The current bull market in Gold has certainly received a lot of media attention, especially on such networks as CNBC and Fox News.  What has not received much in the way of media coverage, is how the recent climb in gold prices has effected online retailers of gold jewelry.

          Jorge Lazaro, President of OroLatina.com, an online discount retailer of fine 14 Karat (14K) Gold Jewelry, is one of hundreds of online merchants who has had to repeatedly adjust the pricing on their website, sometimes daily, to account for the seemingly endless price increases in the cost of gold.  He reports that when they first began building their online business in late 2005, the price of Gold was at $450 USD per ounce.  By the time the site launched in September of 2006, the price had climbed into the $600s.  Gold now stands at record levels, currently at the time of this writing, $971 USD per ounce!  “Given that there are not a great deal of industrial uses for gold beyond the manufacture of gold jewelry as there are for metals such as Palladium and Platinum, I suspect that the current price of gold has long past the result of flight-to-safety investors fleeing the volatile stock markets and is now driven by an unprecedented amount of speculation; probably a direct result of globalization.  There are many people throughout the world who have only recently gained access to the markets via the Internet medium that is now available, and I imagine they have been piling into the gold bull trade by the thousands.” 

         Mr. Lazaro indicated that at first, the rising price of gold merely squeezed their margins, but of late, even his most staunch online competitors have been aggressively raising their prices in an effort to maintain profitability.  “It all boils down to supply and demand.  The higher the price of gold goes, less and less people can afford the jewelry they desire.  More and more I see our competitors moving towards styles in 10 karat gold, or abandoning gold all together in favor of silver, titanium and jewelry based on other, less expensive metals.  I expect this trend to continue until the market tops out and ultimately comes down to more realistic levels.” 

           When asked about the current business environment and his thoughts on the future he mentioned that their wholesale operation, (located in New York City’s Diamond District) which supplies their online website and does not deal directly with the general public, can no longer publish prices in their catalogs because of the current market.  Wholesale prices are generally based on the 2^nd London Fix price of Gold on the date of shipment.  In addition, his suppliers in Italy, Turkey, the United States, and elsewhere have all suggested that they prepare to see $1200.00 / ounce gold.  Furthermore, they have not yet released their 2008 collection because they expect one (or more) of their foreign suppliers to go out of business within the next year, because as the price of gold has climbed, the demand for gold jewelry has fallen off.  “This has obviously provided us with additional challenges, particularly in our supply chain.  How can we invest in publishing a catalog of items if there exists the possibility that as much as 25% of what we offer may suddenly become unavailable?”

         Another challenge has been in predicting the weights of jewelry items.  “Because the price of gold has skyrocketed in the past few years, jewelry manufacturers are making jewelry lighter.  More often than not we find ourselves crediting back our customer’s for gold weight they paid for but the item is actually lighter than we have advertised.  Because we price on a per gram basis this is done before we ship the jewelry and have called our customer.  Each occurrence still amounts to 20 minutes of a representative’s time.  Over the course of a year, this adds up.”

            Mr. Lazaro, who is an avid watcher of CNBC, noted that “Guy Adami, a former Gold Trader of 15 years and a star of the CNBC show Fast Money has often said “This story never ends well for the Gold Bulls”, and that “It takes the stairs up, & takes the elevator down.” (the price of gold).   It is for this reason, and experience, that we are carefully monitoring our inventory and maintaining sufficient hedges, particularly in the form of Futures Put Options.“  Mr. Lazaro also said that “Our Indian partners, with whom I have been doing business for more than 20 years, have told me that the women of their homeland are now selling their gold jewelry (which is commonly 20-24 karat in India).  This has historically been an indicator that the price of gold is due for a correction, however we haven’t seen something like this in over 20 years and it is really anybody’s guess when the price of gold will return to more realistic levels although I believe we will see 600 USD per ounce before the next run up past 1000 USD per ounce.” 

          With respect to the future, Mr. Lazaro does not see himself moving into jewelry based on other metals, at least yet; “We separate ourselves from the competition by offering gold jewelry styles that are not available anywhere else, specifically boutique styles.  Sure, we offer a lot of the same  common styles as other jewelers, such as Cuban and Figaro linked gold chains (as an example), but we believe that in order to compete in the current gold jewelry market, particularly one where people are desiring jewelry pieces that are unique and lend a distinguished look to their owners, the only way to succeed is to offer your customers something that no one, at least that they know, has; and in this respect, we have been very successful.  Two years ago when we first launched Orolatina.com, our average order was $250.00.  Now, our average order is approaching $1000.00 as we have noticed a shift from the basic common styles to our 14k gold handmade and 14k gold fancy styles.  Our website has also seen a tremendous increase in traffic and sales from Europe, particularly the United Kingdom, Australia and France, and we attribute this to what is currently a very favorable exchange rate for them.  We have also been having a lot of success with our 14 karat gold religious jewelry line, which we will be adding additional products to this Winter as we retire more than 800 items currently offered on our website and replace them with our 2009 collections.”  As far as where the price of gold will go, he maintains that it could continue to climb for another year, possibly two, but he is sure that once it tops out it will fall far faster than it has climbed. 

         Lastly, while many of his competitors are moving to other metals and/or jewelry that is less than 14 karat in purity, OroLatina will continue to expand his offering of higher end, unique styles of 14k gold jewelry and 14k gold jewelry with diamonds and other gemstones, in an effort to capture word of mouth and repeat business from his loyal customers.

Gold Jewelry, 14k Gold, Gold Chains, Gold Pendants, Gold Earrings, Gold Bracelets, Gold Necklaces, Gold Rings, Gold Anklets, White Gold, Two Tone Gold, Tricolor Gold, Yellow Gold

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Filed under: General, Jewelry Business

Are you a jewelry designer looking for a new market for your handmade jewelry or an entrepreneur looking for a new business idea? Why not start a personal shopping service for jewelry? This unique business idea would work well for a jewelry designer who lives in a larger city where there are a lot of professional women. This business could be started with very little overhead and risk and could be a natural extension to your current jewelry business, if you’re already an established jewelry designer. If you don’t have the skills to design your own jewelry, you could find wholesale sources for interesting artisan jewelry that’s not widely available to market to your clients.

Personal shopping services that are popular in large cities where there are career women who don’t have time to shop for clothing and jewelry but are required to look good for their jobs. You could offer to come into a client’s home, review their wardrobe, and make suggestions for the jewelry they need to complete their outfits. Of course, you would supply the jewelry from your custom designs or purchased wholesale from local artisans. If you design jewelry, you could offer to do custom designs for the woman who wants truly unique pieces that can’t be found anywhere else. Otherwise, you would look through your current inventory of designs and use these to coordinate with the client’s outfits. A personal shopping service for jewelry is a great time saver for these women who have too little time to spare.

I would advise offering your jewelry personal shopping service in a city that has a population of at least 100,000. You would expect a city of this size to have a certain number of career women who would be interested in your services. To market this idea, you could approach large companies in your area with brochures outlining your services and see if they would be willing to display your literature in a prominent area such as the business cafeteria or other area with high traffic. You could also discuss with the business the possibility of using your jewelry for corporate gift giving which would be another source of revenue for you.

In your marketing materials, you could emphasize how unique, jewelry makes a special, one of a kind statement that can transform an ordinary outfit into an outfit that sends a message of style, good taste, and power. You might want to show photos of an outfit without jewelry next to a photo of an outfit accessorized with your jewelry. You could also emphasize the time saving aspects of your business. You bring the jewelry to them so they don’t have to take time away from their busy schedule to shop for it themselves.

You’d be surprised at the number of professional women who are not comfortable with selecting their own jewelry or accessories and would love to have an objective, outside opinion on what would work with their current wardrobe. You may want to consider putting together a portfolio of photos showing outfits which you’ve coordinated with interesting jewelry to show your clients what you’re capable of. Let them know there’s no risk to them. If they don’t like your suggestions, they’re under no obligation to purchase your jewelry. When your clients find out your jewelry shopping service is essentially risk free, they’ll be eager to give you a try.

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Filed under: Jewelry Business