Komali Moon is a new online-only jewellery retailer.
Jewellery Fair suppliers deny online retailer
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An Australian internet retailer who attended the recent Sydney Jewellery Fair to order new stock found little success, claiming all of the brands she was interested in declined to open an online-only account.
Melanie Hawgood launched her online jewellery and accessories store Komali Moon earlier this year and experienced rapid initial growth, stocking mainly overseas-based jewellery brands. However, when Hawgood attempted to secure new stock from Australian jewellery wholesalers exhibiting at the recent Sydney fair, she says she was flatly refused.
“I started my website by stocking a lot of brands I know from overseas and they have not had an issue at all with my business being an online retailer,” she said. “The questions they would usually ask would be about the other labels I carry, who are my other customers, and to make sure I would sell at the recommended retail price. At the Sydney Fair, distributors would just say ‘no, we don’t do online’.”
Hawgood contacted Jeweller after the JAA International Jewellery Fair saying she continued to get the same response from a range of exhibitors throughout her visit.
“It was very uncomfortable,” she said. “I went to the brands I was interested in and that was the first question I asked them [if they would sell to online-only stores]. I didn’t feel comfortable having a five minute discussion about their brand then telling them I was an online retailer and them saying they wouldn’t open an account.”
Hawgood said she has “an issue with that being the sole reason, without them delving into my business any further.”
“One brand said they decide on a case-by-case basis, they do sell to some online-only stores,” she said. “I got feedback from them at the end of last week and they said they loved my store, that I would definitely fit in, but management said that due to complaints from other stockists they can’t do online-only anymore.”
Hawgood, who launched Komalimoon.com.au in May after a long career in finance, said she did not visit stands at the fair displaying generic jewellery ranges as she was only interested in branded product. She would not divulge the companies she tried to open accounts with at the fair.
Complications
The issue of brands supplying online-only retail businesses continues to be a complicated one because often the local distributor’s agreement does not allow for the online channel because wholesale distribution agreements are usually defined as territories.
Phil Edwards, managing director, Duraflex Group Australia
Duraflex Group Australia managing director Phil Edwards told Jeweller that Thomas Sabo does not allow its products to be sold by online-only retailers, as a mechanism for supporting its physical retail partners.
“As a brand, Thomas Sabo, does not sell to online-only stores and operators,” he said. “It is very much defined in the agreement with the head office in Germany. They want to support the retailers we already have existing relationships with. The brand’s strength is in bricks and mortar retailers.”
Edwards was unaware whether his staff at the fair were approached by Hawgood, but he confirmed that he receives many requests to open online-only accounts, however, stores that maintain both a physical and online outlet could sell Thomas Sabo products online.
“If a bricks and mortar store wants to have an online “store” as an extension of their bricks and mortar store then Thomas Sabo as a brand will support that online store and that online presence, and are very happy to work with that store,” he explained. “Yes, it comes with some rules and regulations you have to abide to. But as a brand we are very happy to support a bricks and mortar store with an online store that supplements their bricks and mortar store but isn’t just a standalone online presence.”
Hawgood said she found it “ironic” that bricks and mortar stores could sell branded products online but online-only stores couldn’t.
“I really don't understand why suppliers don't treat online businesses as they would any other business, and ask questions more along the lines of ‘who is my customer and what other labels do I carry?’, instead of instantly dismissing me due to the fact I am only online,” she said.
Holding stock
The issue for many suppliers is whether an online-only retailer has the intention of ordering and holding stock or whether they just want place an order with the supplier as they achieve a sale with the consumer.
Men’s jewellery supplier Cudworth Enterprises does have several online-only customers, but a number of strict conditions apply before an account is opened.
“I don’t mind supplying to internet retailers as long as they do two things,” Cudworth director Darren Roberts said. “They have to buy stock for their website to carry, like a bricks and mortar retailer does, and honour the recommended retail prices.”
Darren Roberts, director, Cudworth Enterprises
Roberts said that often an online-only retailer wanted to upload his products’ images on their website but not carry stock. He explained that, after careful consideration, he now works with “about half a dozen” Australian-based online-only retailers.
The other major concern for high-profile brands in dealing with online-only retailers is the fear of heavy discounting and undercutting traditional bricks and mortar retailers thereby devaluing the brand’s marketing and image.
John Papaioannou, managing director of Time Essentials, the distributor of a number of high-profile watch brands confirmed that his distribution agreements allow him to supply online-only retailers.
“We can supply to internet retailers but our head offices are very selective in who they do it with. We haven’t done it yet [opened a local internet only account] but it would be a case of us giving head office a proposal and saying ‘Here’s the website, this is what they will sell and how they will sell our brand’,” Papaioannou said.
He said he’d have to provide some rationale and support for why it would not affect the brand’s existing traditional retail channels.
Papaioannou added that he also receives many requests by internet retailers to sell the Bulova, Jag and Fiorelli watch brands, and there are many reasons why he has not yet decided to offer that retail channel. He agreed with Roberts, saying that online-only retailers will often want to upload product images onto their website and avoid holding stock like bricks and mortar retailers do.
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Posted September 17, 2012