Independent jewelry retail brands have an opportunity to join jewelry buying groups that claim to provide a variety of benefits and opportunities. These groups combine smaller businesses’ power when it comes to procuring expensive inventory from sources that may usually prefer to work with bigger names in the industry. There are other benefits as well.
But a recent INSTORE survey found that 64% of jewelers surveyed aren’t a part of one.
If you’re interested in these types of purchasing organizations to expand the options your smaller jewelry brand has, it’s important to research carefully and explore the pros and cons before jumping in. Not only do you need to decide if buying group engagement is the right choice for you, but you also need to find one or more that suits your needs and interests the best.
Let’s break down the pros and cons so you can make the right choice for your store.
What is a jewelry buying group?
These groups pull the buying power of multiple independent jewelry retailers. They are not legal commercial entities on their own, and they don’t affect the independence of your brand from a business perspective. Instead, they act as a collective that makes it possible for members to get better pricing, access to exclusive collections, and smoother interactions with large jewelry manufacturers and other sources. They offer networking opportunities that may improve bargaining power and operational efficiency.
Each individual jewelry buying group may operate differently. Retailers need to look into the individual collective to determine the benefits they will receive and any disadvantages that will get in the way of their goals. Also, keep in mind that you can’t simply sign up for any group you want. Most have limited membership spaces, and they only operate in certain geographic locations or specific niches.
Here are a few common ones you might have heard of:
- The American Gem Society
- Continental Buying Group (CBG)
- Independent Jewelers Organization (IJO)
- Retail Jewelers Organization (RJO)
- Southeastern Jewelers Organization (SJO)
Pros: The advantages of joining a buying club for jewelry retailers.
The buying journey of an independent retail jeweler may face many challenges, especially if your company is quite small and you don’t have the financial resources to order high quantities of inventory at once. A jewelry buying group, as mentioned above, can help with this and provide a variety of other benefits along the way.
Cost savings and negotiating power
This is the top advantage of joining a buying club. It can offer discounts on wholesale jewelry purchases to improve your inventory levels and even offer products you may not have access to otherwise. It’s easier to make a profit when initial costs are lower, and you have more marketing leverage when you can offer larger discounts to retail customers.
Access to exclusive deals and new collections
Besides lower costs, a buying group often gives individual retailers access to exclusive products or collections that the source doesn’t want to sell to just anyone. Manufacturers or designers want their pieces in shops that can sell them and order more. The collective bargaining power of a buying group makes this more probable.
Networking opportunities in the jewelry industry
Many jewelry buying groups are well represented at popular trade shows. In fact, negotiations and educational opportunities often occur at these events. Therefore, they provide a genuine opportunity to build strong relationships within the industry and explore additional cooperative benefits with individual brands.
Business support, growth opportunities, and education
Besides networking with those who can provide more access to jewelry products, buying clubs may also help with business growth, operational support, and even training or mentoring in some cases. These benefits can include things like shared marketing strategies, data sharing, and technical support for e-commerce or POS platforms. These types of opportunities are of special interest to newer retail brands who may not have the type of support or access to industry mentoring that can propel them into a place of success and respect.
Cons: Potential drawbacks of buying groups you should consider.
Despite the collection of benefits that buying groups bring to independent jewelry retailers, many jewelers choose not to be a part of them. Some company owners simply prefer to do things on their own and not follow the rules or limitations of other organizations. When you explore the opportunity of joining a jewelry buying group, it’s important to consider the potential disadvantages just as much as what you have gotten out of the association.
Membership fees
This is one of the main roadblocks when signing up with any of these organizations. Some of them have upfront fees in the thousands of dollars. This may be quite prohibitive for newer brands or those who have very limited customer bases or specific product lines. Also consider ongoing membership fees and purchasing requirements. This is just one of the financial responsibilities or obligations that can make joining a bad choice for you.
Obligations, commitments, and restrictions
Every jewelry buying group has its own list of rules and agreements that every member must follow. Some common ones include minimum purchase requirements, exclusivity agreements to buy only from affiliated suppliers, transparency in sales and inventory reporting, and required shared costs of things like promotional events, certain shared technology, and more.
The potential for conflicts or disagreements always exists when an independent brand joins purchasing collectives. Members without administrative control or power within the buying group may not have much say in how things progress. While this may make some independence-minded brand owners balk, a well-organized and professional jewelry buying group should not have any policies that cause serious problems.
Conclusion
Jewelry buying groups have been a large part of the industry for many years, and today’s savvy retailers should look closely at the opportunities to see what will work best for them. When it comes to collective bargaining power and sharing knowledge, opportunities, and resources, these types of organizations usually provide many more benefits than the potential disadvantages. Ultimately, it’s up to you and your brand identity whether joining one of these groups makes sense or not. The option exists and has provided other retailers with many needed benefits over time.
.jpg)
