[john675]

You are right, Jeremy. After reading the posts on CPAA, I was so shocked I actually forgot about your detective work regarding PealDiver's IP address. It is an interesting situation as Peter was trying to be a rational voice for PearlDiver's perspective as a B&M retailer (without condoning the name calling histrionics). This support may have been misplaced if PearlDiver is in fact from Mastaloni. That would mean that the thread does not reflect frustration or anger about your competition against the B&M sector but rather a calculated attack against your character and those of other online pearl purveyors that offer high quality products at good prices.

[gravityalwayswins]

I am not at all surprised. It's completely understandable (not defensible, just understandable) that a B&M store owner in his/her supposed shoes would perceive Jeremy to be the source of his business declining (giving the benefit of the doubt on the B&M store even existing). Online businesses of all kinds are causing enormous changes in marketplace activity and consumer habits.

Personal attacks on others are so EASY and with humans swayed by emotion, so EFFECTIVE to the uneducated listener. Looking in a mirror, admitting defeat, and being willing to DO something about it, take chances, make changes, work hard!, become a better businessman and compete with your products and your service, not your insults... that's HARD, which is why so few do it.

I purchase jewelry at B&M stores equally as often as I do online. This person would have lost my business not because of pricing but because of his/her lack of integrity.

[pearlescence]

Much the same with bookshops and Amazon plus supermarkets. Markets and ways of selling change, the coming of the computer changed everything. Now even Amazon will have to change with the coming of a viable computer book unit device into which 100s of books can be downloaded.

I remember the struggles of 25 years ago when skilled printers, typesetters suddenly found six year apprenticeships worthless with the introduction of cheap, clean and easy computer typesetting. Not only were their skills on the scrapheap but their power to stop the press had gone. Anyone could input.

Now all bricks and mortar shops struggle to survive. Those who have not changed their ways of doing things fade and disappear.

In business you have to change all the time or get left behind. Clearly - and his name proves it - pearldiverwhateverhisnumber - hasn't changed - well who dives for pearls now? Its a bit sad really.

[Raisondetre]

Ah, the drama unfolds ... I just read the thread (been out all day) and the claims by the pearldiver person are so ridiculous I don't think anyone of average intelligence would believe it for an instant. I can't be bothered signing up at the other website, and I think most people would make it here eventually anyways. After all, P-G shows up on google easily enough, and I think that gives it more credibility than say a person with an IP traceable to any commercial organization with vested interest. Fair’s fair, and that’s just below the belt. Now, I've been on both sides of the fence - I've run a small business albeit for a very short period of time, but am a mere informed consumer now. Sometimes I do get carried away with my discussions with the various vendors and say things I shouldn't, but it's all in the name of passion for the subject. Business is exciting in its own right. But when I shop I weigh up the value of an item both as a vendor and consumer before deciding if it's worth the money I pay, if it makes sense at all. So here are some thoughts – I hope it’s a more objective analysis of what is essentially a pointless attack on an established business model. Online businesses work. Look at ebay. If a business isn’t making as much as it used to, it’s time to re-evaluate the business strategy.

When I had my business I opted for a B & M thinking it would reach a bigger customer base as I was doing fashion retail, and shipping/sizing would be difficult especially since I lived in a very densely populated Asian city. Many of my friends have had online businesses which didn't make money, mainly as a hobby while keeping their day jobs, e.g. soap-making or custom-made accessories. These were all labor intensive, and hard to get economies of scale in. So I was under the impression online stores were not the way to go. The original idea was to get at least one store set up with higher start-up costs, and if that worked out to start a chain. Unfortunately my store didn't work out for various reasons, but I started thinking about why it went wrong, from the characteristics of a product to the actual business model of a B & M store. While I had the business at a time when economy was really bad, the main reason my store did not work out was because of the high overheads of an actual store. It was the sky-rocketing rents (even in off-season you had to keep paying unless it was a flea market type establishment) and labor costs of hiring to keep it running (basic fixed costs even if labor is not utilized, plus more labor needed during peak season), both of which are virtually eliminated in the online model. Sourcing and shipping were easier, but for the amounts I ordered I was still paying way too much. So in terms of overheads, and then economy of scale, I was at a distinct disadvantage compared to an online store. There were other factors involved but too long to get into. Typical rookie mistakes that aren’t particularly relevant.

Now pearl is a unique product – Jeremy would have mentioned many times about how he started out. It has a small shipping weight, is readily available in quantities with cheap processing labor and has a huge market waiting to be tapped on especially since it is a traditional gemstone only available to the royalties. But there were also obstacles to be overcome. Freshwaters were traditionally seen as worthless beads because of the poor quality of the initial batches from China. Over the years, the quality of freshwaters has improved tremendously, so much so that there is mainstream acceptance of freshwater jewellery as high-end jewellery. Freshwaters are now more popular than ever, and rightly so for the value-conscious middle-class consumer, thanks to the advent of online pearl stores and great consumer education. Online pearl stores have in effect created their own market demand, and are controlling the quality of the goods provided to the consumer. BUT B & M stores are still selling poor quality freshwaters at premium prices. So who has actually taken a step backwards? It’s not rocket science. BTW, online vendors don’t decide the RRP of the pearls – it’s what people are willing to pay for it at B & M stores. As long as the profit margin is reasonable I don’t see why vendors can’t choose to cut prices.

Jeremy has been established since 1996, not always as PP, but he got in early and pretty much created his own niche market. I believe PP was one of the first if not the first online high quality pearl vendor, and the first one to do it on such a grand scale. I figure if you create your own market you can do whatever you want with the pricing – and he’s chosen the way of foresight by not monopolizing as B & Ms have done. At least the pricing is consistent, not like B & Ms which slash prices during sales. B & Ms have their overheads to cover, but that’s not a reason to attack online stores. People have to find their own competitive edges. It is not always easy for any given online vendor, even if Jeremy makes it look easy. I shudder to think about the huge risks taken especially during the SARS outbreak in 2003.

So yes, online businesses do have the edge over B & M stores, especially once they have the critical customer base - the growth is exponential, as opposed to B & M which pretty much incurr the same start-up costs for every single outlet unless you are the franchiser (franchisees probably fork out more than the average independent retailer). Most high-end stores would have a fixed customer base especially for old money. Middle end stores probably have it the hardest. Again, you picked your own business, don’t blame others. If people want to compete find some way of cutting costs by all means go ahead. That is the nature of businesses, and the ones who don’t make it get phased out.

People who make stupid claims should really read up on online businesses. In fact Jeremy happens to just have written such a book which is sold on Amazon, unless of course people want to denigrate Amazon ...

And as for the quality, PP has always provided me with top-quality pearls - if I order AA+ I am still surprised at the quality because they tend to mute the brilliance and magnify the flaws so I know exactly what I'm getting. My collection is not as extensive as some of the more established P-Gers here, but I am no longer the amateur I started out as 16 months ago. I have been on pearl expeditions to the wholesale markets in China itself and have gotten great deals on AAA grade pearls - some of the vendors there were actually shocked I knew to ask for the high quality pearls when all they showed me was rubbish. I'm pretty sure if I bothered to go to the trade shows (and some of the P-Gers here have been - please refer to posts by Caitlin and GemGeek, with photos no less) I can still easily identify AAA pearls by sight, even without GIA certification. I've been to the source, and whatever's been put out there by Jeremy or P-G is not BS. If you're sourcing from somewhere more expensive then Jeremy actually sells, do yourself a favor and go to China. At least for a visit if not to continue sourcing as it may not be cost-effective on such a small scale. If you haven't even been to the source I'd just say you're akin to the frog sitting at the bottom of a well, with a limited view of the world. That's a very famous Chinese saying that is very apt for this situation.

Why should anyone doubt the quality as long as there is sufficient credibility (as seen by good customer and peer reviews), a generous return policy and credit card protection in case anything goes wrong? The online vendors here retail but do wholesale for the most part ... I think the word wholesale is pretty self-explanatory. I buy everything pretty much wholesale these days. If it weren't at a discount why would I even bother? Consumers aren’t stupid. Period.

Sorry about the ramble. Too many thoughts rushing around in my head – I was just boiling mad at the accusations in the CPAA thread. Not even sure I got them all in the right order.

I haven't had time to cover the Akoya and the Hanadama issue, but I think it's been thoroughly discussed here to make the accusation look foolish.

Exactly how much detective work do you have to do, Jeremy? I wouldn’t have the energy to keep up.

[J Marcus]

By john675: Frankly, I have never bought any jewelry from a B&M store. I always felt the markups were ridiculous. I found my jewelry through estate sales, auctions, and, in the early 1980s during the silver and gold commodity run up, found great deals on diamonds from companies buying cast-off engagement rings. I like nice things and I get them without having to pay the unfair prices asked by B&M stores in the US.

John--I think that if you had spent any time working "in the trenches" of some of the independant brick and mortar stores, you might see things quite differently. I have worked in brick and mortar stores for most of my professional life--mostly as a bench jeweler, but also having to wait on customers, design custom jewelry with and for customers, serving as a resident technical expert when needed, answering phones, setting up cases, etc. etc. etc. . . Not one of the store owner/operators I have worked for have been or have become, by any stretch of the imagination, wealthy from their jewelry enterprises. In fact, we all, invariably, have come to the conclusion that we basically work for wages--owners, managers, master goldsmiths, et. al. Many things drive up our cost of doing business. For instance, the owners are faced with such dilemmas as: Do we hire sales personel so that the highly skilled bench personel can remain at their benches and make and repair jewelry, even though for a large percentage of their time the sales staff "picks lint" no matter how consciencious they are, or do we squander valuable bench time having the goldsmiths wait on customers, half of whom sometimes just seem to want to tell you their woes. Period.

The online vendors of just about all gems and jewelry have cut into our margins and that has, at times, caused us loss of revenue, but as Jeremy has pointed out on the CPAA forum:

"But online sellers have the much more difficult task of selling pearls site-unseen to consumers. In this aspect the traditional dealer is in a much stronger position; they have the face-to-face relationship with the customer. Currently, the available demographic to online sellers of jewelry (those consumers willing to purchase jewelry online) is less than 10%."

Edit: I think it possible that I haven't made clear that I am not arguing against what Jeremy has said. I agree with the above quote. Immediately below, I was simply making a clarification about the nature of our customer base--not complaining.

I must point out though, to both John and Jeremy, that a B&M store does not have marketing access to the other 90% of customers, we just have access to the other 90% in our own communities. What has kept us solvent (not nearly so much as you might think!) Is the strengths of being right here as a member of the community, able to show the customer and allow them to handle the actual goods they are considering and being right there for them to cater to their whims and provide them the face to face service that so many desire. If we treat customers unfairly or even if they falsely perceive us as doing so, we must face the music and take the loss and the collateral damage. We independant B&M stores also, because of the necessary limits of our size, are denied economies of scale. On top of that there is the single most limiting factor that dictates our pricing--"turn rate." Turn rate is the number of times that a vendors' inventory turns over in a year. It used to be said that grocery stores operated on a margin of about 20%. (I have no idea if this is current.) However, think about this: the turn rate in your average grocery store is about 52. That means that in a years time they take in that 20% markup fifty-two times! A good, independant jeweler has a turn rate of about one. That's right--one! Mull that one over a while before you call our pricing ridiculous! Our prices are not ridiculous! It's simply the cost of providing the assurance, immediacy, personal attention and all the other things that make up the service you get with a good B&M store. Consider also, that many of us provide all this at prices below those of the chain stores, by the way. If those things don't interest you, then you're welcome to bargain away, my friend, (...and just how much is your time worth?) but please consider what I've said before you malign our pricing as ridiculous!

With all due respect,
Marc
http://www.flyrodjewelry.com/home.html

[pearlescence]

I don't think shop prices in general are ridiculous, but they do reflect what is perhaps a 20th century retail business model. I do think that the whole bricks and mortar business model is and must change. Perhaps the independents such as you and your employer need to think about how to reach wider markets for custom work - there are many customers looking for work such as you do Marc, who will not find their way to where you work, for example.

[jerin]

Quote: Why should anyone doubt the quality as long as there is sufficient credibility (as seen by good customer and peer reviews), a generous return policy and credit card protection in case anything goes wrong? The online vendors here retail but do wholesale for the most part ... I think the word wholesale is pretty self-explanatory. I buy everything pretty much wholesale these days. If it weren't at a discount why would I even bother? Consumers aren’t stupid. Period."

I agree with Raisondetre and I also do understand what Marc is saying, as a customer I would not want to see shops disappear and being forced to buy everything online, however as a customer I must also try to get as much for my money as possible so there is no easy solution.

Finally I just want to comment on the above forum´s discussion about pearl quality that we customers by now do know what we want and due to experience also know what we get/have gotten from Jeremy and our other vendor members online and no matter what people say it is my absolute conviction that we customers can be trusted to see fine quality and that we are able to compare between different qualities thanks to our own education from the Pearl-Guide forum.

[CLICLASP]

Jeremy
the way you answered is so factual and elegant !
a model for anyone facing that type of problem
good luck

[pbazar]

I think there are many models to successful retailing. Each model has its strengths and weakness. The good retailer has the opportunity to build a personal relationship. The independent jeweler can make custom jewelry. What is jewelry anyway it is bought for a reason to celebrate an event. As a symbol of love ,wealth to make the buyer feel better.

The notion that only the online option is viable in today’s market is ludicrous. If price was the only determining factor in the purchase of pearls or any other product Mikimoto
Would not exist nor would Tiffany or David Yerman.

Each channel of distribution has its nich to fill. I do agree that every retailer must continue to evolve and reinvent itself to an ever changing market.

The bravado that e-retailing is the only viable option is as distorted as pearldivers contrary stance.

When you shop the stores of Bora Bora or Christchurch to buy that keepsake of your trip it does mot matter that it could be found cheaper on Ebay

[Richard W. Wise]

Jeremy, et al,

On the positive side, I think that the debate on the CPAA forum crystallizes the fact that jewelers must begin to adopt new competitive strategies if we are to survive in the new worldwide economy.

Jeremy simply took advantage of a glaringly obvious opportunity when he went into the pearl business. You all know the story. Fact is, is took the jewelry industry a full decade to get wise to Chinese quality FW pearls. I began buying the pearls in the mid-1980s, I was impressed by the high quality 7-8mm buttons that were available at that time.

In 1991 when I was Gemology Columnist for National Jeweler I wrote a column "High Quality Chinese Pearls" suggesting that the Chinese were producing world class pearls. It was not until 1999 partly as a result of the nucleus or no nucleus controversy, that the market began to wake up and actually buy these pearls. In the interim I made lots of money. Did I mark them up? Damn right! and FYI if I hadn't no one would have bought them.

Well thanks to Pearl Paradise, the internet and all you troublemakers on PG.com those of us in the jewelry industry has got to get off its collective butts and come up with a new survival strategy. Well, that's just the way it goes. We are either for competition and free markets or we are not. Companies like Mastoloni and Imperial Pearl have had it their way for centuries but change will and must come from below, from the individual retailers who have been in thrall to the big wholesalers for years.

Its been a nice ride. Retail jewelers have been in fat city for years. De Beers in diamonds and the big guys in pearls have had a cozy relationship with jewelers for years and everybody benefited, everybody that is but the consumer, but "its all over now, baby blue."

De Beers has sold its clientèle down the river and big companies selling commodities like pearls are poised to do the same thing. They really have no choice.The diamond market has already collapsed in on itself and the pearl market is not far behind. The handwriting could not be clearer on the wall. Either eliminate the middleman's profit or become the retailer and faced with prospect of extinction which do you think the big wholesalers will choose.

Jewelers, it seems to me, have little choice but to become, well jewelers and get out of commodities like colorless diamonds and cultured pearls and turn our attention to the fine and the truly rare. We have to stop trying to beat the Walmarts of the world at their own game. That has proven to be a fool's strategy.

As for online companies like Pearl Paradise, remember, the market can do unto you what you did unto others (how about that for a remake of the Golden Rule?).

De Beers made a strategic error when it decided to build stores and compete with brick and mortar retailers. That was a violation of Sun Tsu's principals as expressed in The Art of War. What it should have done was to go online.A big corporation fighting small independents on their own turf makes much less sense than taking on the internet retailers. I mean its all about price on the internet, not relationships, not service, not trust. How long do you think dirtcheapdiamonds.com will last against the guys who dig the diamonds out of the dirt. What happens when Walmart gets into pearls?

[pattye]

Peter and Richard,

Forum members here have endless stories of the ignorance found in and misinformation dispursed by B&M stores when it comes to pearls. Most carry so few pearls, they could be but a small part of what makes the B&M profitable. What are Mastoloni and Imperial doing to help their customers (B&M's) get excited about and promote pearls and pearl education????? A knowledgeable customer is a confident buyer!!!!!

I have never gotten the impression from ANY of our online sellers that they think theirs is the only way to sell pearls. To infer they somehow have their hand in the pocket of the B&M is utterly laughable.

Richard you are just plain wrong on this one

I mean its all about price on the internet, not relationships, not service, not trust.

It IS ALL about service, relationships, trust, then price, in my estimation. Without these, the online store will not be around long.

Availability of relatively inexpensive, pretty, not necessarily round, freshwater pearls have allowed a whole new market to open up, women buying pearl jewelry for themselves, not waiting to be gifted with jewelry from a guy, gaining confidence to purchase more expensive pieces.

Peter and Richard, maybe you should put some of the blame on Honora and Joel Schechter, whom I've have seen on a given day sell 55,000 strands of fw pearls on QVC!

IMO,

[Heidi]

Chiming in late here - I haven't had a chance to fully catch up on all the background but I can speak to the use of the internet as a communication tool, in general - including the phenomenon of social media (this forum is a great example). There is a vast difference between shopping at a big box or chain and a small boutique; the same difference exists between dealing with an impersonal "bargain" e-merchant and one with focused, individual customer service. In the world of selling stuff to people, be it clothes, cars, pearls or other goods the long term relationship between the merchant and the customer is a very important factor to repeat sales and the word-of-mouth advertising which follows. It can contribute to weathering ups and downs in the economy for a smaller business.

[pearlkrazy]

I was at JCK in June & it seems as though most of the jewelry industry is scared to death & very pessimistic. The jewelry industry in general (not just pearls) is a very tight knit clique-ish group. I can imagine they are very upset, change does not come easy to most of them & they are seeing their way of life coming to an end - not only due to online retailers, but the big box jewelers such as Jared. They will have to adapt to survive & are being pushed way outside of their comfort zone - hence the lashing out.

I have personally bought from a couple of the online retailers here & have found their product to be just as advertised. I love purchasing from them for lovely pearl staples, but still prowl B&M independents for unique designer pieces. The B&Ms may not be able to compete for the basics, but I feel like they still have a place with custom & unique pieces, not to mention the face to face relationships they can cultivate.

[Heidi]

Originally Posted by pearlkrazy

I was at JCK in June & it seems as though most of the jewelry industry is scared to death & very pessimistic. The jewelry industry in general (not just pearls) is a very tight knit clique-ish group. I can imagine they are very upset, change does not come easy to most of them & they are seeing their way of life coming to an end - not only due to online retailers, but the big box jewelers such as Jared. They will have to adapt to survive & are being pushed way outside of their comfort zone - hence the lashing out.

I have personally bought from a couple of the online retailers here & have found their product to be just as advertised. I love purchasing from them for lovely pearl staples, but still prowl B&M independents for unique designer pieces. The B&Ms may not be able to compete for the basics, but I feel like they still have a place with custom & unique pieces, not to mention the face to face relationships they can cultivate.

You make some very good points about shifts in the industry.

Something that goes beyond the jewelery world is a change in the emerging customer base out there with respect to almost any consumer goods. Teens and 20-somethings are in a different world when it comes to communication and the value of relationship contexts. The virtual world is part of their native language, which is very hard to understand completely. Mechants will prosper if they understand the emerging communication tools and patterns.

I love to put my hands on artisan pieces and do visit B&M sellers to do so - at the same time there has not been a single fine jewelery purchase I have made in person within the last 5 years that I could not have made online with equal quality and unique/custom design results. Heck, I had our wedding rings custom made (beautifully) and still have never met that jeweler face to face. Merchants are surely feeling this shift in the marketplace. It can't be the most comfortable thing, but it is exciting I think.

OK, I think I've hijacked this thread enough. I did not mean to detract from the original material of Jeremy's post.

[Mka4972]

Pattye

I must speak on behalf of Imperial. I work for Peter as his pearl buyer and I know he spends countless hours and dollars putting together training programs for the B&M stores. I have never seen someone more passionate about educating the sales forces of America to furhter thier knowledge about pearls. In most cases we have found that the typical salesperson in America knows very little about pearls and that is something Imperial is trying to change. Peter started a program called "partners in pearls" which gives any retailer that signs up every single tool available to them to hep them increase the sales of thier pearl departments, Imperial sends out a newsletter called "pearl perspectives" every month letting people know what is going on in the market and usually has an article or two that has something of historical nature regarding pearls. Imperial sends out CD's galore to our customers that explain eveything they need to know and more about pearls. All you have to do is go to Pearls.com and you can see some of what Imperial put out for educational purposes.

Marc