Is this commercial greed stealing business from established online stores?
I had to talk about this as I was rankled when I heard the news from one of our clients.
Here’s the story………
Zoo Jewellery have now been trading online for a good number of years. The site is trusted, orders are healthy and online the brand is continuing to flourish. As well as supplying their own range of jewellery, Zoo also supply products from the likes of Kit Heath, Hot Diamonds and St Justin.
Everything was fine in the garden, when…….
One of the manufacturers has shut-up shop and is preventing jewellery retailers from selling its jewellery online. This is course is the prerogative of the manufacturer, after all it is there product and they can do what the hell they like with it.
Bone of contention
Here’s my bone of contention – After years of building the brand, pushing forward and investing in their online business one of the suppliers has now decided to stop supplying all online jewellery retailers such as Zoo Jewellery.
If the supplier was that adamant they wanted to cease supplying the retail sector, then why not set-up a series of shops? Why does this jewellery supplier believe they have the right to steal business away from their resellers only in the online environment? Easy, because they feel they can achieve the same sales with their website as do all their resellers do with a hundred websites.
The likes of Zoo Jewellery have been used to build a brand only to be informed they can no longer sell online. So what is the motive behind this business decision? What is the strategy behind the decision? From my outside perspective I can only see it as greed.
Why now and why online only?
The jewellery supplier has seen vast numbers of sales being recoded via online channels and it looks as though it wants the additional margin for themselves. After all why take reduced margin, when you can forcefully prevent your online resellers from selling online by shutting down accounts.
through its online resellers and now because set-up costs are far less than setting up a chain of 150 high street stores they are happy to cut revenue streams from small business that have supported them over the years.
Softening the blow – The Affiliate Scheme
The company in question is offering an affiliate scheme to its resellers, this is at least some comfort for those who are going to be affected by the loss of online sales. Whilst we all know there is good money to had from a quality network of affiliates, you have to think that without a readymade affiliate network, sales would die. If it were me I would not have anything to do with the brand. As a site owner why should I send my traffic and loyal customers to a now competing business?
Do not take the stock offline
Whilst the manufacturer is threatening complete account withdrawal via non-compliance of not withdrawing online ordering facilities for this jewellery range, it should not stop Zoo and other jewellery e-tailers from displaying the stock online should they want too. After all, Zoo Jewellery has three jewellery shops, the site also offers a service to customers who may want to browse jewellery ranges prior to visiting the ‘bricks and mortar’ store.
Here’s what is going to happen; the online jewellery stores that have the traffic coming to them at this time will continue to get traffic coming to them. The difference is this, they will no longer be selling a specific jewellery range. These are business people, all that is going to happen is they replace with a substitute.
Yes, there is going to a degree of brand loyalty, but I will be frank, the brand in question is no Rolex or Cartier, it is recognizable but not irreplaceable. Ultimately if you enter a site on terms such as silver jewellery or silver earrings you are going to look at what the store has to offer. Zoo take their highest conversion from their brand name. What they showcase to visitors, they sell. No showcase, no sale!
The manufacturer in question has to ultimately compensate for the loss of let’s say one hundred online retailers and replace with a single entity. Yes, they will be fine on their brand name, but there are more tangents required than just brand.
Zoo have worked very hard at brand loyalty, the customer service is second to none, and I am not just saying this as they are a client, my better half shops at Zoo both online and off and is only ever full of praise for the team.
Ill-formed business decision
This is where for me a critical ill-formed business decision has been made by the jewellery manufacturer. My partner shops at Zoo Jewellery because there is a choice. When she is looking for silver jewellery she will go back to Zoo, it is at this time purchase choice is guided by brand loyalty to Zoo Jewellery and not the manufacturer.
If you take away your channel sales you have to work incredibly hard to fill the void. And to stop online sales from 60-100 online resellers overnight is for me a disaster waiting to happen.
Here’s my two-pennies worth: If you are going to shut-up shop and not allow your national resellers to sell online then as a company you should be also be prepared to invest in high street outlets to also offer your product ranges.
I would love to see all the affected jewellery retailers to get together as a collective and turn round in one voice and inform the manufacturer they are no longer prepared to sell their product in-store. Then watch for a very big u-turn!