Gem dealers from all over the world came to Oz seeking the path to better profits.
By Morgan Beard, Editor-in-Chief

Related Links

• The Australian Sapphire Blues • Bonding with CIBJO Companies Mentioned • International Colored Gemstone Association (ICA) • Thaigem.com • Cherrypicked.com

With all the reality checks of the past two years - the Internet wipeout, the threats of a U.S. recession, and the fierce competition in luxury branding - how can a business survive?

That was the theme addressed by this year's International Colored Gemstone Association (ICA) Congress, held April 29-May 3 in Sydney, Australia. Eighty-five members of the association from around the globe gathered to discuss ways to work together and improve their financial picture going forward.

While the main topic of this year's sessions was selling gems via the Internet, members made it clear that the issue on their minds was promotion of colored gemstones.

The Sydney Opera House, an Australian icon, framed by the famous Sydney Harbour Bridge. Photo by L. Simmonds. Photo © Australian Tourist Commission.

On the first day of the congress, the board held an open forum where members were invited to give their thoughts on the future of the organization. The discussion centered on ways to grow the ICA, and one of the primary means given was promotion. The question was, promotion of what?

Some felt that the most effective promotion would be aimed at the end consumer. As one Swiss delegate put it, "We have to take our own future into our hands. We need to have a world promotion around colored gemstones."

The primary objection to a consumer campaign was the cost, but as guest speaker Eric Braunwart of U.S.-based Columbia Gem House reminded participants, promotion doesn't necessarily equal advertising.

"We often tie dollars to effort, and that's not always the case," said Braunwart. "We can do something for a small amount of money. What we are talking about when we talk promotion [is] all different methods of promotion. Advertising is very expensive; public relations is not necessarily very expensive."

Others felt that it would be better to work with retail jewelers, to help them push color to their customers. "The people who sell colored stones are the people behind the counter," observed U.S. delegate Tom Cushman of Allerton Cushman & Co. "If we're talking about selling colored stones, let's promote them to the people who are going to sell them. . . . If we can't get these people switched on to selling color, [we're in trouble]."

Delegates admire an opalized dinosaur fossil during a reception at the National Opal Collection. Photo courtesy ICA.

Still others proposed promoting the ICA itself to retailers, helping to build a brand that would associate the organization with ethics and quality.

"If we advertise that you should buy a gemstone from an ICA member, [that buyers will] get good disclosure and a good product, that leads to branding of gemstones sold by ICA members," said Oren Eliezri of Colgem 97 Ltd. of Israel.

The issue was tabled for further consideration, but during the course of the Congress, delegates heard speakers give other perspectives on branding and promotion.

One of the most dynamic talks was given by Bob Pritchard of Marketforce One Inc., a marketing company that has done consulting for companies like Coca-Cola, Ford, and General Mills.

Although the topic of his presentation was marketing on the Internet, Pritchard shared some insights on colored gem marketing with the delegates.

"You need to clearly define what it is you're selling. You have to educate people," he said. In a focus group, he asked what he described as 15 "very sophisticated" women to list some colored gemstones. "There was not one mention of ruby, emerald, or sapphire." When he asked why, "They said, 'Those are precious gemstones, they're different.'

" 'Colored gemstone' does not mean to the public the same thing it means to you," he continued. "You've got to understand what it is you're selling, and you've got to communicate that to your customer. You're not selling colored gemstones, partially because nobody knows what they are."

Nor should colored stones be defined by their characteristics, he added. "You're selling benefits, not features." He used the example of companies that sell window frames by advertising the advantages of their particular frames. "Who the hell knocks a hole in the wall to stick a window frame in it? People knock a hole in the wall to get a view. If [your product] doesn't make [the consumer] feel better, people aren't going to buy it. What's your emotional benefit?"

Past President Paolo Valentini speaks to the crowd. Photo courtesy ICA.

In response to questions from the audience, Pritchard recommended that the ICA undertake a consumer promotion campaign. "There's only one person in the world who's important, the customer. The customer can fire every one of you tomorrow by refusing to buy your product."

And in response to objections about the cost of advertising: "It doesn't take money to build an image. It's not the size of the budget that counts, it's the size of the idea."

The ICA does have at least one marketing initiative that's enjoying a lot of success: the ICA Web site. According to the site's Webmaster, Constantin Wild of W. Constantin Wild & Co. in Germany, the site has been attracting around 10,000 people a week, mostly consumers looking for more information about colored gems.

In a post-congress board meeting, the ICA directors approved an expanded budget for the site. They also adopted the slogan "Go Color!" for use in marketing (pending trademark approval).

Other marketing initiatives are still under discussion, but ICA President Israel Eliezri of Israel made it clear in a wrap-up press conference that a consumer promotion wasn't going to happen, at least not in the near future. He emphasized promotion to jewelry manufacturers and retailers as a more likely course, and pointed to the ICA site as a consumer-oriented educational and promotional tool.

The Newer Internet Economy
What does the future hold for colored stones on the Internet? Online entrepreneurs gave delegates a picture of the possibilities.

Board members, from left to right: Thomas Lind, Timothy Roark, Marcelo Bernardes, Jimmy Yiu-Lun Ko, Akira Ito, and Mehul Durlabhji. Photo courtesy ICA.

Two of the companies represented - Thaigem.com and Cherrypicked.com - are very different gem trading sites, but when it comes to doing business online their representatives had remarkably similar advice: Focus on personalized customer service, make sure gem images and descriptions are accurate, and offer a solid return policy.

"The gem industry is ideally suited to online trading," said Don Kogen, CEO of Thaigem.com, which sells gems of all varieties and qualities. "The Internet levels the global playing field. A customer can find what he wants, when he wants."

Moreover, the Internet can introduce people to gems they never knew about. "Sites like Thaigem.com allow jewelers to meet new and interesting gems," Kogen pointed out.

One technical problem facing colored stones online, speakers agreed, is the lack of a descriptive language like a grading system. "It would be so much easier if we had [a standard] descriptive language as our diamond cousins do," said Richard Orbach, CEO of Cherrypicked.com, which offers fine colored gems to the trade and public. He pointed out that diamond grading makes diamonds much easier to sell over the Internet, and gives consumers more confidence in what they're buying. "Diverse opinions riddle the colored gemstone landscape, making an informed buying decision an impossibility."

Despite the potential, the industry has thus far shown a reluctance to do business online. So far, the business models that work best involve selling to the consumer as well as retail jewelers, which most dealers are reluctant to do. But competition with jewelry manufacturers and retailers shouldn't be a concern, argued Kogen. "Consumers don't have the time to deal with a lot of this, to buy a gemstone and get it set themselves and save 80 bucks," he said. Instead, they are more likely to go to a store and buy finished jewelry - so jewelry stores are likely to be a site's best customers.

"The jewelry store is still the king, and I expect it will remain king for the next few years," said Orbach. "I believe dealers should be looking to partner with retail jewelry stores to create the harmony the Internet promises."

Even Pritchard agreed. "Is the Web the answer to everyone's prayers? Is it going to change the way we do business? I know it's not. I believe that in the business-to-consumer market, it has a very limited future.

"The biggest trend is people going to a Web site, getting all the information, and going to a retailer to buy it," Pritchard concluded.

Whether it's promotion or Internet selling, the answer always seems to come back to the retail jeweler. That's likely to be the focus for the ICA until the next congress, to be held in two years in an as-yet-undetermined location.

• For more information on Australian Sapphire, see The Australian Sapphire Blues.
• Read about the International Confederation of Jewellery, Silverware, Diamonds, Pearls and Stones (CIBJO) recent meeting with the ICA congress in Bonding with CIBJO.