Successful e-Commerce Ventures

The ongoing debate over the necessity of e-commerce in the jewelry industry is coming to a close. From small shop artisans showcasing their custom work to major manufacturers providing their customers with the ability to place and track orders online, virtually every jewelry business has an Internet presence or is planning for one.

But getting involved in e-commerce is still not a simple proposition. Like any business decision, selling online requires research, testing, and refining; a simple Web site is no longer the sole requirement for success.

In the case studies that follow, two companies will discuss how and why they ventured into e-commerce-and how it has affected the way they do business. B.A. Ballou & Co. in East Providence, Rhode Island, is a leading manufacturer of findings, supplying millions of pieces each year to thousands of customers worldwide. Oakland, California-based Jim Binnion is a jeweler and artist who, until the advent of the Internet, sold strictly through galleries and regional trade shows. Both studies show how, regardless of size, a company must consider its market, its needs, and its capabilities before hanging a cyber-shingle.

At Your Service

B.A. Ballou & Co. Reaches Out to Customers

It is one thing to sell your product on the Web; it is another thing entirely to attempt to electronically re-create the experience of doing business with your company. When East Providence, Rhode Island-based findings manufacturer B.A. Ballou & Co. decided in 1999 to change its static, information-only, three-year-old Web site into an e-commerce site, they did so knowing their primary goal: to provide customers with the same level of service online that they would get if they were ordering via more traditional methods.

"We have always received high marks from our customers when surveyed about the level of the customer service we provide," says Frank Di Pietro, the company's marketing manager. "We wanted to be able to show people that using the Internet would provide an additional option that maintains the high levels of service they expect from Ballou." But transferring that level of service to a new medium was not something that Ballou intended to rush into. The company's reputation was on the line.

"We looked at this as a traditional market research project as well as a vendor search project," Di Pietro says. The company spent the better part of a year putting together its online strategy before rolling it out at the 2000 MJSA Expo New York. And the entire process began with one basic question.

"One of the key things we asked early on was whether or not our customers had Internet access," says manager of information systems Kevin Crowninshield. "If we were going to put money into this, were we going to get a return? We asked customers about their current capability to access the Internet-What kind of connections did they have? What kind of computer skills did their staffs have? We didn't want to develop a big Web site, only to find that our customers don't have good access or had no interest in this technology."

Ballou discovered that their customers were not overwhelmingly ready to do business online. Many customers still had dial-up access (i.e., through phone lines) to the Internet as opposed to faster direct subscriber line access; some had a limited number of computers hooked into the Internet; some had no Internet access at all. But although the numbers appeared low, one statistic made Ballou decide to go through with its online program: A majority of its clients who did not have access intended to get it within the next 18 to 24 months.

And those survey results proved correct. Since the time of the survey, Di Pietro says, "we've seen a lot more of our customers getting online, having access from the office, making upgrades to equipment, and realizing that the technology is here and it's going to be here going forward." He adds that if the company had wanted the e-commerce site to be immediately profitable, it may not have elected to go forward. But Ballou looked at it as an informational tool, as well as a medium that would assist both its customers and its internal service departments.

In Spring 1999, confident about the prospect of e-commerce, the company began the project in earnest-although it would be several months before it even considered revamping its in-house resources in anticipation of getting online. "It's worth noting that before we even bought a single piece of hardware, we were seven or eight months into the project," says Crowninshield. "Those first months consisted of analysis, marketing surveys, contacting the customers, and designing the site."

One of the first things Ballou did was research budgets and look at vendors to administer the site. "We didn't rush the due diligence aspect," says Di Pietro. "These days, anyone can call themselves an Internet Web site developer."

The company combed through the many solicitations it had already received from both national and local Web vendors. The goal was to find a vendor that not only had a track record, but also would be willing to supply the contact information of former clients.

"We wanted [a vendor] who was open to our talking to its customers," Di Pietro says. "We also wanted one that would be willing to accept a contract in which, if deadlines and budgets weren't met, penalties could be issued." Such security, Di Pietro adds, is particularly important given the amount of initial work required to set up a Web site.

Led jointly by the management information systems and marketing departments, Ballou created an overview of what it wanted to incorporate into the site, so that both company and vendor would be working from the same blueprint. The company also spoke with outside consultants who specialize in the Web. These consultants provided the company with more pointed, technology-specific questions to ask of vendors, leaving Ballou free to concentrate on the business concerns.

After about six weeks, the package was ready and the company took proposals from vendors. Two months later, in September 1999, they selected a company whose approach they felt comfortable with.

"They were very user-friendly," Di Pietro recalls. "They made us feel comfortable in what they could do for us, and came very well referenced. All business references I spoke to about them said the same thing: They deliver what they promise, on time and without any sticker shock."

The company was now ready to overhaul its equipment, and it proceeded full-bore. "We upgraded our network," Crowninshield says. "We installed a proxy server to give our employees high-speed Internet access. This isn't something we technically had to do for the site, but we'd look pretty silly trying to promote it to our users and not have good access internally. We also gave faster PCs to those staffers who are directly involved with the site-the customer service department, marketing coordinator, and office manager, among others. We installed a router and firewall software, which increases our computer security from the outside." A separate server was also installed in-house to move the data back and forth from the IBM AS400 system (the company's main database server) used by the customer service department and the Web site server, which is hosted off-site.

One thing the company did while the system was being developed was to "clean up" the information stored in the AS400 system. Since the Web site would tie directly into the AS400, providing customers with access to some of the information contained there, such as order statuses and histories, that information had to be converted into a format they could understand. This was no small task, Crowninshield notes, since the AS400 held literally years of data-much of it in a company-specific shorthand.

"It wasn't something we could present," he says. They didn't want a customer to have to decipher "GRD CHN GF WZ 402 X 1.5 HA" into "402 Guard Chain, gold-filled, Hamilton finish, 1.5 inches." That cleanup, and the entry of the converted information into the system, took about two months of work by various departments. This included updating item master records on the AS400 to match the new images that would appear on the Web, and the addition of "series numbers" that would cause the images on the Web site to group as they do in the company's catalog. "As a bonus, when we start working on the new [print] catalog later this year, everything will already be updated," Di Pietro adds.

While the company was handling its internal conversions, its vendor created the Web site design. The company considered about six different versions before settling on a final choice. The basic idea was to split the site into two "sides": the public side, which offers product information and pricing (Di Pietro notes that Ballou is one of the first findings companies to put its pricing out in the open), and the side for registered customers, which provides value-added options within a confidential site.

"You can check an order status online, and find out when completed orders were shipped via links to UPS and FedEx," Di Pietro says. "By clicking on the tracking number, you can see when it was shipped, when it was delivered, and who signed for the package. Plus, right when you log in, we know who you are. We don't have to take the billing information or the shipping information every time you order, since we already have captured all that data."

Crowninshield adds that "if a customer has specialized product or service information, it is retained on the site confidentially for their convenience. They can look over their sales history from the last couple of years for inventory purposes or planning purposes. We're taking advantage of what we already have on the AS400 by streamlining that data to make it easier for the customer to use it. Service as well as sales is what we're going for."

Becoming a registered user is a simple process, particularly for existing customers. All they need to do is provide a secure password, and once customer service contacts them for confirmation, their account is created with their existing history intact. As for new customers, they are brought on via the Web site just as they would be in the real world-except that the information necessary to open an account can be confidentially submitted online.

With all the elements in place, Ballou opened the doors to its new site and premiered it live in March 2000. The launch was also promoted throughout the year via domestic and international trade show exposure, trade magazine advertising, and targeted direct mailings of collateral material to current customers, jewelry manufacturers, and distributors. The ads and mailers invited existing and potential customers to visit the site.

And they did. Since its inception, the site has received several thousand hits per month, and more than 100 customers have registered on the site. "Based on our total number of customers, this is running pretty close to what we expected," Crowninshield says. "We have a good combination of manufacturers and distributors-large, mid-range, and small customers. As companies implement better Internet access, we expect the numbers to go up."

The company has also seen a distinct rise in orders placed by overseas customers. "Fifty percent of our Internet orders are submitted by our international customers and distributors," Di Pietro says. "They're taking advantage of the ability to place an order, check a price, or make an inquiry any time of the day or night."

Another feature that customers are taking advantage of is the site's direct ties into the company's order retrieval system, providing nearly real-time ordering. The AS400 checks the off-site Web server every 15 minutes to see if any new orders have arrived, pulls them down, and notes them with a "review" status. That puts them in a queue to be seen by a customer service representative, just as a traditional order would be.

And those reviews are vital. "Our customer service reps know our customers very well," Di Pietro says. "They're on a first-name basis with many of them. Human interaction is very important. We want to be sure that the customers who use the site get a good impression the first time out. The review doesn't slow the process at all; it adds a level of checks and balances."

For example, if an order comes in for a million pieces from a customer who has never ordered a million before, the reps will recognize it and research it further to ensure the accuracy. The reps can also spot product discrepancies such as a pin stem and a catch on the same order that might not be compatible. And it's not uncommon, given the newness of dealing on the Web, for orders to have an additional or misplaced digit; the reviews allow those errors to be caught, and corrected. And any such discrepancy is followed up with a phone call to verify exactly what the customer needs.

Although the site is designed to augment the customer service department, it does offer some benefits over traditional methods of ordering. Along with 24-hour access, placing an order through the site circumvents the problem of not being able to get through when calling the company, and customers are never placed on hold. The upgrade has also had some internal benefits: Customer service has been further complemented by the staff's high-speed access to the site-they can actually retrieve shipping information from it faster than they can from the in-house AS400 system.

To further introduce the Web site, the company has armed its sales force with the equipment and training necessary to show it to customers. "We put together a simple presentation, with marketing explaining why we were doing this, and management information systems showing them how best to access the site and explain it to the customer," Di Pietro says. And in the event the salesperson is visiting a client with no Internet access, the company has also created a CD-ROM presentation that can be shown on the laptop.

However, Di Pietro adds, "like any industry, our people have varying levels of experience with computers." Which means there are going to be questions on using the site. The company offers constant support to the sales reps-whether by fielding questions via phone or e-mail, or even flying out to a rep's area for some additional training.

Salespeople also have access to an extranet-a site within the site-where they can check customer histories, find information they may need for upcoming calls, or communicate with other reps. "It's like a private room for doing business," Crowninshield explains.

The additional benefit of all this, Di Pietro notes, is that when customers see the salesperson working with the site and how easy it is, they will also see the ease of doing it themselves. "Plus, it gives the sales rep some new service options to discuss when he visits the customer," he says.

So far, the company is pleased with the response to the site, Di Pietro says, and that has given Ballou the incentive to continue adding new services and features. "A lot of what is on the site is there as a result of feedback we've gotten from our customers, things they've told us they want," he says. "That will continue to be an important tool for us going forward."

And going forward-both for B.A. Ballou & Co. and its customers-is what e-commerce is about.

Talking to the Goldsmith

Jim Binnion Finds Promotion the Key to Success

When Jim Binnion, owner of James Binnion Metal Arts in Oakland, California, explains that his Web site has caused his business to double each year since its inception, he isn't bragging. He's genuinely amazed-if not a bit overwhelmed-by how his entry into cyberspace has affected his business. The Internet has proved so good for Binnion, it may force this formerly one-man operation to expand, just to meet the new demand for his product.

When Binnion originally created the site in 1996, he intended it to be a repository of information on mokum? gane, the art in which different metals are fused and cut to create a woodgrain effect. He was already sharing his knowledge with other artists through an online e-mail forum called ArtMetal, and Binnion saw the Internet as a way to expand how he disseminated that information.

"Initially, it wasn't even a marketing thought," he admits. "It was that I was communicating with a large group of people via e-mail, and here was a way to show a picture of what I was talking about rather than trying to describe it. It was a tool to facilitate communication, and a way to put my gallery out there and share it with other people."

Being something of a self-taught computer enthusiast with a small amount of experience in hypertext markup language (HTML, the computer language that makes Web sites possible), Binnion used a Web authoring program called Adobe PageMill to create a simple Web site. Working about four hours a night (after the day's work) for roughly a week, learning the ins and outs of the program by trial and error, he put together some pages that consisted of notes from a mokum? class he was teaching, along with photographs of his rings. It was the inclusion of those photos that turned things around.

"The site went up in October, and that same month people off the [ArtMetal] list started to contact me, inquiring about the rings," he says. "They were trickling in-a couple a week. People would write, 'The rings are beautiful, how much would a set cost?' They were requests for the work itself, not for information on mokum?. That was when I started to see the business potential of the site."

At the time, Binnion's site had "a long, bizarre address" provided by his Internet service provider. This was true of many early Web sites, before simple, intuitive site names (such as jewelry.com) were common. "It was their domain name, slash this, slash that, and then my name at the end," he recalls. "When I started to realize that there was some commercial potential for the site, I secured a domain name."

Luckily for Binnion, in those early days of domain-name speculation, when ordinary people were registering names such as fordmotors.com and then selling them to the companies that, by rights, owned them, his was an art with an unfamiliar name.

"I realized that tying up a meaningful domain name was a good idea. Through Network Solutions [then the only site authorized to register domain names] I registered mokume-gane.com, mokumegane.com with no hyphen, and jbmetalarts.com." (Another designer had already bought the simple "mokume.com.") Registering a domain name costs roughly $35 per year per name, and can now be done through a number of Web sites.

With the intuitive domain name in place, Binnion began working to draw more commercial traffic to his site. While he was getting visitors and business, most of it was coming to him circuitously.

"If people were searching for mokum? on a search engine, they would find the ArtMetal site, where I had my class notes," he recalls. "I had a link to my Web site on that page, so that would bring them in. It took them three steps to get to me."

Obviously, Binnion wanted a more direct path to his site, so he submitted his URL (Web address) to the major search engines, such as Yahoo! and Lycos. Every search engine, he notes, has a page where a company can enter its URL, along with keywords for searches and, sometimes, a description. "You might have to look hard to find the link to add your site," he says, "but it's there." For example, in Yahoo!, you won't see the "Suggest a Site" link until you've put in a search argument (words or phrases for the engine to find), gotten a result, and clicked into one of the engine's category pages-and even at that, the link is at the very bottom of the page, in very small type. Once a company's information is entered, it's up to the search engine staff to decide whether or not the site gets listed. In addition, as new sites are added, old listings can slide down the results page or simply disappear-which is why, Binnion insists, it's necessary to keep going back to check and to resubmit.

"I submit my site's info every month or two," he says. "You don't want to do it too often, because some of the search engines are set up to block or even remove people who try to force them to pick up the site."

Binnion is a firm believer in search engines. "I got picked up on Yahoo! in its early days, and, of course, it's turned into a monster of place. That engine has always been responsible for a large percentage of the people coming to my site. And once the business started coming from Yahoo!, I started looking even more into how to publicize the site."

Which could be a daunting task, given the number of engines that are already out there and new ones cropping up all the time. But no daunting task, it seems, remains so for long on the Internet. Sooner or later, something comes along to automate the tedious. Binnion's new favorite Internet tool is Selfpromotion.com, a service that allows users to submit their listings to any number of search engines with a few clicks of the mouse.

"By using this tool, I'm able to do in literally minutes what used to take me all day," Binnion says. "And with just a few keystrokes I'm able to update all the sites I've set up in my profile."

Banner ads are another common way to promote a Web site. These narrow, sometimes animated ads that usually appear at the top of a Web page are on virtually every site. Binnion has dabbled in them, but doesn't place much faith in their effectiveness.

"I was offered an ad on the ArtMetal site," he says. "I figured if anywhere would be a good test, it [would be] a place where people were already focused on artistic metal endeavors. I was able to look at the statistics-how many impressions were made [the number of times the ad showed] versus how many people actually clicked on the ad, and the numbers were well below 1 percent.

"Most of the people I know consider banner ads an annoyance," he says. "I see them as something people view akin to television commercials-something that's in the way of the program. I don't want to start out by annoying my customers!"

What Binnion has found does work is a new method of advertising being offered by the Google search engine. Rather than creating a banner, an advertiser selects certain keywords or phrases that a Web surfer might enter. When the results based on those search arguments come up, a small, text-based ad-no more than 50 words-appears in a shaded box on the right-hand side of the screen. The box has a link to the advertiser's site.

"It seems to be working quite well in bringing traffic to my site," Binnion notes. "The number of click-throughs is still fairly low-about 1.3 percent-but the interesting thing is that I'm getting more hits from the Google engine [overall]. I think people see the box, and they see my listing [which appears to the left], and they click on that. The box, I think, acts as reinforcement for my name."

The cost is right as well, Binnion says. Where banner ads can cost literally thousands of dollars, the Google offer is priced in a tiered structure based on whether your listing appears at the top, middle, or bottom of the page. A top-of-the-page listing, clearly the premium, is only $15 per thousand impressions (the number of times that the box is shown as a result of a search). At that rate, Binnion figures, if he gets even a couple of orders through it a year, it will pay for itself.

As the increased exposure brought more buyers to the site, Binnion also had to reconsider the way he was doing business. For the first six months of his site's existence, orders were taken strictly via e-mail. He admits it was not the easiest way to do business.

"People who liked the work they saw would write and ask if I could do one in this color gold or that color gold. I'd have to write back long, involved e-mails to explain what materials I worked with, whether or not I could make what they wanted, or if I could do something similar. It created a lot of back-and-forth, usually three or four e-mails, just to get started."

The answer was to design a form, using PageMill, that allowed users to create and submit a query specifying such things as the combination of metals, style, and size they wanted. With the program's drag-and-drop interface and Binnion's own familiarity with the software, putting the form together was fairly simple; it took him a single evening to create. He activated it by contacting his Internet service provider to get a small bit of HTML code that needed to be added to make the form process the information and deliver it to him via e-mail.

"The form now walks [customers] through the basics of what's available," Binnion says. "I still get some who want to add elements, but the information I get from the form makes the majority of the quotes I generate pretty straightforward."

Binnion has recently expanded the form to include definitions of some of the terms he uses, such as "etching," the chemical process that removes sterling silver and creates surface texture to enhance a ring. He's also placed images to illustrate ring profiles-e.g., comfort fit, half round, and flat-as well as to illustrate how the rings look with rails.

Although the form still keeps Binnion's main business vehicle e-mail-based, he prefers it that way. The Internet is rife with e-commerce sites boasting the fast-and-easy "shopping cart" version of buying online-click on a product, click to the check-out, toss in payment information. That vision doesn't jibe with the way Binnion prefers to do business.

"I want people to feel like they're actually talking to the goldsmith," he explains. "They interact with me by telling me what they want me to make, and then we'll enter into the transaction of the sale. I don't want to have the metaphor of being a Wal-Mart-drop your stuff into the cart and proceed to the checkout line. I see e-mail and the phone as a way to bridge the distance between myself and customers, and it still allows me to interact with them one-on-one."

This personal approach is working well for Binnion-perhaps too well. Last year, between his regular orders and his Web site orders, he was turning out about a ring a day and working seven days a week, 10 hours a day. His orders now come in from around the globe, whereas prior to his Internet immersion he sold mostly through East Coast galleries. He admits that it may be a problem.

"If business doubles again this year, I have to make a decision on what I want to do with this," he says. He has added one hire, a bench jeweler who performs some of the routine finishing work, and his wife gladly volunteers to field and respond to e-mail queries. Still, he wonders if it will be enough. "Do I hire additional people…to answer the phones and e-mails?" he says. "There are days when I don't get much done at the bench because I'm spending my time on those."

But for now, Binnion is making the most out of the influx of business that e-commerce has brought him.

"It's a good thing," he says. "It's made me think about what I want to do and where I want to go with this. It surprised the hell out of me, but it's a nice place to be right now."