The process of buying jewellery is one that is traditionally tactile: From feeling the cut and heft of an inclusion-free gem to trying on a piece that ergonomically fits the shape of one's finger or neckline. Unsurprisingly, a report on luxury ecommerce by Mckinsey and Co published this year states that only 4.1 per cent of luxury timepieces and jewellery are sold online.
But that statistic might evolve, as a slowly growing group of bauble buffs are plonking down thousands for jewels that they've only viewed on a screen. The world's largest online jewellery retailer Blue Nile, which specialises in diamond engagement rings, is expecting revenue to fall just under US$500 million (S$716 million) this year.
Which is perhaps why the Singaporean-born, American founder of four-year-old jewellery e-commerce biz Plukka is planning to take her company public on the Australian Securities Exchange this October through a back door listing. The Australian exchange is more geared towards small-cap listings.
"The fact is, e-commerce in fine jewellery is still nascent with only 5 per cent of sales taking place online," says Joanne Ooi, who started Plukka after observing the colossal mark-ups for designer jewellery in brick-and-mortar stores.
"However, that segment of the market is predicted to double by 2020 according to a McKinsey report published last year. Considering that most luxury watch and jewellery brands are content with their current offline business, that gives Plukka a good opportunity to get a jump on this space, while most of its competitors are complacent."
Indeed, the luxury sector is known for being a late adopter of ecommerce. Chanel, the grande dame of luxury fashion, will only cave in to the e-commerce pressure by launching a online store next year - over two decades after Amazon started selling books on the Net. And the sale of fine jewellery - as compared to the faux, costume variant, certainly belongs to the upper echelons of retail.
Perhaps the main obstacle to peddling rocks, or any other pricey luxe good, via bits and bytes stems from trust: Convincing consumers to drop a large chunk of their pay checks in a click is a perennial challenge. "It becomes much more difficult to move jewellery when you get to US$3,000," says Ms Ooi, who adds that the average transaction value has jumped to US$1,800 from US$1,300 since last year.
"What happens a lot on our website is that clients buy something very affordable first. Then, with time, they move up in price as they gain comfort and confidence in their online shopping experience, including the quality of our products. Forty per cent of our online customers buy again."
A luxury retail veteran - the law graduate was credited with turning around Chinese luxury house Shanghai Tang in her seven years as creative director, Ms Ooi's strategy is to offer better value to shoppers and delivering higher margins to designers by cutting out the middlemen with no inventory cost. Hong Kong-based Plukka represents more than 40 designers and offers more than 2,000 styles of luxury jewellery in 18K gold, sterling silver, diamonds and gemstones, including made-to-order designs.
"The honest truth is that we treated fine jewellery as if it were a widget, not alert to the particularities and challenges of this 'high sensory involvement' consumer category," admits Ms Ooi.
"Fast forward to where we are today, after numerous iterations of our business model, and you can see that our business model comprises all channels that are relevant to fine jewellery, like brick-and-mortar boutiques, e-commerce and trunk shows. Based on our on-the-ground operating experience to date, we believe that the current omni-channel setup is at the sweet spot of consumer purchasing behaviour."
Last year, Ms Ooi opened her first physical outlet, a 400 sq ft store in Hong Kong's upmarket Landmark mall in Central, and just opened another in The Hamptons, New York. And this is just the start of a pretty aggressive expansion plan aiming to eventually conquer the coveted US market.
"Our immediate goal is to raise funds for our global expansion which includes opening up to six boutiques before the end of 2017, with four of those in key US markets," explains Ms Ooi.
"While we could arguably accomplish a lot with pop-up boutique and trunk shows, there's no substitute for the visibility and branding achieved through the establishment of a brick-and-mortar jewellery boutique in a prestigious, high traffic location."
She plans to grow the business into a global luxury brand; a go-to destination for customers to discover creative, daring designs and a one-stop retail solution for independent designers. At the moment, most young jewellery designers hail from multi-generational family businesses as it takes millions in funds to start up a bling biz.
With her relatively affordable price points and edgier designs - fashion-forward pieces include a US$420 18K rose gold 'hand bracelet' which comprises a thin chain ring linked to a bracelet that goes around the wrist, Ms Ooi's main demographic is the woman who buys her own jewellery.
And it all boils down to convenience. Unless you're a lady who lunches, chances are the idea of regularly spending hours trawling through the shops for the next big thing in bling might not be the most realistic or enjoyable pastime.
After all, if Net-a-Porter - which earlier this year hosted Chanel's first foray into e-commerce with the launch of fine jewellery line Coco Crush on its site earlier this year - could convince women to buy a US$12,187 Oscar de la Renta embroidered tulle gown online, why wouldn't shopaholics snap up diamond cuff in a click of the mouse?
This article was first published on October 3, 2015.
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