Jewelry Inventory Management: 18 Major Steps to Maximize Profitability
With the rise of technology & availability of smartphones, the Ecommerce industry has grown rapidly across the globe. People love to shop from Amazon like marketplaces where they can pick and choose what they want by sitting at the comfort of their home. Faster delivery, easy refund policies, best price guarantee makes the Ecommerce industry favourite among the masses.
Currently, online jewellery sales only account for four to five percent of the market, but the Ecommerce sector is expected to reach around 15 percent by 2020.
Now, this has opened up a completely new business territory for the Jewellery brands and merchants. Imagine a time when without being physically present one can showcase all the products to people across the globe with a very nominal infrastructure expense. It sounds great, right? But it has got its own set of challenges as well.
Towards the end of the article, we discuss how an upcoming brand has expanded their business across online channels following a systematic approach to overcome the challenges faced. In this article we will discuss the challenges faced by jewellery brands in details with the solutions that are available to overcome them:
1. Adapting to the technology used to manage online operation:
When you expand to online business, the first challenge is to adapt to technology-driven business rather than face value. You need to start using advanced yet user-friendly technology to operate your business. You will require an inventory management software, warehouse management software, accounting software besides uploading appealing photographs, writing world-class content to describe your products. Apart from these, you should be able to comprehend the data available to you across the channels to keep adapting to ever-changing competitor landscape. For this, you need analytical tools to utilize the data properly.
Suppose you have 4 different online channels where you have listed your products. You will need advanced and real-time analytics to keep tab of the sales data & upcoming events to forecast your inventory requirements. In Jewellery, you can not let a lot of money be stuck due to overstocking.
2. Handling frauds in returns:
When jewellery is involved, there is a higher risk involved with frauds. There might be fraud returns where your original gold or diamond product is replaced with a fake product and returned. But not all claims or returns are fraud. It gets challenging to address the fraud cases and segregating them from genuine claims. The team handling this needs to be very experienced and smart enough to provide prompt service to genuine customers and identify and take actions against frauds. For expensive items, its advised to use camera recording the entire packaging process to ensure the right product is being sent. This recording can, later on, be used to dispute any fraud cases.
3. Managing Inventory across the Channels:
Consider a scenario, you had 5 stores previously and now you have started operation in your own website and 3 new E-commerce channels. Now how will you manage inventory from them? Let’s have a look at all the possible options.
You create a different catalog for all 8 channels. It will be very expensive to manage same SKU set for all the channels and you will have a pile of unsold inventory which will block a lot of capital for you. Not advisable
You segregate online and offline and keep inventory available for each mode of business separately. It although costs less than maintaining for each channel, still it poses challenges in terms of the cost involved in managing a huge inventory.
Centralized inventory management is the perfect solution to overcome this challenge. Have all your inventory listed in a central panel. It gets managed from a central dashboard. Anyone can see the availability from the inventory dashboard be it online or offline. So, no need to keep a larger inventory. Perfect solution!
4. Streamlining barcoding & labeling the inventory
When you deal with jewellery, weight, design, style everything has to be perfectly labeled. This helps in calculating the price for precious metals. A small mistake in the labeling will cause a big loss to the organization. Customers are very particular about the jewellery they purchase. So, the margin of error is very less for jewellery. In order to eliminate any error, SKU barcoding & labeling is very crucial. It streamlines the entire inventory and minimizes miss shipping.
5. Real-time Inventory sync
When multiple business channels are involved with a centralized warehouse, it becomes a major challenge to ensure correct inventory is displayed across the channels. Incorrect inventory may result in incorrect stock outs on certain channels or getting an order which isn’t present in the warehouse. To overcome this, one needs to have an IT infrastructure in place that can manage all the channels from an omnichannel platform. It can do real-time inventory management across the channels to avoid any overbooking. The latest trend is to tie the offline store with the online inventory and keep all the channels in synch.
Jewellery is a very delicate and expensive product category. There is a higher chance of fraud while in transit or during delivery of the product. Even a single missing shipment or fraud can hamper your margin in a big way. You must have an exclusive agreement with the logistics company to cover these risks and make security arrangements to avoid these frauds.
When it comes to jewellery products, the delicate items need to be packed well so that it does not get damaged. Apart from protection, presentation of the product creates brand value. In order to have a durable yet safe and stylish packaging, a lot of research has to be done.
8. Cannibalism between different channels
There is a fear of cannibalism between channels and hampering your business. But with better promotion planning it can be avoided.
9. Expensive products handling
Jewellery comes in different sizes and colors. Having multiple sizes & colors for a particular style code is an expensive affair. With multiple channels, the cost of maintaining inventory increases many folds. The best solution to this problem is to have a cloud-based centralized inventory management solution.
10. Getting visibility in the marketplace
There is tough competition in online marketplaces due to the presence thousands of brands and millions of products. There is cut-throat competition with aggressive pricing and large catalogs. The demand of the market pushes you to keep your designs fresh and up to date. It is a big challenge for new entrants to compete with established players in a level playing field. This can be handled using two-pronged approaches.
First, focus on providing exceptional customer service hence driving solid reviews on the product. That will push the sales further.
Next, use offline stores to clear any stuck inventory. Omni-channel is the way forward. Keep offline and online stores in synch.
11. Creating Brand
In order to escape the tough competitive marketplaces, brands prefer to have their own store in Shopify, Magento or WooCommerce. With proper systematic SEO, in long term, these stores help to create a brand image. But again, getting good traffic to the website is challenging. Not everyone is aware of the techniques required to be successful with a storefront. It needs dedicated resources to build the brand.
12. Bringing traffic to your own site
SEO, Blogging, digital marketing, promotions, alliance marketing, and a lot more things are required to get a brand noticed and bring traffic to the website. Then converting the traffic into paying customers is a major challenge. It requires a lot of continuous effort to grow the business from the platform. But nowadays with dedicated expert agencies can do the trick for you. You can let them manage your online business and work on a revenue sharing or fixed remuneration basis.
13. Proper image shooting
Customers while doing jewellery shopping, most of the times have a style or colour in mind.The online channel does not provide the luxury of checking the product physically to the buyers. So, the images become the most crucial attribute to tempt the consumer. If the images do not represent your exact product, the return percentage goes up. It also creates a negative experience for the customer. While doing a photoshoot of jewellery, there is a very good chance of the original colour of the stones getting distorted. So, a professional photoshoot with perfect editing is a necessity.
Apart from images, description of the products such as dimensions, stones used, quality of metal used, guarantee/warranty etc help the customer have an idea of the product in details. After the image of the product, correct information of the product is essential to generate interest in the product. If the description of the product does not match with what is delivered to the customer, it again creates negative experience and dissatisfaction for the customer. The return rate is also increased. The product might be of very good quality but if it does not match with the description, it does not match the expectation of the customer. So the cataloguing should be accurate and should provide maximum information about the product to help the customer make a final purchase decision.
While developing the content of the product description and the title, one needs to use the right keywords that the customers are searching. Amazon is now commanding 50% of the product search as compared to Google. Hence the right SEO strategy goes a long way in building the long term demand of the brand.
15. Wrong Shipment
Consider a scenario where you ordered a pink colour bracelet matching with your pink dress. You paid for the order and in 2 days you got the product. When you opened the package, the product inside the package turns out to be red. You will be shattered and extremely dissatisfied with the brand. There is a high chance that you will not to get back for a repeat purchase. In jewellery the chance of this happening is higher from other categories because of the sensitive nature of the purchase as well as wrong product labelling and inaccurate image. To avoid these issues, you need to label your products with a barcoding system. It will help you ship the correct product every time.
16. Payment Tracking
For the businesses happening through marketplaces and cash on delivery modes, the third party gets involved with the payment processing. When there are returns involved, it becomes very complex to track payment pending for invoices. So accounting ERP helps solve the challenge of identifying outstanding invoices and get them settled.
17. Higher marketplace charges
Marketplaces provide a platform that gives you access to a whole new world of opportunity. But that comes with its own set of challenges like higher commission charges. It eats up your margin in a big way. You cannot increase the price as the competition is tough as well. So, in order to manage the sales with a competitive pricing will be challenging for brands to sustain. One of the alternate option is to have a website of your own where you need not pay a commission is helpful in a long run.
18. Building trust
What is the quality of the product? What if it’s a damaged product or I don’t like the quality? Are my details safe with the site? Can I trust them with service? All these questions are influential in decision making when a customer is purchasing a product online. To create that trust you need to provide excellent customer service, assure them with your policies without complex terms and conditions. Make it easier for the customer to return the products with a customer friendly return policy. This helps you in building a brand in long term.
How Do Brands Enhance The Experience Of Customers With All The Channels?
To supercharge the online shopping experience, brands need to offer omni-channel features like in-store pickup of online orders. That way, you drive traffic to your stores from the web, giving your sales associates the chance to sell complementary items before the customer leaves with their purchase. Selling more to each shopper can also happen on the web, by suggesting cross-sell and up-sell items on the product page as well as in the shopping cart. Below is a quick study of a Jewellery brand that expanded their business 3x through eCommerce.
Zivah is an semi precious jewelry brand mainly engaged in exporting out of Jaipur, India. Their average item price ranges from $20-$50. In 2014, the brand decided to go online, direct B2C through various eCommerce platforms like Amazon. EasyEcom team helped the brand in uploading the catalog, managing the SEO strategy and all in all acted as a partner. In 24 months time, Zivah now does about $20,000 worth of business through online channels in a month.
That’s a quarter million dollars annual run rate, now consider following:
- Brand didn’t have to separate inventory from their wholesale business. Same common inventory is now exposed for online that was earlier used only for wholesale (export)
- Zivah staff was trained by EasyEcom solutions team for their day today eCommerce operations. That helped them become efficient without having to go through all the learning curves.
- EasyEcom automated the eCommerce accounting using Tally ERP for Zivah. That’s usually a huge headache for brands originally dealing with B2B business line. B2C eCommerce accounting is still a nightmare for many brands. Thankfully Zivah didn’t have to experience that.Zivah is now planning to launch their cross border B2C export business to North America, Australia etc with the integrated support provided by the EasyEcom solution.
“We have been using EasyEcom for our online business for more than two years now. When we started, we didn’t have any clue about eCommerce. However EasyEcom team has been supportive throughout our journey and helped up grow over the years. Best thing about EasyEcom is their prompt customer service, they treat our business as theirs. They have been our close partner and we continue to march along with their assistance”
– Prasanjeet Singh, Owner, Zivah (Sukhmani Enterprises)
Omni Channel is the way to go
It’s a no brainer now that Omni Channel presence always enhances the possibility of long lasting customers. Now it’s adapt or perish time for brands like Zivah. Brands that will adopt the new reality of online shopping, will thrive. Others might face a difficult time in surviving. Omni Channel business helps in brand building with higher brand visibility and availability. It also provides a platform to reach a global customer base with your entire product catalogue. Although the challenges mentioned above are real and difficult, with a dedicated workforce and proper planning these hurdles can be overcome.