn’t get much better. How much you sell at a party, and whether you get invited back, depends on you and your jewellery.
How does it work? Jewellery Parties are ideal start up businesses for women, particularly for women who are not in a position to work regular hours due to family or other commitments. Parties take place in the evening, and run for only a few hours at a time. If you are unsure about whether your new business will succeed or not, or you need to maintain a day job while it gets off the ground, a jewellery party business is ideal. It works like this: You find a hostess, someone who is happy to have you in their home selling your jewellery. The hostess invites her friends, family and acquaintances to the party, where wine and other alcoholic beverages are often consumed in large quantities. You arrive an hour or so before the guests, set up your tables and jewellery displays, and wait for your potential customers. Many jewellery party organisers work for large party plan companies, and offer only the jewellery provided by that company to their customers. They stock a number of items themselves, and offer other items for sale via a catalogue, taking payment there and then, and ordering from the company after the party ends. Essentially, these women are little more than sales people, working on a commission basis for the larger party plan company, who make the real money. A number of women mix and match their jewellery, ostensibly working for the party plan company, but also selling other lines of jewellery they source elsewhere. The party plan company’s name is often a help in setting up the initial party and tempting the hostess, but the real money is made on the externally sourced stock, on which profits tend to be far higher.
The true entrepreneurs bypass these companies entirely, and source all their jewellery themselves. They manage their own parties, find their own hostesses, and build up a client base over time and through recommendations. These are the women you should strive to emulate if you feel that jewellery parties are the route you wish to go down.
What are the costs involved in becoming a Jewellery Party Organiser? Assuming you are going it alone, and not becoming a poorly paid consultant for another company, your start-up costs will be quite low. Similar to market trading, you will need a fold up table or two, along with various display items such as velvet covers and busts. You will also need some business cards to hand out to as many guests as possible. Business cards will prove to be your life blood, as they are where your future parties come from. If your stock and presentation impresses people, they may want you to host a similar party at some point in their own homes.
And that is pretty much it. As with market trading, there are no utility or rental costs. Your biggest and most regular expenditure will be on stock and packaging, all items for which your customers pay you directly. Jewellery parties are an ideal entry point to someone who wishes to become a jewellery retailer. They allow you to learn which items sell well to which sorts of people, and they allow you to build up relationships with suppliers that can be used later if you decide to
branch out from parties and start attending fairs or markets, or even if you decide to open a bricks and mortar shop at some point in the future.
Is there a downside to Jewellery Parties? Well, yes. The potential earnings from a good jewellery party are considerably lower than what can be made at a busy fair or market. While it’s true that you do have a captive market, that market is quite small. At your best party, you’re unlikely to turn over more than £1000. A more modestly attended party could yield as little as £500. When costs are factored in to this, profit is not huge. But having said this, jewellery parties do provide many women with a lucrative sideline income, especially if they manage their stock right and don’t try to sell the same stock to the same women again and again. I’ll be discussing this in more detail later, but fresh stock is the life blood of all jewellery businesses, and failure to introduce new lines is one of the most common reasons jewellery party businesses fail. We’ve gone from a shop on the high street, to a market in the open, to a home in the suburbs. Can we possibly lower the entry point for jewellery retailer any further? The answer is yes, we can. The Internet has created the armchair business woman, and it is to her that I now turn.
eBay and eCommerce The Internet has lowered the barrier to entry for new businesses to the extent that you can begin trading online under a new business name within hours. Sadly, this is exactly what many people do. There is an assumption that just because a particular business model is now possible, that it will also be profitable. This is not true. In all key respects, trading on the Internet is no different to trading anywhere else. In the case of jewellery, you are still selling a physical product to real people. You are selling necklaces, rings or bracelets to women who intend to wear them, just as you would at a jewellery party, from a market stall, or in a shop. You need to build relationships with suppliers as you would if you were selling through any other medium, and you have to deal with customer problems and issues as they occur. The Internet has made it easier to get started, but it hasn’t made it easier to be successful. If you are the sort of person who works hard, has an eye for detail, and doesn’t expect anything for nothing, then you have as great a chance of running a successful online business as you have of running a successful market stall or shop. If, on the other hand, you are considering selling online because you perceive it to be easy, then you are doomed to failure. The only positive piece of advice I can give you is that your failure is unlikely to involve losing the kitchen sink. Unless, that is, you’ve been seduced by the prospect of the easy money to be made by sourcing stock from China - more on that later. There are many options when it comes to selling online, but I’m going to highlight two in particular, as they are the two that seem to attract jewellery retailers most often. The first is eBay, and the second is setting up your own eCommerce site.
What is eBay really like? eBay is a flea market. eBay buyers are very similar in their mindsets to people who buy at car boot sales. They do not want to spend money, and they are looking for bargains. You are unlikely to make much money selling your jewellery on eBay. eBay instils the idea that things have little or no value into the minds of its users. It helps create the impression that everything should be cheap, even when it’s not. If you attempt to sell jewellery in this sort of market place, one of two things will happen. You will either be forced to lower your asking price in order to attract customers, thereby decreasing your profits to the extent that you will be working for less than minimum wage, or you will have no customers.
While it’s true that eBay is responsible for a huge volume of online sales, in real terms it only accounts for a tiny percentage of those sales. The potential market beyond eBay is far more vast than you might have realised, and it is only getting bigger. eBay has passed its peak, but eCommerce itself is maturing and growing every year. If you really are determined to try your hand at online sales, you should look to setting up your own website, and not attempt to compete with other eBay sellers by racing to the bottom in a price war.
Setting up an eCommerce Site This is not as simple as it sounds. Yes, there are quick and easy routes to setting up an eCommerce website. But a website that nobody visits, or that those who do visit are not prepared to buy from, is a wasted effort. Here’s a rule of thumb for eCommerce: if it’s cheap and easy, it’s worthless. Successful websites, just like any successful business, can make a lot of money. Professionals who can design and build successful websites are therefore in high demand, and their charges attest to this. Website designers, SEO experts, web programmers, database experts, online marketing experts - all are highly skilled jobs and all command a high wage. If someone is offering you these skills at rock bottom prices, then you should be asking why. Why are they offering to build you an eCommerce website for £500 when somebody else is asking for £5,000? Surely if they were any good, they too would charge £5,000 too. You know the answer to this already: if it’s cheap and easy, it’s worthless. There is a perception that all websites are somehow equal because they start from a blank page or a simple web address. Are all shops equal because they occupy buildings? Are all paintings equal because they start from a blank canvas upon which colour is applied? Yet somehow, the idea that building successful websites is easy and should therefore be cheap has taken root in the minds of many non technical business people. Your fifteen year old cousin may have designed a website for his favourite band in his spare time, but that doesn’t mean that he can design a jewellery website for you that people will be happy to give a credit card number to. That doesn’t mean he can write copy that attracts customers and search engines alike. That doesn’t mean he can take quality photographs of your colourful necklaces and watches. For all this, you need professionals. And professionals cost money. Yes, you could start off with a cheap and cheerful eCommerce site designed for £500, but I’ve seen this happen time after time, and it always ends the same way. Picture this: Sarah can’t afford to have her website done properly, so she uses a guy she found on an online forum who says he can do the whole job for £500, and he’ll include all that SEO stuff she doesn’t really understand as well. Two months later, the site is ready. It’s an open source osCommerce site that looks just like many other small eCommerce sites that Sarah has seen but never bought from. She creates her categories and adds her stock. The images
don’t display very well and appear distorted - they’re all longer than they should be, and when she clicks on a picture to enlarge it, a pop up dialog appears with the same distorted image. She adds an item to her shopping basket and goes to check out, only to be faced with a big red and yellow warning screen saying something about Danger and Security Certificates. She emails her website guy and he replies back saying something about SSL and that’s the way the picture is supposed to be and what sort of camera is she using. Eventually Sarah gets the bugs sorted out, and starts running a Google Ad campaign to get customers in. But she can’t afford the £0.70 per click that Google wants in order to put her ad near the top of the first page. Instead, she offers £0.15 a click, but over time nobody clicks on her ad, so she adds her website address to her signature on forums, and mentions her site on Facebook and Twitter. There are a few visits but no sales. Six months after her website goes live she shuts it down. She’s had one sale, from her mother, and no interest from anyone else. Sarah concludes that eCommerce is over rated, that she chose the wrong jewellery and needs to find new suppliers, that SEO is sown up by all the big companies, and that Pay Per Click advertising doesn’t work. She considers herself lucky she didn’t give up her day job, or go with that professional website development company who wanted to charge her £5,000. But what really happened? Sarah’s website, that she paid peanuts for, was the online equivalent of a dirty blanket lying on the ground at a street market, on to which she tossed a few odds and ends then sat back and hoped someone would come along and buy something. And what happened? Only her mother bought something.
Should I try my hand at eCommerce? Not if it’s your first step as a jewellery retailer. And not if you don’t have the expertise required to make proper decisions about how to get that site built and maintained. And not if you can’t afford to lose the money you invest. eBay is for mugs. You will not become successful selling jewellery on eBay. And a good eCommerce site is not cheap. It costs money to design and build. It costs money to get ranked well with search engines. And it costs money on a regular basis to maintain it, update it, and to increase its Google ranking. My advice would be: build your business offline. Learn the jewellery trade offline. When you have mastered your products and your customers, when you have built a strong reputation as a jewellery professional, then look into building a website and leveraging the knowledge you have built up offline into an online arm for your business.
Recommendations for Starting Your Jewellery Business We’ve looked at the different options open to you as a jewellery retailer. But which should you chose? Where should you start? This is a question only you can answer, but I might be able to help you on your way. If you are thinking of opening a shop, ask yourself this: Do you want to open a shop because you like the idea of a shop and the prestige you feel it would bring? Or are you thinking of opening a shop because you want to be successful and make money? Are you more concerned with how you are perceived by others than you are about making money? Do you know, based on retail experience, which lines of jewellery will sell well? If you don’t, then you cannot project potential earnings. Do you know how much a particular item will retail for? If you don’t, then you cannot project potential earnings. Do you know how many paying customers will enter your potential shop? If you don’t, then you cannot project potential earnings.
Reality Check: Shop owners think they are the pinnacle of retail. They often look down their noses at market traders, car boot sellers, and amateur jewellery party organisers. But the figures don’t support this attitude, not by a long way. We supply all of these different types of jewellery retailers. The truth is, many shop owners spend as little as £300 a month on new stock, while many market traders spend over £3,000 a month on new stock, and three times as much in the lead up to Christmas.
My recommendations 1. Do not allow your first entry into jewellery retail to be a bricks and mortar shop. No matter what you feel in your heart, no matter what dreams you may have had, do not do this. You will regret it and you will squander a great opportunity. 2. Do not allow your first entry into jewellery retail to be online. It’s not as easy as it looks, and it can distort your perceptions of value and taste. 3. Stay away from eBay. Nothing good will come from it. 4. Building a successful eCommerce business is hard work, involves a lot of expert knowledge, and costs a heck of a lot of money. 5. Don’t expect to make money at a car boot sale. Instead, use it as a learning and training exercise.
What should you do right now? 1. Buy a fold up table, and pay a visit to a car boot sale or two. 2. Join the National Federation of Market Traders. 3. Go online, and find a list of local fairs across the country that welcome traders. Pack up your tables and your stock, and try one. 4. If you are determined that fairs are not for you, phone a jewellery party organiser and ask them to put on a party in your home. Invite your friends and see how the party organisers do things. 5. Run your own party. 6. Build on the experience and successes of early fairs, markets and parties. 7. Expand your stock range and diversify. We’ll be discussing stock in more detail later. Choosing your business model is one of the hardest decisions you will have to make as a jewellery retailer. Once you’ve done this, you can focus your time and energy on choosing stock and finding suppliers. If you have decided against opening a bricks and mortar shop, you will find that your available capital to spend on stock is far greater, and it’s on stock that you should be spending the bulk of your start-up money.
The Jewellery The most important decision you will make as a jewellery retailer, and one that you will find yourself making again and again over the course of your career, is what jewellery to stock. Choosing the right jewellery is a make or break decision - one on which the success or failure of your business depends. Most jewellery businesses fail, and this is the point at which that failure begins. Without the right stock, it doesn’t matter how pretty your shop is, how well presented your stall, how well attended your parties, or how highly ranked your website is with Google. Without the right stock, you will fail. By all means, spend a lot of time perfecting your displays, researching your market and your locations, and preparing elegant business cards, but the bulk of your time and energy, especially when starting out, should be spent examining different styles of jewellery and deciding what to carry and what to pass on.
Reality Check: Don’t follow the herd. If you make your stock decisions based on what you see in other jewellery shops and stalls, you’ll only ever be one of a crowd, and many businesses in that crowd are not doing well. You need to stand out from the crowd. You need to be different. Look at pictures of celebrities in magazines and on the television. What styles are they wearing? Because this is where the styles that will be popular on the street tomorrow come from.
What sort of Jewellery should I invest in? Let’s assume that you are not opening a high end jewellery shop selling diamond rings and Rolex watches. Let’s assume that you are planning to cater for ordinary women buying jewellery for ordinary social occasions. Women buy jewellery these days the same way they buy a new jacket or a pair of shoes. The market is huge, and is not getting any smaller, and it is this market that most start up jewellery businesses enter. So what options are open to you?
1. Costume Jewellery
Sometimes known as fashion jewellery, costume jewellery is the mainstay of most small jewellery and accessory businesses. Suitable for all occasions and spanning every conceivable price range, this jewellery should and no doubt will form the core of your business. Costume jewellery is made from non precious metals, beads, glass, and at times, plastic and other synthetic materials such as cubic zirconia (fake diamond). It includes necklaces, bracelets, rings, and earrings. The pictures below are examples of what constitutes costume jewellery, and highlight the variety open to you as a retailer. Every one of these was a top seller for in 2010 for Nirvana Wholesale.
2. Sterling Silver
While most precious metal jewellery should be avoided due to cost and the expertise required to correctly identify its calibre, this is not the case with sterling silver jewellery. Compared to gold, silver is relatively cheap. The retail prices of a silver necklace and a fashion necklace made from synthetic materials are often quite close. Why should you stock silver jewellery? Customers like it. It’s simple, elegant, and unlike costume jewellery, rarely goes out of fashion. Silver rings set with cubic zirconia are timeless, as are plain silver bracelets. Additionally, silver jewellery is immensely popular with customers who have nickel and other allergies, as there is no danger of an allergic reaction - something that is often cause for concern with costume jewellery.
Ladies watches are now treated as just another item of jewellery. Where once women owned one or two watches, shoppers today view watches as a fashion accessory and often have as many different styled watches as they do bracelets.
Reality Check: Be careful when sourcing watches from suppliers, as poorly built watches are common. My advice is to stay well clear of low priced watches, and enter the market at the mid price level. If you’re paying less than £5.00 wholesale, then chances are you are going to have a problem. Customers are quite comfortable spending £20-£30 on a new watch, so aim for this segment of the market.
When starting out, stay away from children’s or men’s watches. There is always a temptation to try and capture a piece of every market, but the reality is ladies watches and jewellery out performs men’s and children’s by a huge margin. Trying to cater to men and children will only dilute your displays.
4. Hair Accessories
Walk into any accessory shop on a high street and you will find more hair accessories than jewellery. And most of what you see on display could be charitably described as cheap and tacky. Do not attempt to compete with these shops on this level. The dumbing down of hair accessories is one of the great travesties of the jewellery business, but it is one that I believe will not last. There is a major gap in the hair accessory market, and it is in quality items. Walk into any bridal shop and you will be faced with a different selection entirely, priced at a much higher level. This is the market segment you should be focusing on if your intent is to make money and improve your business. The £2 pack of five hair bands is for dummies. There is no money to be made here, and attempting to do so will sap your will. Look instead at the £20-£50 retail price range, examples of which can be seen below.
Many jewellery sellers also sell handbags, and there is a reason for this. Customers who buy jewellery also buy handbags, and they do so when in the same frame of mind. Should you enter the handbag market? My advice would be yes, but not straight away. Build up your jewellery, watches and hair accessory collections first. Get this right, and then consider branching out into handbags. 6. Gold and Precious Stones
No. Stay away from gold, both the precious metal kind and the cheaper gold coloured fashion jewellery kind. When selling gold, platinum or diamond jewellery, a whole different level of expertise is required, and that is not something you can pick up on your own.
Summary When starting out, you should not be putting your fingers into too many different pies. Keep it simple, get each step right first, and then move on to the next. Start with a strong selection of costume jewellery, preferably lines that nobody around you is selling, and add some tasteful sterling silver rings, bracelets and necklaces. This is the core of your business, and you should compliment it with only a small selection of quality watches and hair accessories. And then you should stop and take a breath. Build up these four areas until you are confident that your stock is right, and that your suppliers are up to scratch, and only then consider branching out further.
What price range should you target? At the beginning of this book, I said that some of the advice I was going to give you would be controversial. We’re now entering territory where my advice will fly in the face of established wisdom. My own experience in the jewellery business is as a retailer for many years, and as a wholesaler and importer supplying retailers of all kinds. I know what sells, and I know what makes money. And more importantly, I know what does not sell, and I know what does not make money. The first thing you need to understand about jewellery is that it’s not about price. When women decide what necklaces they are going to buy, that decision is not based on price, not when it comes to costume jewellery or jewellery that retails at less than £50. When buying an engagement ring for £500 or £5,000, price plays a major part. But when buying a necklace to go with a new dress, when the choice is between a £10 necklace on a display at River Island and a £25 necklace hanging from one of your displays, the decision is based on which necklace they prefer. It’s that simple. At this price point (the cost of a new pair of jeans), women do not buy on price. If they are buying for their ten year old daughter, then yes, price does come into it. If they are buying a gift for somebody else, then here too price plays a part. But when buying for themselves, as long as an item is affordable, they make the decision based on what they like. What does this mean for your business? This means that you should stay away from the bottom rung of the ladder. Do not stock and do not sell junk jewellery. Leave this to the eBay sellers, the chain stores, and the stall holders who flood each car boot sale and market, each selling the same items at the same bargain basement prices. Target the middle to top end of the fashion jewellery market. Aim to sell quality, unique items, at middle to high prices. Believe me, it is no easier to make a £4 sale than it is to make a £24 sale. But once that sale is made, the higher priced item will bring in five times as much profit.
But expensive items cost more to buy This is true. But the reality is, you won’t need to buy so many of them. Consider two clothing shops: one cheap and cheerful, with clothes piled high to the rafters, the other elegant and discerning, carrying only a small number of items, all displayed with plenty of room for shoppers to walk around and view them. The second shop may be selling far more expensive items, but they don’t need to stock very many.
This is the model you should adopt for your jewellery business. Think quality rather than quantity. Far better to have a display containing only thirty unique and fashionable necklaces, than a cluttered display housing two hundred lines of junk jewellery priced at only a few pounds each. But don’t panic, every item does not have to be expensive. You can always populate your displays with a small number of cheaper lines: £12 necklaces or £8 fashion rings, for example. Cheaper items do occasionally pull in customers, who then go on to treat themselves by buying your more expensive lines. And when it comes to your expensive items, try splashing out on two or three large signature pieces that really catch the eye. There’s nothing better than unusual pieces of costume jewellery to pull in the customers. You don’t even need to sell these pieces. Their job is done when that customer walks in the door. Below are two examples of eye catching pieces that would make you stand out from the crowd.
Jewellery Stock Mistakes – What Retailers Do Wrong The most common mistakes made by new and established jewellery retailers are made when it comes to stock and pricing. If you avoid these mistakes when starting out, you will find yourself well positioned to compete with even the best jewellery businesses. 1. Sourcing stock based on Price
Let me tell you a story from only last year. A new customer placed their first order with us. It was a good sized, respectable order of over 200 items, mostly necklaces and fashion rings. After viewing the details of the customer’s order, I knew that we would never see that customer again, and I knew that within a year they wouldn’t be in the jewellery business. There were a one hit wonder. How did I know this? They bought based on price. They bought over 200 lines of necklaces and fashion rings, and they bought only from the lowest price blocks available in our wholesale catalogue: £1 necklaces and £0.30 fashion rings. There’s nothing wrong with these lines in small doses. They sit well in the middle of more expensive items, and they do sell - in small doses. But when this is all you have in your jewellery display, when your customers are forced to buy cheap and only cheap jewellery, you can kiss your business goodbye. Retailers who buy only cheap lines will not succeed as well as retailers who buy more expensive lines. And the reason for this is that women shoppers want the better lines. These retailers may not realise it, because they’ve always bought based on price, but their customers do not want cheap necklaces retailing at £5 or £6, they want stylish, classy necklaces that their friends will notice, and they’re willing to pay £20 or £30 or more for them. We have regular customers who started off buying cheap items every couple of months. Then one month, for whatever reason, they added a few necklaces at £5.50 each. And a week later they’re back, and they’re spending a couple of hundred pounds on the top end of the catalogue. Then they come back for a third time and they order in volume, probably for the very first time in their lives, and it’s all high end stuff: chunky, colourful necklaces, heavy metallic necklaces, charm bracelets at £5 each, expensive fashion rings, and heavy sterling silver bracelets. Why? Because the more expensive stuff sells! This belief that price matters is ingrained far too deeply in some retailer’s minds, usually those at the very bottom rung of the ladder or those just starting out. But the reality is, if they ever want to move beyond that bottom rung, they need to realise that Jewellery is never
about price. So what should that retailer have done if they wanted to succeed? They should have chosen 40 expensive items instead of 200 cheap items. 2. Not updating stock often enough
Sterling Silver Jewellery is timeless. Whether it’s a ring, a pendant, or a pair of earrings, last year’s fashions will look just as good this year. The same cannot be said for costume jewellery. I estimate that costume jewellery has an in-fashion life span of about 4-6 months. What was popular last year, simply will not sell this year. What sells well in the summer will not sell in the winter. You need to change and update your stock frequently. Just because a particular range sold well at last year’s Christmas Fair, does not mean it will sell well this year. If you try to sell the same items to the same people again and again, your customers will stay away or your party attendances will get smaller and smaller.
3. Following trends rather than setting them
When everyone is on the bandwagon, that’s a good sign that it’s time to get off. Just as when everyone is investing in property, you can be sure that the next slump is around the corner, so too when every jewellery shop and stall is selling the same styles, you can bet that that particular style is not long for this world. Time after time, we hear from retailers who bought items months ago, asking when we will be getting more of a particular necklace or bracelet that sold so well. The answer is, we won’t, and neither should they. Jewellery retailers should be telling their customers what’s fashionable, not expecting to be told. They should be setting the trends, not hawking last year’s fashions. Leave your competitors on the band wagon, and search out new styles. It’s far more profitable, not to mention satisfying, to be selling fresh styles that nobody else has yet, than to be selling the same old stock that everybody around you is selling. 4. Trying to please too many different people
There’s an old saying that you can’t please everyone, and that when you try, you end up pleasing no one. You should take this to heart when starting your jewellery business, and in particular when you are sourcing your stock. Who are you selling to? Who are your customers? If you plan to sell to everyone who wears jewellery, and your customers will be women of all ages, men and children too, then you need to take a step back and rethink your business model.
If your target market is young twenty something women, looking for fashionable, colourful and original jewellery - women who want to stand out from the crowd and be noticed - then all your purchasing decisions should be built with that woman in mind. If you are looking to sell to middle aged women - who tend to have deeper pockets and more elegant tastes your buying decisions will be different. Brides and bridesmaids? Goths and emos? Children and teenagers? Men buying presents for wives and girlfriends? Picture the person who will buy that necklace, that watch, or that ring. Picture this person before you buy your stock. Do they fit your customer base? Because if they don’t, you should consider buying something else. The amount of jewellery shops I’ve seen that have a little of everything is simply disheartening. Men’s watches? Children’s rings? Bridesmaid’s bracelets? You need to focus your mind, and you need to focus your buying decisions. Pick one customer, and buy only for that customer. Otherwise, you’ll end up with a range of jewellery that is so diverse it pleases no one. The end result of which is no one talks about you, your shop, or your jewellery to their friends and your business wallows in mediocrity, just like so many other jewellery businesses.
5. Not being adventurous enough
There is a place for conservative jewellery. It’s at a job interview. Every woman has one simple necklace she can trust will not get her into trouble at a job interview. But if this woman buys a lot of jewellery, she will only have one of these pieces. You should not be stocking more than a handful of safe and unassuming necklaces or bracelets. Because a handful is all you will need, and nobody will ever buy more than one of them. You need to be adventurous. You need to buying bright colours, big, garish necklaces, unusual rings and extravagant hair accessories. This is what women want, or at least it’s what women who spend a lot of money on jewellery want. They want to be different; they want to be noticed; they want their jewellery to draw stares and comments from friends and strangers. None of which will happen if they buy your dull, uninspiring lines of everyday, regular jewellery that they can find in every high street chain store and every jewellery stall at every market across the country. You need to get into the habit of taking risks and trying out new styles, even it means not purchasing items you know to be strong sellers. Regular, repeat customers are far more valuable to your business than new customers who may buy from you only once. And how do you keep these regular customers happy? You buy new, fresh, exciting styles. Be adventurous.
6. Letting grey haired men make the buying decisions
I am a grey haired man, I admit it. And I cannot pick jewellery that women want. I just can’t do it. But I don’t have to, because I am not a jewellery buyer. Our buyer is a thirty year old woman who knows fashion. She can look at a necklace and know immediately if it will be popular with the woman on the street, and if they will be prepared to pay what is required for it. And she is almost never wrong. One time in a hundred she will choose a dud that for whatever reason fails to sell, but the other ninety nine times she chooses strong sellers. There are times when I would look at what she is selecting and say: “There is no way that will sell” or “Nobody is going to buy that.” And it is invariably that style of necklace that will become the year’s best seller. Men can’t buy jewellery that women want to wear, it’s that simple. Don’t believe me? Years ago, when I worked retail, the week leading up to Valentine’s Day was when we got rid of our dullest, most boring women’s watches and necklaces - the drab grey stuff that women simply refused to buy for themselves at any time of the year. Men arrived in their droves to buy these items. No doubt there was many a fake smile on Valentine’s morning, with promises of saving it for a special occasion, because it was too good to wear every day. Translation: she hates it but doesn’t want to say so. That same male inability to buy women’s jewellery extends to retailers sourcing jewellery from wholesalers, and wholesalers buying from manufacturers. I can spot male buyers by looking at the contents of their order. It’s not that they buy greys and blacks (women jewellery sellers buy a lot of these too); it’s the absence of any strong colours and styles. Our male buyers rarely buy pink, orange, or blue jewellery, and they rarely buy large, gaudy items. It’s as if their courage runs out after one or two red necklaces. If you’re a man entering the fashion jewellery business, you’re in for a rough time, and the saddest part is you won’t even realise what you are doing wrong. If you’re a woman in partnership with a man, make sure that you decide on style and colour. Argue over cost, by all means, but do not let a man have any say in the selection process. 7. Buying for yourself
You are not your customer. No doubt you have your own style, but this should never interfere or influence the jewellery you decide to sell in your shop. If you are a twenty five year old woman, you may decide to target similarly aged women as part of your business, but there is huge variety in the tastes of twenty five year old women. If you choose to buy only jewellery that you would be happy to wear yourself, you will find that you are missing out on a huge segment of the market. You should ignore your own personal likes and dislikes entirely and be guided in your purchase decisions solely by what actually sells and what is more generally fashionable in society as a whole. While it’s very possible that you decided to open a jewellery business because you love jewellery, don’t use that as an excuse to stock your shop or parties with items you wear yourself.
8. Bringing personal taste to the buying table
Following on from mistake number seven, you need to learn how to leave your personal taste at the door. Poor stock choices can be fatal to a jewellery business. Just about everything else can be fixed, but if you are selling jewellery women do not want to buy, all the price reductions, sales, window displays and newspaper adverts will not help you. You cannot sell something people do not want. A couple of years ago I was advising a young woman who had recently started her own jewellery business. She was selling at parties and online, and things were not going that well. So I looked at her stock. It was brown, it was black, and it was silver. When I asked her where all the colour was, she replied that she found bright colours tacky, and that she couldn’t face having to sell pink jewellery all day. It was just too little girly, she said. I shouldn’t need to point out how ludicrous this position was, but she failed to understand that the reason she was not doing well was because she was not selling jewellery that women wanted to buy. She assumed that she had good taste, and that women would benefit from her taste and should welcome the opportunity to buy based on that taste. What she forgot was that every woman has different tastes and styles. They don’t want yours, why would they, when they have their own? So remember, what you like doesn’t matter. You are not your customers. And please, whatever you do, remember that most women really do like colour - even pink. 9. Under pricing
Charging too little for your jewellery is a mistake common to market traders and internet sellers (eBay sellers in particular). If you charge too little, your customers will be happy, but your bank manager will not be. Your objective should not be to break even, it should be to make a profit, and a substantial one at that. Your pricing should reflect this. When working out a retail price, a number of factors come into play. The most obvious are your own costs: wholesale costs, taxes, packaging, displays, rent, etc. You need to add up all these figures and work out the true cost of a particular necklace. The difference between the true cost and the retail price is where your profit lies. Say for example that you calculate the true cost of a necklace that you bought wholesale at £4.50 to be £7.75. Not unrealistic at all. A respectable retail price for this necklace might then be £17.50. If your customers are happy to pay this, then you are on to a winner. You may even decide that it’s selling so well that you could charge more, at which point you’ll be jumping up and down. A common mistake is to take the basic cost price of £4.50, assume that retail mark up should be about 40%, because you read that on an online forum, and set your retail price at £6.50. Which means you will be making a loss of £1.25 on every necklace you sell.
This can happen to new businesses for a number of reasons. Firstly, they fail to identify the true cost of an item they are selling. Secondly, they fail to correctly gauge the market, assuming that because a jewellery seller down the road is selling junk jewellery in the £6 range, that this is the only price the market can stand. And finally, they undervalue their own stock. This retailer may have been happy to pay £17.50 for this necklace herself in somebody else’s shop, but because it is hers, she assumes it is worth less. This happens far more often than you might expect, and retailers who fail to learn from this mistake early on, will find themselves out of business very quickly, often not understanding why, as the jewellery may have proven to be very popular with consumers. The lesson here is: understand the real cost of every item you sell, and set a retail price as high as the market can stand.
10. Over pricing
While under pricing is a mistake made by one section of new retailers, over pricing is common amongst a different section: in particular, jewellery party planners and bricks and mortar shop owners. What happens is this: a jewellery party organiser hosts her first party, usually at a friend’s house. She invites all of her friends and family members and arrives early to set up, having spent many weeks preparing: sourcing the perfect stock, buying tasteful packaging, and getting her display ready. And she does really well, turning over more than £1,000. A week later she runs another party, this time at the home of a casual acquaintance. She doesn’t know anyone at the party, and sales are dismal. What went wrong? Family and friends are not a good barometer of the market place. They will often feel obligated to buy something from you, or tell you that they love your stock not because they do, but as a show of support. The fact that a party attended by a large group of family and friends did well is no indication that you have gotten your stock right, and it is certainly not an indication that you have gotten your pricing structure right. I have known jewellery party organisers who would have attempted to sell that original £4.50 necklace for £30. And while their mother may have bought one, nobody else will. Over pricing is a problem that also happens to shop owners, and often not at the early stages. Shop owners, especially gift or shoe shop owners who are not solely reliant on jewellery sales to keep their doors open, have a habit of over pricing. They wrongly assume that because a necklace might retail at £15 on a market stall or at the Christmas fair, that they should charge £25 because they are a real shop. This sort of mentality is far from uncommon amongst shop owners, and is one of the reasons so many traders can outperform their bricks and mortar competitors. 11. Poor Presentation
Two things make you stand out from the crowd: the uniqueness of your stock, and
your presentation. One without the other is a recipe for failure. It doesn’t matter how good your jewellery is if it’s displayed in an unflattering manner. And it doesn’t matter how fancy your display is, it will not help you sell junk jewellery. By showing your goods off at their best, and making it as easy as possible for people to try them on, you make the buying decision that little bit easier. You’re not fooling people into buying something they don’t want, what you are doing is removing some of the barriers that may prevent them from buying in the first place. Some time ago I was browsing jewellery auctions on eBay, and something struck me about many of the auctions I visited: I was unable to work out if I actually liked any of the jewellery on offer. Now, chances were that much of that jewellery was good stock, but the quality of the displays and images were such that I simply could not decide. And this does not only happen in the online world. Not long ago, walking through one of Ireland’s larger indoor markets, I was drawn to a small stall tucked away in a corner. The stall owner was selling French Ikita jewellery (I won’t even speculate as to how he got hold of it), and every single necklace was sitting in a large pile on a flat table - tightly wrapped in plastic. Despite the popularity of Ikita, no one was stopping; and no one was stopping because most people didn’t even realise he was selling jewellery. With a proper display, and a little effort, this could have been the most popular stall in the market. Instead, the owner packed up and went home early, probably never to return - no doubt telling his friends that Irish women just weren’t interested in jewellery.
How to Display Your Goods There are two things to know when it comes to setting up your display: Firstly, you need some props, and secondly, you must give yourself enough time. If you’re planning a jewellery party that kicks off at 8pm, get there by 7pm, and spend that extra hour laying out your stock so it looks as attractive as possible. A whole industry exists to make this easier for you. Whether you’re selling necklaces, bracelets, earrings, or rings, careful use of props can present them in such a way that will remove indecisiveness from your buyers. Be sure to take everything out of its plastic wrapping, and get that wrapping out of sight, preferably under a chair somewhere. Necklaces should be displayed on proper necklace stands that allow people to picture them around their own necks.
Bracelet displays should show each piece from many different angles, giving buyers the opportunity to see how they hang from a wrist, as well as how they compare to other styles. Do remember to make it easy for your customers to try on each item.
Earring displays are often forgotten, but it is very important for people to be able to see how they hang. Unlike bracelets and necklaces, they are rarely tried on, so your display must present a good picture of how they would look when worn.
Displaying rings is relatively straight forward, and because they are so small, setting up a large and varied display is not difficult.
The props shown in the photos above can be built up over time, and the decision as to which should be used for a particular display is something that will get easier as you gain more experience. I would suggest however, that you not overdo it - start small, and work up. Very large, cluttered displays are almost as bad as no display at all. Careful use of props and elegant displays can have a major impact on sales, but it doesn’t stop there. Once the sale is made, you have a final opportunity to impress your customer and make them want to come back for more. This opportunity lies in how you pack your goods.
Do you normally drop those sterling silver necklaces into a paper bag and move on to the next customer? Why not box the necklace instead? There are a whole range of packaging options available to you, with different boxes and bags designed specifically for rings, necklaces, and bracelets, in many different styles and colours. And they do not cost an arm and a leg either. The question you should ask yourself is how do you want your customers to look at you and your business? Do you want them to see you as a pile-them-high discount store - cheap, drab, and crowded? Or do you want them to picture you as a fashionable boutique - elegant, tasteful, and a pleasure to visit?
A retail business lives or dies on the back of its suppliers. Without good suppliers providing quality, sought after items at affordable prices, you don’t have a prayer of getting your business off the ground. When you find a good supplier, they will become your most closely guarded secret. So where are these suppliers? How do you go about finding them? The Internet has changed the face of retailing, and it’s in the process of doing the same for wholesaling. The traditional route to sourcing suppliers is fast being replaced by new methods. This is good news for start-up jewellery businesses. The Internet levels the playing field, allowing a small retailer in the Shetlands easy access to wholesalers at the other end of the country, something that twenty years ago would have been impossible. At the same time, the Internet has given rise to a raft of new wholesalers - wholesalers who operate online only, and come with few of the problems and difficulties that accompany the more traditional and established wholesalers. Let’s start by looking at the traditional wholesalers. But you’d better hurry, because these sorts of companies will probably not be around for much longer. 1. Wholesale showrooms and sales reps
There are two traditional methods of sourcing jewellery from wholesalers. The first method, most widely used by small, independent retailers, is to visit a showroom of one of the many established wholesalers in person. The second method, more common amongst larger shops, is to have a rep from these same wholesale companies pay you a visit with a collection of catalogues and samples. The problem with both of these methods is you’re very limited in the number of wholesalers you can see, and in the new lines of jewellery you can find. Where does this jewellery come from, and is any of it worth buying? An important point to note about your average jewellery wholesaler and importer is that they are unlikely to ever have visited the manufacturer of the products they sell. They usually order from a catalogue that hasn’t changed in years, content in the knowledge that all of their competitors are doing the same. Years ago, when I worked retail, we’d get a visit a few times a year from the sales rep of a big jewellery importer, showing us their new stock catalogue. The new stock was little
more than the old stock in different colours, a fact that failed to generate even a hint of embarrassment when it was pointed out to him. Do not expect any unique or particularly interesting designs from these sorts of wholesalers. They rarely change their stock, preferring to continue selling what was popular in years gone by. A walk down the aisles of any of these large wholesale warehouses can be a depressing experience. If you ever wondered where the 101 jewellery sellers at every market you visit buy their jewellery, this is the place. If you choose to buy in these places, you will become just another in the long line of small time, barely scraping by, jewellery sellers who dot the markets and car boot sales. If you come across a wholesaler who sells jewellery that looks completely different to everyone else’s, then hold onto this supplier as if your life depended on it. Chances are they are one of the very rare few who actually deal direct with manufacturers on a regular basis. This means that they could easily be the only supplier in the country with those particular styles.
2. Trading Magazines
Twenty years ago, The Trader was the magazine to buy if you were looking for suppliers in the UK and Ireland. Every wholesaler was in it, and it could take you all day to get through. Those days are long past. Today, The Trader is a shadow of its former self, boasting only a fraction of the page count from years gone by. The wholesalers who continue to advertise in magazines like this are the same traditional wholesalers mentioned above. New wholesalers are bypassing these magazines and advertising directly on the Internet. Avoid trading magazines. 3. Trade Shows
Trade shows are one of the few traditional methods of finding suppliers that has not suffered through Internet competition. Shows such as the Harrogate Home and Gift Show and the Spring Fair in Birmingham are frequented by all of the big, established wholesalers, and a large number of the newer online suppliers. Is it worth a trip? Yes, it is. It’s worth going to these shows simply to see what is available. What are suppliers pushing forward as this year’s fashions, and does it look exciting or old hat? And how do they compare with each other on price? Don’t place any orders at these shows, no matter how hard the sales men push you. Use it as an opportunity to see what’s out there. And don’t expect every wholesaler to be there. We rarely attend trade shows. Indeed, some of our busiest weeks occurred just after a big trade show has ended, as customers failed to find anything new at the shows, and returned to place orders online.
Sourcing Wholesalers Online The number of wholesalers, both new and established, that have an online presence is growing every month. And retailers who look online can often find new and exciting lines of jewellery that can be difficult, if not impossible to source elsewhere. Online businesses are more than simply arms of already established businesses. In many cases, the best online companies do not have an offline presence at all. Companies such as Amazon and Dell started online, and continue to sell only online. The wholesale jewellery business is no different. While it is true that many of the wholesale companies with large showrooms and sales teams do have websites, they are rarely numbered amongst the best online jewellery suppliers. Running an online business is not the same as selling from a showroom, or having an experienced sales rep sit in front of a customer for two hours pushing the merits of their necklaces or bracelets. Online, the quality of the jewellery needs to be good enough to sell itself. The customer is in control at all times, and can leave at any moment. They are competing with 1001 other online wholesalers, many of them selling similar lines at similar prices. Established, bricks and mortar wholesalers have no advantage in the online world, where everyone operates at the same level. Only a small percentage of jewellery retailers have yet embraced online purchasing, and it is these very retailers who are finding the best of the new suppliers, and the most original and unique lines of new stock. It’s a well known fact that large, long established businesses are loathe to change. This is as true of jewellery wholesalers as it is of any other business. What this means for retailers, is that if they continue to source their jewellery the old fashioned way, they are in real danger of being left behind. But with so many internet wholesalers to choose from, how do you find the good suppliers? 1. Search Engines - Google
The most common method of finding new jewellery wholesalers online is to use traditional search engines such as Google, Yahoo, or MSN. If you know what you’re doing, and how to interpret the search engine results, then this can be a very effective method. But in order to get the most from these results, you need to understand a little about how Google chooses which sites appear on the first page. Google does not care about the quality of jewellery on offer on a particular website. It does not care about how cheap or expensive that jewellery might be. And it does not care about how extensive or limited the company’s online catalogue is. When you enter a search query such as wholesale fashion jewellery or wholesale jewellery into Google, it returns websites that it feels meet the requirements of your search phrase, and it does this without understanding the words you typed in.
One other factor that plays into a website’s Google ranking is the age of the website. A wholesale company whose website went live 10 years ago will probably rank better than the websites of new wholesalers, even though the older company may be selling out of date lines of jewellery, or may not even have an online shop at all. What this means is that a wholesale jewellery company can climb the Google rankings and appear at or near the top of the first page of results for important search phrases, while at the same time having a limited range of stock, of poor or unimpressive quality, and at prices that are far from competitive. The company may even have ceased trading months ago, but so long as the website still exists, so too will its high ranking with Google. What does this mean for retailers trying to find wholesalers online? It means that you cannot assume that the first page of results returned by search engines is any indicator of the quality, size, or professionalism of the wholesaler. The websites listed may have paid a lot of money to optimising companies to help them reach the top, or they may have simply struck lucky through their use of keywords on their web pages. Now, this is not true in all cases. Occasionally a good wholesaler with excellent stock will reach the front page of Google. But you cannot rely on this. You should never stop at the first page of results. In many cases, continuing on to pages two, three, and four will yield far better results. Most people do not do this, which means that most retailers fail to discover the jewellery wholesalers lurking on page two or three of Google, and make their buying decisions based on those often inaccurate first page results. Google and other search engines also allow companies to run paid for ads that appear after you perform a search. These ads are located at the very top of the page and to the right of the search results, and are often a good way of finding new suppliers that have to yet to rank well, and established online wholesalers who want to be found. The advantage of clicking on these ads is that you know straight away that the company is still in business (they get charged each time an ad is clicked on), and they are confident enough of their stock that they are not afraid to pay you to come to their website - not to be underestimated.
2. Online Directories
There are two types of online directories listing wholesalers: free and fee based. The fee based directories charge you, the retailer, for access to their list of suppliers. The free directories charge the supplier for his listing, and give you free access to those suppliers. Ask yourself this: why would a supplier wish to restrict the number of retailers who have access to their details? This is what happens when retailers are charged for access to supplier information. The answer, of course, is they would not. Wholesalers want to be found; they want every retailer across the country to choose them as their primary supplier. You should stay away from fee based directories. Any money spent on them is wasted money, paid for information that can be had for free elsewhere. Every wholesaler who is listed in these directories will also be listed in directories that do not charge retailers for
access. Free directories are far more popular amongst retailers and for this reason, are equally popular amongst wholesalers. In the UK, the primary free directory for wholesalers is the aptly name www.thewholesaler.co.uk. Its jewellery section is comprehensive, and lists most jewellery wholesalers who supply retailers across the UK and Ireland, even those who may not have an offline presence at all. If you are looking to compare the offerings of different wholesalers, this is a good place to start. An evening spent browsing a long list of wholesale websites can be far more profitable than a week spent walking into show rooms in Manchester or London.
Selling on eBay is a mug’s game. There is little profit to be made and it will quickly destroy any love you may have had for your business. But buying on eBay can, on occasion, be worthwhile. There are a number of sellers on eBay who sell job lots or wholesale lots of jewellery. Sadly, the quality of these items leaves a lot to be desired, and I would not recommend you use any of them. Where eBay comes into its own is in locating suppliers of those extras that every jewellery business owner will need: packets of clasps to replace ones that break, cheap chains, batches of replacement batteries for watches (always a requirement), and scales to weigh your silver jewellery. My advice is to use eBay for sourcing these non standard items, and not to use it as a central avenue for sourcing stock. 4. Alibaba and Chinese Suppliers
Visit any business forum anywhere on the internet, and every day someone will ask about Chinese suppliers or buying from suppliers listed on Alibaba. This is prompted by the extremely low prices on offer, and the potential profits that accompany those prices. First off, there is nothing wrong with jewellery made in China. Chances are, just about every item you sell bar the sterling silver, will have been made by a manufacturer in China. But as a new jewellery retailer, buying direct from China is about five steps up the ladder from where you are now. You shouldn’t even be considering this. I have dealt with Chinese manufacturers and wholesalers for many years. As with any business, some are good, and some are bad, and it takes experience to work out which are which. The first rule for anyone considering buying from China is: You need to go there in person. You need to visit manufacturers and hold their stock in your hand. If you can’t do this, if your business has not reached the level where this expense can be justified, then you are nowhere near ready to buy from China.
What are the problems with Chinese suppliers?
1. Bargain prices come with bulk orders. Forget about ordering two or three of each necklace. Most Chinese manufacturers and wholesalers will not even consider an order of less than two hundred of each item in a single colour. 2. Quality control is a huge issue. It is not uncommon to lose an entire order due to poor quality. If you can’t stomach these sorts of losses, then stay away from China. 3. Forget about refunds or trading standards. None of this exists or applies to Chinese suppliers. If something goes wrong, you and you alone will pay the price. 4. Consistency is hard to find. A supplier who delivered quality items two months ago may fail you completely the next time you order. 5. Websites such as Alibaba are riddled with scammers who will take your money and then disappear. When this happens, you have no come back. Importers who source stock from Chinese suppliers have years of experience to draw upon. They have people on the ground over there whose job it is to inspect each order before final payment is made. They visit each supplier in person when placing orders. And they have the financial resources and customer base to be able to buy in bulk and to absorb any losses that might occur. This is what is required if you wish to deal direct with manufacturers in China. Do not get seduced by the fairy tale stories you read on the internet of retailers who made a killing from dealing with Chinese suppliers. Truly successful retailers do not tell the world about their suppliers, especially not the good suppliers. One in one hundred retailers who attempt to buy from China may strike gold through sheer luck, but the other ninety nine will nurse their wounds in silence, too embarrassed to say anything. Stay away from China. So you’ve found a supplier that you feel is selling just the kind of jewellery you’re looking for. How do you deal with them? And what should you expect?
Dealing with Suppliers
Dealing with a wholesaler for the first time can be a little daunting, especially for new businesses. Unless they’ve come to you by recommendation - highly unlikely, as retailers guard their suppliers religiously - it’s hard to know what to expect. The goods they supply could be first rate, shoddy and broken, or fail to arrive for many months. Firstly, will a jewellery wholesaler do business with you? The answer to this question is usually yes. Jewellery wholesalers are used to dealing with small businesses: gift ships, accessory shops, market traders, and party planners. You will find that they are very much aware that market traders can outperform high street shops, and that start up small businesses are often not VAT registered or work from home.
What to Expect In an ideal world, retailers would buy all their stock from 1 or 2 local wholesalers. The stock would be well priced, come in wonderful designs, arrive in perfect packaging and pristine condition, never break or cause problems for yourself or your customers, and generate healthy profits. But you have to do business in the real world, and in the real world things are never perfect, and expecting them to be is not going to do you or your business any good. The most important thing I learned during my retail years was what to expect from suppliers. When you know what to expect, then you know when there’s a real problem that you need to do something about. When you know what to expect, you know when NOT to get worked up over something that either can’t be helped or isn’t worth the time and effort attempting to fix. The first thing you should expect from your jewellery wholesaler is the items you ordered. This may seem obvious, but the reality is that many wholesalers - not the best ones, of course - do not always send you the precise goods you requested. This may take the form of supplying you with the correct items, but in different colours than those you specified, or in the worst cases, of supplying slightly different items. There are two reasons why this may occur. The first is that their catalogue may have some small print somewhere along the lines of ‘assorted colours supplied’ or ‘items similar to those listed’. This is often done to cut down on extra work for the wholesaler - rather than photographing each item in each colour and variation; they photograph only one, and pick and pack from the larger batch of assorted colours and styles. The second reason is that they may have sold out of the items you requested, and
rather than contact you and tell you, they attempt to pass off similar items rather than run the risk of losing your business. Of course, what they don’t realise is that when you receive the unasked for goods, there’s a very high likelihood that they’ll lose your business anyway. The second thing you should expect is that your jewellery arrives well packaged. This means that each item should be packed separately, especially in the case of sterling silver jewellery which can scratch easily. Items not well packed can be very difficult to unpack, particularly if there are a lot of necklaces with chains or strings involved. There really is no reason for poor packaging. If any of these things happen, you’ve encountered a bad supplier and you should treat them accordingly.
What NOT to expect This is going to be a little more controversial, as many retailers expect the kitchen sink from their suppliers, and when anything goes even slightly wrong, they feel entitled to complain. Firstly, remember that you are not an end consumer. There is still risk associated with your buying, and there are things you must accept as part of the buying process. Firstly, you cannot expect wholesalers to supply you with jewellery ready for immediate re-sale. This means that sourcing packaging (boxes, cards, etc.) is your responsibility. While the jewellery may come packaged, this packaging is not for retail display. You need to do some work in this area yourselves. Secondly, you should not expect perfection. Though good wholesalers check items before they are shipped or as they are unboxed into their warehouse, they don’t spend the same amount of time that you, the retailer, will spend to ensure that quality is 100%. What this means, is that for costume jewellery you shouldn’t be surprised if one item in twenty needs to have a clasp tightened or a stone super glued back into place. This is normal, and in many cases one faulty item in twenty is a good result from a wholesaler. You should only consider sending the item back to the wholesaler if you can’t fix it yourself. If you do start returning items that can be fixed by a single turn of a screw, you’re going to frustrate your supplier, which won’t do you any good in the long run. Only end consumers have the right to expect perfection. In a similar vein, if you’ve received a batch of watches, and some of them do not appear to be working or are showing an incorrect time, then you should do one of two things: change the batteries or reset the watch to the correct time. The wholesaler is unlikely to change the time on a watch they receive, so it will usually come with factory settings. Likewise, a dead battery does not mean a dead watch. In a batch of one hundred watches, five dead batteries would not be uncommon or cause for concern. This does not mean the watches themselves are of poor quality. The point I’m making is that though you can expect good quality goods, and you can
expect the goods to be what you ordered, you need to remember that you’re paying wholesale prices, not retail. The mark-up from wholesale to retail is there in part because of the extra work involved in ensuring each individual item is up to scratch. Within reason, it’s your job to do this.
Minimum Orders Most jewellery wholesalers have a minimum order requirement. This is used to deter retail buyers and to streamline their own processes. The paperwork involved in processing a £20 and a £200 order is often the same, and there is rarely that much difference in shipping costs. Many suppliers are simply unwilling to process tiny orders because the work and cost involved is the same as for larger orders. You need to respect this, and either place an order that meets the requirements, or wait until you are in a position to place a larger order. Phoning the supplier up and trying to get them to make an exception for you will lead to failure and will be a black mark against you in the supplier’s book. Suppliers do bend rules, but they do so for large customers, not small ones. And there is nothing like arguing over the minimum order size to mark you out as a small customer of little value. If you do find a supplier without any minimum order size, or one whose minimum requirements are very low, chances are you’ve stumbled across a small supplier operating from home - they do exist, especially online. There is nothing wrong with this, but you should be aware that they will be unlikely to stock large volumes, which can be problematic when it comes time to re-order popular lines.
What NOT to do You do not want to annoy your supplier. There is nothing worse than finding a good supplier who sells unique items that your customers love, only to have them drop you as a customer after a few orders. In the past, we have dropped a small number of customers, and usually for the same reasons: 1. Excessive returns. If you return items that are not damaged, or that can be easily fixed, you are going to annoy your supplier. And if a higher proportion of your orders suffer from damaged items than the orders of other customers, your supplier will probably blame you, though they may not say so to your face. The end result of this is that they drop you as a customer, and if that happens, there is nothing you can do about it. 2. Abusive phone calls. If a necklace broke after you sold it to a customer, by all means raise the issue with your supplier if you are convinced the item was defective, but be
sure to follow their own returns or complaints procedure. Getting angry over the phone with your supplier is a sure fired way of being dropped by that supplier. You should also be careful about excessive telephone calls. Hounding your supplier about irrelevant issues or asking silly questions that are already answered on their website is only going to annoy them. Recognise your own size. Many retailers, especially those with high street shops, have incorrect opinions about their own size, and their expectations based on that size are unrealistic. If you are placing a £500 jewellery order with a supplier every month, you are not a big customer. You are one of many regular sized or small customers. Do not act like you are a big customer. Do not act like you are a supplier’s only customer. They may be your best supplier, but that does not make you their best customer. What makes you a big customer? In the world of jewellery retail, spending £2000 a month in the first half of the year and £4000 a month in the later months would put you in the top few percent of independent jewellery retailers. Suppliers might give you more leeway if you fall into this category, but if you don’t, you’re just one of a crowd. This is harsh, but true. Remember this, and don’t annoy your supplier.
Identifying Bad Suppliers
Mistakes can be costly, especially when starting out. One of the worst mistakes to make is to find yourself depending on bad suppliers. So how do you vet suppliers?
Sample Orders By far the best way to test a supplier is to place a small sample order. No matter how many times you talk to them on the phone or meet them in person, all you will ever hear is what they want you to hear. Nothing beats that first order for showing you what a supplier is really like. What does a sample order do for you? 1. Allows you to see the true quality of items, which can be different from display quality or catalogue pictures. 2. Allows you to test the speed of delivery. Does your order take three days or three weeks to arrive? 3. Allows you to test the picking and packing process. Is every item you ordered present, and is it well packaged to avoid damage? 4. Allows you to test the after sale and returns process. In the case of damaged items (this will happen, even with the best suppliers), how does the wholesaler respond? Do they answer their phone or email and deal with the issue? You can’t beat a sample order. Everything else - checking company registration and VAT numbers, talking on the phone, checking out their warehouse, sending emails - is worthless in terms of truly testing a supplier. So why do so many websites advise you to do all of these things before ordering? Because they are easy to do, they can be done from the comfort of the chair in front of your computer, and they cost nothing. A sample order costs money, so many retailers avoid this step and instead harass wholesalers for weeks or months before placing that first order. There is no quicker way to annoy a supplier than hounding them week after week, talking up the big orders you will soon be placing, but never actually doing so.
What can go wrong with an order? So your order has arrived. Is it up to scratch? Are there problems hidden away that are not visible at first glance? What should you look for? First of all, you need to unpack everything and ensure it is exactly what you ordered. Not all wholesalers are that careful when it comes to picking colours, and some have a nasty habit of replacing sold out lines with something else. Check this carefully. Secondly, remove items from their packaging and check for breakages. Pay particular attention to clasps and links. A broken item is not necessarily a problem. It could be easily fixed by tightening a screw, using a little super glue, or replacing a clasp with one you bought as part of a cheap multi pack on eBay, in which case, fix the problem and move on. Check that any watches are working, and if not, try changing the battery. Anything that cannot be fixed, put to one side and raise the issue with your supplier later. Next, separate out any silver jewellery. Weigh each item and ensure that the weight corresponds to what you ordered. Silver has a fixed value, and silver jewellery prices are based on weight, not style or design. If the supplier did not specify a weight when you ordered the jewellery, treat this supplier with caution, and check that the silver is hall marked. Remember that just because jewellery might be silver coloured, this does not mean it is sterling silver. Sterling Silver will be advertised as such – if it doesn’t say sterling silver on the website or in the catalogue, then it is fashion jewellery. You will be expected to know this. If everything is in order, congratulations, you’ve found a good supplier. If there is a problem, raise it with your supplier and see how they react. You should simply report the problem, preferably by email, and not get dragged into any arguments. Problems do occur, even with the best suppliers. You need to add up all the costs of doing business with a supplier when you make decisions as to whether you want to use them going forward. It may be that Supplier A is more expensive than Supplier B, but Supplier B is unreliable or doesn’t monitor quality control particularly well. It may that Supplier A sends a lot of faulty items and is slow to handle returns, but their items are unique and your customers love them. All these different issues must be weighed against each other when you make decisions as to who to buy from. And the answers are not always straight forward. You may decide to accept problems with as much as 10% of items from a supplier because their stock is simply too unique to pass up. But hold this thought in your mind: if you cause a supplier too many problems (and problems are defined by them, not you), they will drop you as a customer. So be careful how you deal with problems when they occur.
Is my Jewellery Business in Trouble?
Most of us work day to day or week to week, engrossed in what is in front of us and only thinking about the bigger picture when absolutely necessary. This can make it difficult to see the forest from the trees, especially when you live and breathe your business, and have been doing so for many months or even years. It’s not easy to spot problems when those problems have crept up on you, and it’s not easy to fix problems that you are not sure are real to begin with. The clearest indicator that your jewellery business is in trouble is low or nonexistent profits. But there are other, less obvious indicators that you should be looking out for: 1. Few Repeat Customers
Repeat customers are the life blood of a jewellery business. If your stock is unique and fashionable, customers will return again and again. You will become their first port of call when they need a new piece of jewellery to match that new dress. If you’re not attracting repeat customers, you have a problem.
2. Few Recommended Customers
When was the last time a customer came up to you and said: “My friend was wearing a wonderful necklace she bought off you last...”. If you can’t remember, or if this has never happened, then you have a problem. It means your stock is not standing out. It’s not unique enough to be noticed or for customers to seek you out over. 3. No Passionate Customers
“I just love your stuff. It’s so different.” You should be hearing this every day. If you’re not, there is a very real problem with your stock, and you need to fix it. Otherwise your business will languish in mediocrity, just another small time jewellery business barely getting by.
4. You Are Not Getting Invited to Host New Parties
The best party organisers don’t go looking for business, it comes to them. If you are handing out business cards at your parties and not getting any calls, you have a problem. It could be a problem with your stock, your prices, or the whole package. You need to find out why.
5. Mark-up on Stock is Below 100%
If you’re buying for £2 and selling for £3.50, you have a problem. The mark-up on fashion jewellery in particular can be very high. An item you buy wholesale for £5 plus tax could easily retail for £20. If your margins are tight, either you’re under pricing, or your supplier is over pricing. You need to work out which is causing the problem, and fix it. Most major problems that drag a jewellery business down are related to stock or pricing. If you don’t have the right stock, you will never be truly successful. You may get by, coasting along and breaking even like so many of your fellow jewellery retailers, but you will never stand out from the crowd. And even if you do manage to get your stock right, a bad pricing structure could put you out of business very quickly. Too cheap, and your profits are low, making the businesses unsustainable. Too expensive, and your jewellery will not sell, often leading you to the incorrect conclusion that nobody wants your jewellery. But there are a host of smaller issues that plague the jewellery retailer, some of which I have touched on earlier. Over time, you may fix these problems yourself, but that can take many years of low sales, and struggling to break even. So what are those issues, and what can be done to address them?
20 Things Jewellery Retailers Get Wrong 1. Failing to Source Suppliers of Unique Jewellery
You need to find suppliers of unique jewellery. It’s not easy, and it may involve checking out twenty different suppliers, but this is the key to success as a jewellery retailer and cannot be overstated. Nobody wants to be one of a crowd. Every woman wants to be unique. 2. Failing to Stand Out From the Crowd
Be different. If you’re selling at a craft fair with ten other jewellery sellers, you’ll get nowhere if you are selling the same or similar items. If you own a shop, your competitors should be scratching their heads over where you find your wonderful jewellery.
3. Sourcing Jewellery Based on Price
If you buy from the cheapest end of a supplier’s catalogue, you will never be able to command high prices. Your jewellery will be cheap and tacky. And no woman wants cheap and tacky jewellery. Buy fifty expensive items, not two hundred cheap items. Sourcing from the dregs of catalogues out of a misguided belief that cheap is good is one of the most common mistakes made by jewellery businesses, and it’s one of the mistakes that is the most difficult for retailers to spot and correct.
4. Not Changing Stock Often Enough
You need to be bringing in fresh lines every couple of months. If you don’t, you will never attract repeat customers. Your best customers should be coming to see you every week, not twice a year. 5. Continuing to Stock Last Years Best Sellers
Fashions change, and so should your jewellery. No matter how good a seller a necklace was last year, the New Year should bring new styles. This is a common mistake - the idea that you should sell items until every possible customer has bought one. Scarcity is great for pushing up profits. Regular customers are rewarded by owning items that their friends cannot buy, and you become known as the jewellers to go to if you want to stand out.
6. Buying Too Many Different Colours and Sizes
You should stock as many different styles as your budget allows for. But you should only ever stock one colour of each style, and as few sizes as possible. Colour is not as important to sales as many jewellery retailers think. Most customers buy a style they like rather than a colour they like. And if the necklace they love doesn’t match any dress they own, they are just as likely to buy a new dress to match the necklace as a new necklace to match the dress. When it comes to sizes, don’t try to please all customers. Where possible, buy adjustable sized rings rather than fixed sizes, and stock most necklaces with average length chains. As nice as it is to be able to please everyone, it’s simply not realistic for a small business. 7. Over Pricing
The bane of small shops everywhere, particularly gift shops in tourist areas, is overcharging. Yes, someone, at some point, will pay that exorbitant price, but that doesn’t mean you should charge it. It is far better to sell ten of a particular necklace at £15 each than one necklace at £25.
8. Targeting too Many Different Types of Customer
You can’t please everyone, and you shouldn’t try. Are you selling elegant jewellery, kid’s jewellery, gothic jewellery, men’s jewellery, Indian jewellery, tribal jewellery, or all of the above? You need to pick a type of customer and target that customer. If you try to meet the jewellery needs of everyone, you will end up pleasing no one. Become known as the place to go amongst one type of jewellery buyer, and stop there. 9. Poor Displays and Presentations
Presentation matters - a lot. Your jewellery needs to be displayed on proper busts and stands, otherwise it will look cheap, and nobody wants cheap. It doesn’t matter how unique or special your jewellery is if your customer is not seeing it at its best. And whatever you do, do not display anything in its plastic wrapping. It’s lazy, and it’s careless. If you do this, you deserve to fail. 10. Failing to Keep Accurate Records
If you think you know what your best sellers and most profitable items are, but you can’t back it up with a spreadsheet listing numbers and figures, then you are probably wrong. Almost every start-up makes this mistake - they assume that because they are so small starting out, that their memory is good enough to keep them informed about what is making the business money. It’s not. When sales are broken down into profits, you will often find that what you consider to be a great seller actually brings in little in the way of profit: the margin may be small, breakages and returns common, or the number of sales less than you thought. Often, the
sales figures for less extravagant pieces may be far higher than you thought. Without hard figures, you will make mistakes when deciding what to reorder, and which styles to invest more heavily in.
11. Poor Relationship with Suppliers
Do not get into arguments with your suppliers. If you are unhappy with the quality of their jewellery, with their prices, with their service, or with their terms and conditions, then go elsewhere. The last thing you should be doing is causing problems between yourself and a company on which your business relies so heavily. Most of the problems between suppliers and retailers begin over minor issues, but end with the supplier refusing to sell to that retailer again. I have directly experienced retailers hassling suppliers for weeks over one or two broken items from months ago, with a wholesale value as low as £10. The end result of which is the retailer being forced to search for a new supplier only two months before Christmas. Minor issues with your suppliers should be treated as minor issues. If you blow them out of proportion out of some misguided sense of pride, or an “I’m right and they’re wrong” attitude, then you deserve whatever befalls you. Remember, they may be your primary supplier, but you are only one of many customers for them. 12. Relying too Heavily On a Single Supplier
Do not rely too heavily on a single supplier. If you buy all your fashion jewellery, sterling silver, watches and hair accessories from the same wholesaler, what would you do if they went out of business tomorrow, or if they decided to focus on a different style of jewellery? This does happen, and when it happens it can cause no end of problems for retailers who failed to source multiple suppliers. You should aim to buy different types of jewellery from different suppliers, and to have backup suppliers in place for critical items. For example, line up a second possible supplier of watches in the event that your main supplier folds.
13. Buying on Credit From Your Supplier
The credit trap is fatal to jewellery retailers, and so tempting. It works like this: a sales rep from a jewellery wholesaler comes to visit you. He offers you thirty days or ninety days or more in which to pay. He offers you an account and treats you like a valued customer. You are flattered and you eagerly sign up, assuming that this will solve your cash flow problems. You place a large order straight away and expect to pay for it in a couple of months. From that point on, you are stuck with a single major supplier. Because you buy from them on credit, you always owe them money, and must pay them that money before you can consider buying from somebody else. The credit trap makes them your primary supplier, not because you want them to be, but because you can’t afford to pay them for last month’s stock and buy new stock from somebody else at the same time. So you pay last month’s bill and place another order on credit, because that’s all you can do. Your stock never changes, and your business flounders. Do not open a credit account with a supplier.
14. Buying Jewellery You Would Wear Yourself
You are not your customer. You should not be buying jewellery because it appeals to you or because you and your friends like it. Your tastes represent only a tiny percentage of the jewellery buying public, and probably not the most profitable percentage at that. Your buying decisions should be based on what sells to the women who walk through your doors or stop at your stall. 15. Not Stocking Items Your Mother Would Wear
If you are a young woman, it’s all too easy to stock your shop or stall with your own age group in mind. This is one of the reasons so many jewellery shops look the same. But the reality is, older women usually have far greater buying power than young women. They often buy more jewellery and they buy higher priced items, which means greater profits for your business. Ignoring your Mother and your middle aged Aunts is a huge mistake. 16. Allowing Men to Choose the Jewellery You Stock
I have no doubt that there are men out there who can choose jewellery that women truly want to wear. But the number is small. All too often, buying decisions at small shops owned and run by a couple - gift shops in particular - are made by men. This is not a problem unique to retailers. I have seen the very same problem at wholesale and import companies, where the person who travels out to China to buy stock is the grey haired company owner, and the result is almost always catastrophic. There is a lot of uninspiring, dull jewellery out there in shops across the land, and the blame for this often lies at the upper levels of the well established jewellery import companies. Buying decisions and buying trips are too crucial to a jewellery business to allow them to be made based on seniority. Your buyer should be the person who understands what women want to wear today. 17. Failing to Understand Your True Costs
Do you know how much that necklace really cost you? Have you included shipping charges, VAT, and packaging costs when you set your retail price? Many start-up businesses fail to understand the true cost of items. I have seen jewellery retailers selling stock they purchased from companies I have worked for at prices that fall below the actual cost of the item. Now obviously these businesses were not long for this world, but mistakes like this are so easy not to make. Break down each wholesale order when it arrives, and calculate the actual cost as opposed to the listed cost of an item. It is the actual cost that you use when applying your mark-up. For example: a necklace with a list price of £5, might have an actual cost of £6.80 after all the extras are added. Your retail price might then be set at £20 rather than £15.
18. Not Advertising Because it’s too Expensive
When advertising works, it works. If you spend £100 a month on advertising that leads to profits of £300 a month, you have made an actual profit of £200 a month on the back of that advertising. Yet many retailers fail to see the sales and profits and only see the costs. Decisions are then made to stop advertising in order to ‘save’ £100 a month, without realising that the end result is a loss of £400-£500 worth of sales. Stop viewing successful advertising as a cost that should be curbed. 19. Building a Cheap Website
Most jewellery retailers know little about web design and web marketing. This often leads to a failure to understand the true costs of running a successful website. You should look on a website as a bricks and mortar shop. Would you hire a teenager to decorate your new shop for a couple of hundred pounds? Or would you hire a professional shop outfitter and designer? If you needed the electrics refitted in your shop, would you choose the cheapest cash in hand tradesman going, or would you get someone reliable in to do the job. There is an old phrase: if you spend peanuts, you get monkeys. This is very applicable to website and eCommerce design. Quality does not come cheap, and if you can’t afford it, don’t do it.
20. Treating the Business as a Hobby
Women starting out in retail are drawn to jewellery businesses, often simply because they like jewellery. They may even make jewellery in their spare time, or frequent jewellery parties run by their friends. But a business is a business, and it should be run like one. Too many women who start up jewellery businesses, especially businesses that require little initial expenditure, treat that business more as a hobby than an actual business. There is often an attitude of “If it fails, it doesn’t matter,” or “It’s all just a bit of fun”. If this sounds like you and your approach to your jewellery business, then I’m sorry, but your business is unlikely to succeed. You need to take your business seriously, and the first step to doing that is to look at these common mistakes made by jewellery retailers, and to start addressing those that apply to you. No matter how well you are running your business, there will be room for improvement.
We’ve discussed the different types of retail options open to you, from the cash guzzling shop to the soul destroyer that can be eBay. We’ve touched on the different types of jewellery you might choose to stock in your new business. We’ve looked at the different range of suppliers, and what you should expect when dealing with them. And we’ve analysed the most common problems that afflict new and more established jewellery retailers. Only you can decide what sort of business you are going to run and how you are going to run it. Only you can decide the styles of stock you will carry and the suppliers you will seek to do business with. I’ve seen many small jewellery businesses come and go, and I’ve seen a small number thrive and grow. I can’t make the decision for you as to what to sell, where to sell it, or which suppliers to do business with. But I can tell you what I would do if I were in your shoes, eager to start up as a jewellery retailer, or to fix the problems in my jewellery business.
If it were me: 1. I would start small, and be very careful not to over reach in the early months. This means keeping start-up costs to a minimum, and not even entertaining the idea of opening a traditional shop until I had a lot more experience in the jewellery business. 2. I would visit one of the large trade shows in order to see what was out there in terms of jewellery and packaging. 3. I would visit some of the walk in jewellery wholesaler showrooms, common in most large cities, and I would do so without buying anything. 4. I would search the internet for different suppliers, comparing their stock and prices, and I would select four or five different suppliers to place a small sample order with. This would be my first real expenditure. 5. I would look online, in the same way, for packaging and display suppliers, and I would place a small order, just enough to cover the jewellery I have already bought. 6. I would buy a fold up table and ensure the seats of my car fold down. 7. I would visit a couple of car boot sales in different parts of the country, set up my stall, meet lots of people, see how they liked my jewellery, and hope that I manage to sell at least one item. 8. I would not get disheartened if I did not sell anything.
9. I would search the internet to locate fairs and shows that allow jewellery sellers, and visit one of these shows. This would be my first real sale at which I expect to make real money. 10. I would use my profits from this show to invest in more jewellery and styles that sold well, from the best suppliers of those I sampled. 11. I would do more shows, and more research into shows and markets, planning ahead by a number of weeks or months, investing in more stock and displays from the profits. 12. I would work this model for a full year, experiencing the Christmas rush, the January downturn, the problems caused by poor weather and times of the year when cash is scarce for consumers. 13. I would use this year to test and source better suppliers, building relationships over time, and growing my range of stock. 14. At the end of my first year, I would look at my profits. If I had avoided the many pitfalls common to jewellery sellers, and made as few mistakes as possible, I would expect to have generated a tidy and respectable income. 15. I would go into year two expecting a large increase in turnover and profits. This is what I would do. It’s not easy, it’s not plain sailing, and it involves real work. It involves getting up early many mornings, working in the evenings in preparation for the next day, and watching a business build up over time. It may lead to a life of the same for many years; it may lead to a successful shop in a busy shopping centre a few years down the road; it may lead to a party plan business or eCommerce business with many employees and a large turnover. But if you do it right, and avoid all the common mistakes, what it should not lead to is failure.
Notes 1. All photographs of sample stock in this eBook were taken from the 2010 and 2011 Catalogues of Nirvana Wholesale. 2. This eBook focuses on retailing in the UK and Ireland.
Copyright © 2011 by Nirvana Wholesale. All Rights Reserved worldwide under the Berne Convention.
Disclaimer Please note that much of this publication is based on personal experience and anecdotal evidence. Although the author and publisher have made every reasonable attempt to achieve complete accuracy of the content in this Guide, they assume no responsibility for errors or omissions. Also, you should use this information as you see fit, and at your own risk. Your particular situation may not be exactly suited to the examples illustrated here; in fact, it's likely that they won't be the same, and you should adjust your use of the information and recommendations accordingly. Finally, use your head. Nothing in this eBook is intended to replace common sense, legal, or other professional advice, and is meant to inform and entertain the reader.