Amazon Goes Into Jewelry Biz

Discussion
Apr 22, 2004
George Anderson

By George Anderson

Amazon.com has gone into the jewelry business with the opening of its newest site www.amazon.com/jewelry and its strategy for gaining business is simple. It will simply low-ball the competition.

“We are thrilled to offer Amazon.com customers an unparalleled jewelry shopping experience by making it easy to find and discover the finest jewelry at lower prices than other retailers — online or offline,” said Eric Broussard, vice president, Amazon.com Jewelry in a released statement.

The same company press release adds, “Traditionally, jewelry product margins are high, in order to cover the costs of holding inventory, renting store space, and providing display cases, a professional sales force and security. Because Amazon.com does not incur many of these costs, the company is able to significantly reduce the margin on its products. While the average margin in jewelry retailing is approximately 45 to 50 percent, Amazon.com targets substantially lower margins on jewelry sales, and lower still — about 13 percent — on diamond jewelry.”

Mr. Broussard says Amazon’s jewelry customers will be treated to the same reliable service they receive buying books and other goods from the e-tailer.

Diamonds and gemstones bought from the Amazon Jewelry store will be independently certified for cut, clarity, color, shape and weight.

Moderator’s Comment: What are your thoughts on Amazon’s venture into the jewelry business?


The biggest risk Amazon is taking here is that it will actually be holding inventory. Its recent growth has largely been in partnership with other retailers.
It will work with other jewelers here also, but plans to have its own product for direct sale to consumers, as well.


Aside from that, Amazon appears to be in a great position. People who have bought from Amazon, trust the company. If prices truly are lower because the
company is willing to live with lower margins than the jewelry store’s success is all but guaranteed.
George
Anderson – Moderator

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