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The Background

Danish jeweler Pandora rose to fame to become a household name after launching its signature charm bracelet in 2000, almost two decades after married couple Per and Winnie Enevoldsen began their modest jewelry business in Copenhagen with imported goods from Thailand back in 1982.

Their success in the Danish market pushed them to think outwards, leading to the company’s international expansion into the US market in 2003, followed by Germany and Australia in the following year.

Fast forward 14 years later, Pandora’s Thai-made fine jewellery is sold in 100 countries through over 900 concept stores, not to mention the 10,000 other retail distributors around the world.

Funny how one little charm bracelet propelled the brand into the global limelight and accounts for 77% of the company’s global sales.

How did this all happen?

One has to take a look at the evolution of the fine jewelry industry to understand Pandora’s success.

The bracelet popularized the brand because of its upscale look and relatively affordable pricing in a market dominated by Tiffany and Co and Cartier. The price of a Pandora bracelet starts at $35 and with more than 800 charms to choose from, the consumer can collect and customize their own bracelet that often signify a milestone in life.

The charms bracelet is the top selling product for Pandora. Image: Fortune

“They tapped into the consumer’s desire for jewelry pieces that are highly specialized.” – Erica Russo, fashion director of accessories and beauty at US department store Bloomingdale’s.

“There’s something for everyone, so there’s a wide appeal for shoppers,” continued Russo.

With a lucky charm under its belt, Pandora issued an IPO in October 2010 to raise $2.1 billion and now the company is the third biggest jeweler in the world behind Cartier and Tiffany and Co, but with a third of its market value wiped out earlier this year, can it maintain this position?

The Challenge

The growth of the global jewelry and personalised accessories market in general has been stumped over the years thanks to macroeconomic factors such as inflation and unemployment plaguing the industry. But global geopolitical and economic uncertainty are not the only things slowing down growth.

Legacy jewelry brands are also slow to identify the shift in their audience’s behavior.

Long gone are the days where women only acquired new pieces of jewelry as gifts from husbands or significant others.

Today, with the increase in women’s purchasing power, ladies are buying their own jewelry — a fact still largely ignored by traditional jewelry brands.

A survey by Jewellery Consumer Opinion Council found that as a jewelry consumer, the [female] demographic is largely underexploited and ignored by the broad spectrum of the jewelry industry.

Unlike previous generations, millennials and Gen Z don’t find the charm of brands like Tiffany & Co as attractive or as Neil Saunders, CEO of retail research firm Conlumino says,

“Millenials are increasingly unmoved by brand names and seeking more bang for their buck, Tiffany’s “old-world luxury” charm isn’t working.”

“Although the brand is not seen as negative, it is seen as being somewhat tired and traditional,” noted Neil. “ Young consumers especially see it as a brand for the older and a different era.”

Not to mention that the younger generation has more options and exposure to smaller brands through online shopping. With its shares suffering and only one successful product, Pandora needs to adapt to the market situation to survive now more than ever.

Pandora shares drastically drop in 2017 after years of high growth

The Strategy

In an effort to move beyond its charm bracelets, the company is actively pushing its line of rings and necklaces, marked by the company’s 2015 Mother’s Day campaign “The Art of You” that featured three female generations passing down jewelry pieces – no men.

“Pandora has deep ties to charm bracelets that memorialize times and people. What’s new here is we’re taking that heritage and bringing it into the future, where it’s also about self expression,” explained Caitlin Ewing, Executive Creative Director for marketing agency Grey that collaborated with Pandora for the campaign.

The campaign hit its target, sale shares of the company’s rings rose to 13% from 4% in 2014.

Pandora’s ‘The Art of You’ campaign popularized its ring selections. Source: Canadian Jeweller.

Furthering its priority to target millennial women, Pandora also launched a global campaign called “Do”, proving no matter where you are in the world, there are values that all women share.

“Today’s consumers expect you to have a point of view and a voice an enable them as opposed to being a director of them. The Pandora voice is all about inspiring women to be true to who they are,” said Charisse Ford, Chief Marketing Officer for Pandora Americas.

However, the company is not without misses. A recent holiday campaign by the brand in Italy received backlash for its marketing message that was deemed sexist and forced the company to release an apology and pull its ads from subway stations.

Translation from Italian: “An iron, a pyjama, an apron, a Pandora bracelet. In your opinion, what would make her happy?” Source: Lefanfarlo Facebook Page.

Pandora also distances itself from the image of a traditional jewelry brand with rich heritage as seen by the lack of narrative or celebrity endorsement to gain a wider audience.

Another standout factor from Pandora is the way it operates its business.

“One of the reasons why Pandora has been so successful is we don’t behave like a jewelry company, but more like a fashion brand,” said Isabella Mann, Pandora VP Marketing for APAC.

Similarly to how fast-fashion companies function, Pandora releases new product lines seven times a year, only two months apart, much more often than traditional jewelers that do it quarterly.

It seems to be meshing well with a generation with shortening attention spans as Pandora was the only “new luxury brand” chosen as a favorite by affluent millennials in a survey by MVI Marketing.

One of the biggest contributing factors to Pandora’s rapid growth is how the company took full control of the supply chain process.

By setting up production in Thailand, the company was able to decrease its operational costs and maintain the quality of its products. The company plans to produce 200 million pieces per year by 2019 Q4 and promote the Thai jewellery industry at a global level.

Pandora also controls distribution in India and Africa by buying back local franchises that sell its jewelry, both in the branded concept stores and shop-in-shops.

In growing markets like Asia, that contribute to 19% of the company’s overall business and registering the fastest growth rate for jewelry, Pandora wants to maintain the brand rather than build stores.

The opening of Pandora store in Hong Kong. Source: HK Citylife.

“It’s no longer about building the brand, but about maintaining the brand. You’re not going to see loads of Pandora stores opening anymore,” said Mann.

Without new store openings, the company has more resources to focus on its online strategy.

Its ecommerce store opened in the US in 2015 after testing the European market a few years earlier. The company’s online store is now available in three continents including Asia Pacific but in Southeast Asia, Singapore is the only market where shoppers can order online through its website.

Pandora’s online store is available for customers in Europe, America, and Asia Pacific.

The Future

Pandora’s journey as a relatively new jeweler has been filled with instances of trial and error as it emerges from legacy luxury brands such as Tiffany and Co as a front-runner in the lagging luxury jewelry retail scene.

By cutting costs through effective manufacturing practices, leveraging ecommerce to shift away from brick and mortar, and even creating PR buzz through controversial advertisements shows the brand’s agility on responding to adversity and obstacles.

The company seems well on its way to achieve its aspiration to become the world’s most loved jewelry brand.

If diamonds aren’t forever, Pandora jewelry is.

Marilyn Monroe once sang, “diamonds are a girl’s best friend” and it seems to be ringing true as Indonesia’s fine jewelry sales grew 13% from 2015 to 2016 reaching $1.57 million, according to Euromonitor.

The country’s upper-middle class households are expected to more than double by 2030 and the current existing 1.5 million are creating demand for gold, silver and metal combinations growing annually 7.8% until 2021 making Indonesia the fastest-growing in the world for jewelry sales.

Indonesia Jewelry Market

Model showcasing products at Orori event in Indonesia.

“Jewelry is part of the culture during wedding and childbirth [celebrations] for people in eastern Indonesia,” said president director Sandra Sunarto in Bandung, West Java. “They are more interested in buying heavier [jewelry] made of higher carats.”

It’s not difficult then to understand why George Budi Sumantri, CEO and founder of Indonesian online jeweler Orori, shut down his family’s offline business to focus on ecommerce in 2012 after taking over in 2003.

ecommerceIQ conducted an email interview with the founder to discover why and how he decided to sell a high AOV product in a country that is still skeptical about shopping online.

Pioneering jewelry trading online

At the time Sumantri decided to close down his offline operations, 80% of the company’s revenue came from its stores spread across Jakarta’s shopping centers.

While an extremely risky move, he believed that moving operations online would save the company money previously spent on sitting inventory and rental costs.

Within a year, the company racked up $1.3 million in revenue and as of 2017, Orori claims to have 2 million consumers and processing thousand of transactions per month.

Global sales of personal accessories are growing at 2%, internet retailing is experiencing double-digit growth. – Euromonitor 2016

“Yes, there are still people who like to shop in a physical store, but when you look closely at the urban population; young couples who plan to get married and the young people who are looking for Mother’s Day gifts, [they] love the practicality and ease of access that ecommerce offers,” said Sumantri.

As newly middle class female Indonesian consumers become savvier about her shopping prowess, she cares about choice—not just price and promotions.

Leaving no space for distrust

A common question asked by many skeptics remains, how do you sell a product with a high average order volume to a market that only began going online?

A quick browse through the site shows that wedding rings can start at roughly $220 and reach $6,000 depending on the carat and diamond cut.

Orori made sure consumers had no reason to doubt its reliability by arming the platform with certain features to ease the minds of shoppers.

For example, all of Orori’s more than 35,000 diamonds are certified by the Gemological Institute of America (GIA) and each have a complete description along with product specifications.

The best way to merchandise premium categories to the discriminating Indonesian shopper is to visibly show price tags to aid comparison spending – Nielsen

For first time buyers, they can read the company’s blog OROREADS, to access online guides for buying jewelry, including how to select the right finger size, caring for fine jewelry and choosing a diamond size.

Still not convinced? The company offers a 100% money back guarantee and various payment options such as bank instalments, cashback, and a ‘buy now pay later’ programme that allows consumers to pay 30 days after they made the order.

For any stragglers with doubts, they can chat with an Orori agent, a feature that can increase conversions up to 6.3 times.

Indonesia Jewelry Market

Orori live chat offered on the website to answer questions regarding its high AOV products.

By providing all of these services, the company is hoping to encourage people to buy jewelry online as per the company’s tagline ‘Jewelry for Everyone’.

On its way to make the region sparkle 

Originally set to sell its own line of jewelry, Orori has since changed its business model to a marketplace to offer a variety of brands on its platform. Right now, the company has seven jewelers on its platform.

Sumantri targets Orori to reach $25 million of GMV in 2019 with annual transactions of 80,000.

The company also plans to move beyond the B2C sector and launch C2C and C2B (consumer-to-business) features by the end of the year. In addition to these aggressive targets, Orori has regional expansion plans starting with Singapore.

“The marketplace [model] will not only change consumer behavior about buying jewelry online, but will also help reputable brands in the industry extend their business beyond just brick-and-mortar,” said Sumantri.

Indonesia Jewelry Market

Orori CEO and founder George Budi Sumantri

Featured image credit: Leeviahan