- Retailers are blending physical and virtual experiences to build trust in diamond sales online
- China online diamond sales have grown ‘significantly,’ says De Beers
China consumers, used to buying everything from Haagen Daz ice cream to cars on their mobile phones, have lacked trust in one online purchase " diamonds. That's beginning to change.
Online sales of diamonds in China have picked up "significantly," says De Beers, the world's largest supplier of rough diamonds by value.
In 2017, only 1 per cent of diamond sales in China were made online. While De Beers declined to say how much that figure has increased recently, its trade communications manager David Petrie told the South China Morning Post "we have just received more recent findings from 2019 showing that online has grown significantly."
It is an important change for jewellers in China at a time when traditional retail shopping continues to struggle, opening up a new revenue stream and potentially cutting down on costs associated with brick and mortar businesses.
Also, many people in China live in rural areas far away from big city shopping centres. That means if confidence can be built up among these consumers to buy online, jewellers potentially can break into new markets.
China disrupting world's diamond sector, tapping sophisticated technology to produce cheap synthetic alternatives
The potential can be seen in the growth of online diamond sales in the US. Online marriage-related sales made up 17 per cent of total sales. That shot up to 22 per cent in 2017, De Beers says.
Chow Tai Fook Jewellery Group, which started online sales in 2011, is among diamond sellers in China that have been strategically working to build up consumer confidence in online buying.
The strategy is called "omni-channel," in which diamonds sellers blend physical and online experiences.
Retailers offer customers in their stores to see a larger selection of diamonds in online displays. The customers are simultaneously seeing actual diamonds in the store, building their trust in the wider choices they are seeing online. If they want to buy later, they can feel comfortable buying online because of the in-store experience, according to the omni-channel strategy.
"With the growth in omni-channel (marketing) and more sophisticated online technology, (Chinese) consumers have been gaining confidence to buy online," said Petrie.
Chow Tai Fook, based in Hong Kong but one of the largest diamond jewellery retailers in Greater China, has installed LCD screens in stores for shoppers to view items not physically on display, its spokeswoman said.
"Since 2011 when we officially started Chow Tai Fook eShop, we have been actively developing our e-commerce business in Mainland China," said the spokeswoman, who declined to give a breakdown on online sales. "Being an integral part of our omni-channel retailing initiatives, e-commerce is more than just a sales platform, while it also serves as an important marketing, branding and customer relationship management channel that enables us to reach, engage and retain customers, especially the millennials."
US luxury icon Tiffany to open more stores in mainland China as Chinese stay home where weak yuan still has buying power
Also part of the strategy is getting consumers used to buying through venues other than traditional stores.
Dozens of mobile payment-enabled jewellery vending machines have been installed in hotels and train-station VIP lounges.
"Several years ago, most items sold outside of our physical stores tend to be cheaper and more standard items costing just over 1,000 yuan (about US$114) each," said the Chow Tai Fook spokeswoman. "Now customers are comfortable spending several thousand yuan on such purchases."
For Chow Tai Fook, online sales in China have grown more important because five months of anti-government protests on top of the US-China trade war have weighed heavily on sales.
In Hong Kong, sales dropped 35 per cent in the third quarter year-on-year, on top of a 16 per cent decline in the second quarter year-on-year.
Sales in China have also taken a hit, amid the economic slowdown. The chain saw flat year-on-year mainland China gem-set jewellery same-store sales in the year's third quarter, compared to 8 per cent growth in the second quarter.
The De Beers report said the average piece of bridal diamond jewellery sold in China weighs only 0.19 carat, worth US$900.
This compares to 0.42 carat in Japan, valued at US$3,500, and 1.7 carat in the US, valued at US$3,400, containing a 1.1 carat main diamond and 0.6 carat of smaller stones on the side.
"In the US, steep retail competition and high consumer price sensitivity are key market features," Petrie said. "At the same time, Americans aspire to acquire large diamonds for important occasions and are happy to compromise on clarity and colours.
"While both China and Japan (consumers) value higher quality diamonds, sizes are smaller in China due to both purchasing power and retail pricing structure. In Japan, the preference for smaller diamonds is culturally grounded as subtle expressions of style are preferred to ostentatious displays," he said.
Meanwhile, De Beers has done its first study of diamond buying by same-sex couples segment, finding they favour unique designs, branded products and online shopping.
The average engagement ring purchased by 175 Chinese respondents identifying as gay or lesbian was 0.9 carat worth US$2,600, higher than the 1.04 carat worth US$2,370 of 124 American gay or lesbian interviewees.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.