Symbiotic supply: How supplier synergy can improve your retail business

by carly_midgley | June 21, 2018 8:55 am

By Hemdeep Patel

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Amazon accounts for 43 per cent of all Internet transactions in 2017. It also makes up five per cent of all transactions when one examines all retail sales across all platforms and channels during the same time period, continuing the company’s upward trend in growth. Year-over-year growth of all other retail operators has been pegged at two per cent, with the overall trend aiming downwards. (For more, visit www.businessinsider.com/amazon-accounts-for-43-of-us-online-retail-sales-2017-2[2] and www.cnbc.com/[3]2017/07/07/amazon-is-eating-the-retail-world.html.)

This is the reality of retail today. The impact of Amazon—and, for that matter, any and all other competition—is more significant than ever before. However, if we examine how other businesses are addressing the changing landscape of retail sales, we find companies are focusing on basic ideas that have served true and strong as long as commerce has been part of human communities. Namely, the focus is on providing great service and an exceptional product at a competitive price.

To do this, many companies need to add new and more meaningful ways of engaging their customers. This can be accomplished by not only creating a link between the business and the product or service being offered, but also illustrating the value this adds. This may seem like a simple recipe, but you would be surprised how difficult it is to create a business that works, lives, and breathes this creed.

In the jewellery industry, this philosophy can be supported by the many aspects that make up a successful business (i.e. marketing touchpoints, customer and inventory management systems, and also e-commerce engagement). However, I will focus on one aspect that is often overlooked and not given a second thought—the jewellery supply chain.

Better together

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On the surface, it may seem the jeweller/supplier relationship is nonsymbiotic—that sales and support are provided from the manufacturer to the customer. However, offering a more symbiotic relationship between customer and supplier can be highly effective.

When I first joined the industry, during one of my early business trips overseas with my father, I learned a valuable lesson: at that time, success in the gemstone business was determined by how well a person bought inventory. This seemed counterintuitive at first, because during these trips, we were spending money and not making any sales. However, by digging deeper into this philosophy, I found if we bought well, we were better able to maximize our margins.

This was a way of thinking more in line with a nonsymbiotic relationship, or one where we and many others like us chased the best deal. The philosophy worked well in the age before the Internet, when the world was much bigger and next-day international shipping and  ‘must go to’ international jewellery trade shows were still years away.

Now—as everyone within the jewellery industry  will know—those days are long gone, and strong competition comes from every corner of the world regardless of which product or services a business aims to carry to market. Though the ability to buy well is still quite valuable, the real strength of a business is its ability to combine its own aptitudes with those of its supplier to market in a more synergistic way. The most obvious example of this is when retailers carry branded lines of jewellery. The brand lends its marketing reach and identity to the retailer’s customers, and in turn, the retailer provides strong support and positive exposure for the brand. The result is success for the supplier and client.

Up close and personalized

A lesser-known—but equally important—symbiotic relationship is the one existing between retailers and their wide range of nonbranded suppliers, each of which provides an important function to any jewellery business. The trade/client relationship can be a valuable resource for a retail business to provide more personalized services in the areas of jewellery repairs, appraisals, or custom design. These offerings can be provided to the retail customer quickly, efficiently, and often with exceptional results when that relationship is symbiotic.

However, exceptional service and products cannot easily be offered through a nonsymbiotic relationship or the digital medium. As I have often noted in my previous articles, bringing customers back to a brick-and-mortar store requires jewellers to provide a more personal buying experience. In the example I provided in my article, “Evolutionary theory[5],” in the October 2016 issue of Jewellery Business, personalization was incorporated through the introduction of computer-aided design (CAD) at the store level. However, it can extend to a wide range of jewellery-related services that cannot be provided through a digital medium.

The real deal

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In the last decade, undisclosed resale of synthetic and treated diamonds and gemstones has increased unabated. Even though many industry leaders and gemmological laboratories have aimed to establish clear protocols to identify synthetic and treated stones, it is still up to the members of the diamond and gemstone sectors to take on these responsibilities. Established suppliers know the relationship they cultivate is based on fundamental trust, which they have to build and maintain. They do this by constantly scrutinizing their supply chains, knowing it is integral to the success of their businesses. Further, they help their clients navigate the pitfalls and landmines resulting from the growing threats of synthetic and treated gems.

As suppliers push to maintain a high level of integrity in their inventory, they increase confidence in the authenticity of their supply to their clients. Further, retailers can use the certainty of natural origin of the gemstone or diamond as one of the key value propositions to their customers. This serves as a vital symbiotic relationship that can help minimize the impact of undisclosed synthetic and treated stones.

With the growth of online diamond/gemstone trading platforms that attract new sellers and buyers daily, many retailers find digital transactions an easy and quick way of making a purchase decision. However, retail customers often request to see a number of stones in order to narrow down their searches. This can only be accommodated when there is a solid understanding between the supplier and client, which cannot be achieved online. Suppliers take on the burden of risk by stocking a wide range of inventory and allowing their clients access through consignments, which works only if the relationship is fair to both parties. A unique advantage of this consignment relationship occurs when retailers work exclusively with a limited number of consigners, which can encourage suppliers to provide their best effort, service, and pricing.

In speaking to numerous clients throughout a business week, I have found this symbiotic approach has become a cornerstone to many successful businesses. By simplifying their supply chains, retailers feel they are able to extract more value from their suppliers for their customers and for their bottom line.

[7]Hemdeep Patel has been writing since 2008 on a variety of topics relating to the jewellery industry, from advanced gemmology, gemstone, and diamond trends to emerging jewellery CAD/CAM technologies. He is head of business strategy and marketing for Creative CADworks, a 3D CAD/CAM firm specializing in design, production, and 3D printer and resin sales. He is a third-generation member of the jewellery industry. Currently, Patel is vice-president of the Gemological Institute of America (GIA) Alumni Association for the Ontario Chapter. He is a graduate gemmologist with a B.Sc. in physics and astronomy. He can be reached via e-mail by contacting hemdeep@creativecadworks.ca.

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