Retail businesses are constantly faced with rent, expensive overheads and online competition. Business owners need to have a response to the changing patterns of consumer shopping.
With the rise of e-commerce the option of starting an online business may be the key to saving costs and increasing profits.
This article explores the cost comparison of running a retail outlet versus an online shop for a gemstone business.
Mygems is a Gold Coast based gemstone wholesaler that has been operating for the past 25 years. The business had a whopping 400 square meter shop filled with gemstones, crystals and fossils from all over the world. They focused on Gemstone Jewelry using natural gemstones as well as gemstone used for metaphysical healing. In 2012 they decided to close up their retail shop and instead sell on Gem Rock Auctions which is a reputable online gemstone selling platform. This decision allowed Mygems to reduce their selling costs and pass these savings onto their customers.
According to the Australian Bureau of Statistics figures, online shopping accounts for more than 7% of total retail sales. However industry experts estimate that the figure is more than 14%. The increasing growth of online sales is putting a lot of pressure on retailers.
The Australia Productivity Commission Research Report 2014 showed 41% of retail businesses operating in June 2009 had exited the industry by 2013. It is hard for retailers to compete against the cost structure of an e-commerce operation.
Mygems chose Gem Rock Auctions as it reduced the costs of running their business, which meant they can provide more saving to customers. The commission cost of selling on Gem Rock Auctions is 10% and the listing fee is only 0.50 cents per item. These listing fees are a once only cost.
The retail shop had an overhead cost of 40%, compared to the cost of selling online which is only 10% per item. Comparing these figures can easily show why retail shops are closing down. They can not compete with online businesses. Online platforms provide an easier, convenient and efficient market place for consumers worldwide.
Mygems was located on the Gold Coast, Queensland, Australia. It was the home of the world’s largest Amethyst Pond. This spectacular Amethyst Geode was found in Brazil. It weighs a massive 1.04 tonnes and contained 150 kilograms of drussy crystals around the edges. In addition, Mygem had an impressive collection of sparkling, glowing and jaw dropping crystals and minerals weighing over 20 tonnes. There were thousands of gemstones and gemstone jewelry on display.
Mygems Pty Ltd started in the late 1980 and Mick the founder would wholesale opals all over the Australia. He favoured the stunning Coober Pedy opals that were mined from South Australia and he had created a popular range of opal jewelry. He was considered an iconic figure from the bygone opal boom days who sold his opal stock to shops and wholesalers. To this day Mick is still in the opal industry.
Mygems created a partnership deal with another gemstone company ‘Gem Trader’ and opened a retail shop in Gold Coast Australia. The gemstone retail store had over 50,000 items and 6 staff.
Mygems would source gemstones from the Tucson Gem Show. The Tucson gem show would showcase sellers and gemstones from all over the world. From this show, Mygems would come back with a 40 foot container each year during operation. Within the container, there would be minerals from Brazil, Morocco, Spain, China, Columbia, Russia, Pakistan and India. Mygems would also travel to various Asian countries such as Thailand, Hong Kong and Manila to source gemstones.
Unfortunately Mick eventually sold the retail shop. Operating a large crystal shop became too expensive due to increasing overheads, staff wages, rent and theft. This made online selling a far more attractive way to offer gemstones all over the world.
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