Jeremy--Isn't comparing the overhead of an online store and a B&M store a bit of the apples and oranges approach? As I mentioned in another thread of yours recently and you have just explained, in a slightly different way, in your post here, I think the critical issue or limiting factor is the
turn rate of total inventory and the
size of the inventory that is turned over in a year. It seems to me that the only way to put the overhead issue for both types of establishment on level ground is to look at overhead as a percentage of yearly gross sales. What I think becomes obvious then is that it is part of the economies of scale, along with such other factors as sourcing and volume that the online vendor is able to take advantage of. Kind of a triumvirate of economies of scale, perhaps.
Yes, the B&M must charge more because of the cost of such things as untangling chains for free and personal attention such as showing non-buying lookers the goods in the cases and all the other things that take up staff time. For those who have the knowledge, the expertise, to know what they are looking at and what they could buy it for elsewhere, then there is no reason that they should make their purchase at a B&M establishment. It is my opinion that the only things that a B&M jewelry establishment have to sell are:
1. Personal, face-to-face, customer
service that includes seeing and handling the goods under consideration;
2. expertise and the assurance that a customer may have (rightly or wrongly) by dealing face-to-face with a supposedly knowledgeable vendor; and
3. Design, to be thought of as either more personalized or unique. (for better or worse, as it were...)
Other than these three things one is left only with material commodities that can be purchased more reasonably elsewhere. (A precious metals refiner, for example, comes to mind.) I think that one might eventually come up with an algorithm that would show the amount and cost of worker hours per item sold
plus the amortized overhead per item sold
plus the increased cost of the items sold because of a lack of economy of scale incurred in order to provide a high number of worker hours per item to supply, shall we say--
commodities--one, two and three above.
Of the three main commodities that a B&M store may offer in contrast to online establishments,
design is the one that is most weakly "owned" by B&M's rather than online vendors. However, I also think that design is something that a very large part of the customer base is loathe to trust to the internet. Part of this is due to a fourth commodity that is not owned very exclusively by either type of vendor and that is
prestige. This is what "branding," (
shudder. . . ) a bandwagon approach to provenance, tries to capture. Having a piece designed just for them personally by a known designer is prestige most largely captured by smaller, custom, B&M establishments.
What one purchases from any vendor is more, often much more, than the item at hand. I believe that any vendor in any venue will pay dearly if they do not keep this in mind and serve customers needs--
all the needs that they desire from said vendor. I'm not stating this defensively, I believe it's just the facts of the matter.
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Marc
http://www.flyrodjewelry.com/home.html A--Balone vendor