De Beers has spent the last eighty years selling diamonds at a huge markup, making the high price a part of the sales pitch and now they're selling a competing product for 80% less. Given their reliance on high prices, why sell lab-grown diamonds—and why sell them at such a discount?
While lab-grown diamonds are currently a smaller share of the overall market at around 15%, they're much cheaper than natural ones, and can only be distinguished using specialized equipment.
It's not the first time De Beers has faced the problem of increased supply. In the 1960s, Russia began mining diamonds in earnest; their diamonds were smaller than African diamonds, but the sheer supply threatened to overwhelm the market—so De Beers started marketing non-ring jewelry with smaller diamonds as a way to control market perception and keep their core business safe.
This time around, with lab-grown diamonds, De Beers can once again separate the market for engagement diamonds, protecting it from an increase in supply—and by choosing their own marketing messaging, and a low price-point, they can emphasize price rather than sustainability, obviating awkward questions about conflict minerals.
One very clever trick some diamond marketers, like the company Brilliant Earth, use on Facebook: targeting unmarried women with ads focused on getting them to share their partner's email under the pretense of dropping a hint. "Dreaming of the perfect ring? Click ’Drop a Hint’ on any item on our site to share your favorite ring styles." The most clever part of this campaign is that once they have the email address, advertisers can target the partner with ads for engagement rings. This solves the key problem in selling diamond rings: the person who wants the product is not the person who buys it. By convincing people who want diamonds to hand over the email addresses of the person who could buy them one, diamond companies outsource the engagement-ultimatum to a globally distributed team of copywriters, digital ad buyers, and conversion-optimization experts.
The rise of the permanent jewelry category – jewelry that’s literally welded on – highlights a fascinating business calculation that brands are now making.
One source of recurring revenue for jewelry brands is consumers’ tendency to lose their jewelry and go back for more. Another source is the inevitable fall of an item’s in-fashion status.
While permanent jewelry, which cannot be removed, fails at bringing in recurring revenue, it also means the wearer essentially becomes a 24/7 walking billboard for the brand.
And as the younger generations increasingly look to their peers and to creators for trusted recommendations, some jewelry brands are revisiting this calculation. It’s similar to the calculation SaaS companies often make when deciding on freemium models: asking the question of whether it’s better to have a high-referring free user or a non-referring paid user.
Clothing brands often pay vast amounts for influencers to wear their brand even just once. The price they’d pay to have the clothing worn permanently would surely be astronomical.
In many ways, permanent jewelry is a modern take on the friendship bracelet. The makers of these bracelets, which first became popular in the 1970s, were strategic. For one, the bracelets have a built-in viral loop. Everyone who buys one necessarily shares it with another person. The creators also successfully pushed, against the norm, for the bracelets to be socially accepted as unisex, essentially doubling their potential market size.
Decades later, permanent jewelry is on the rise. It’s often made of gold so that it can be taken through metal detectors and so that it’s hypoallergenic. Hypoallergenic jewelry, also called implant grade jewelry, is trending particularly among the same younger demographic.
A significant portion of the traditional jewelry industry targets men who are buying a gift. Now, brands like Atolea are trying to expand the market by selling pieces directly to wearers.
To make the leap, jewelry designers are now creating jewelry that’s made to be worn every day. These rings, necklaces, and earrings are still aesthetically pleasing, but more durable than the delicate showpieces made for special occasions.
In the case of Atolea, every piece is completely waterproof — the color won’t tarnish if you take a shower, walk in the rain, or work up a sweat at the gym.
While many brands typically market jewelry as something a man buys for a woman on a special occasion, these brands have tried to shift the norm. They've found that many of their customers are treating themselves out of the blue rather than waiting for someone else to buy them jewelry for a birthday or Valentine's Day.
In this way, they’re taking a product that has always existed and changed not only the customer, but also the context in which it's appropriate to purchase. In making these shifts, Atolea seems to be creating a new and larger market for jewelry.
As lab-grown diamonds continue to erode at the price of natural diamonds, the jewelry industry is coming up with creative ways to avoid shrinking the market size. One increasingly popular solution is to simply increase the number of diamonds per item of jewelry. Even though the price per diamond may be going down, this keeps the price per item constant and keeps the market from shrinking alongside declining diamond prices.
Much in the same way that compact cars sold well when gas was expensive, while SUVs and Hummers were popular when it was cheap, jewelry companies adjust the products they offer based on the cost of the inputs. Tennis necklaces are a case study in this. They're a necklace made from lots of diamonds.
More affordable diamonds have created another growing category of jewelry: the travel ring. It’s a ring that looks similar to a more expensive one, but is cheap enough that loss or theft wouldn't cause nearly as much disappointment. As lab-grown diamonds have improved, the visual differences between them and natural diamonds have shrunk, but consumers who own traditional diamonds often don't feel that their products have been devalued. They just know they have a safer, lower-risk alternative to wear.
Despite only 2.4% of Americans being Jewish, a whopping 40%+ of foods in American grocery stores are Kosher. It’s a labeling play that has massive ROI.
Strategically framing or labeling a product can sometimes be more important than the product itself. Many consumers are allergic to traditional metals used in jewelry so companies are increasingly selling “hypoallergenic” jewelry.
The term “hypoallergenic” is actually not federally regulated so brands can freely use the term without any ramifications. The term “implant grade earrings” is also on the rise.
The trend illustrates how important it is in retail to stay ahead of the new ways that people are describing old products. We’ve previously highlighted a similar phenomenon where savvy low-carb bread brands added "keto bread" to their listings' keywords right as interest in the diet started taking off. These early entrants benefited from a wave of new customers, and were even able to charge more for their product.
While many jewelry trends are driven by celebrity dynamics, the rise of flat back earrings is rooted in pure consumer behavior.
The backside of traditional earrings is typically not flat, so wearers often remove the earrings before sleep to avoid discomfort. This takes time though, and the average number of earrings per ear is on the rise, exacerbating the issue.
As the digital products we use every day increasingly compete for every minute of our attention, the products that buy us more time are increasingly valuable. Flat-back earrings address this and are touted as more convenient because the flat backs make them more comfortable to wear while sleeping. This frees up time, both before bed and after rising, making flat-back earrings not only a comfort product but also a time-saving product.
Pierced ears are getting more popular over time; over 30% of Americans born since the mid-70s have at least one piercing, compared to under 10% for people born in the 60s or earlier.
One of the adjacent trends to flat-back earrings is the growth in piercings for kids and even babies. Many parents with earrings want their kids to wear them too, but worry that traditional earrings may hurt or irritate sensitive skin. Since flat back earrings—also sold as "safety back earrings" on Amazon—are safer to apply, they're often a parent's first choice. And since 14% of the US is under the age of ten, making earrings available to this younger demographic means tapping into parents’ spending power while expanding the overall market—and potentially getting new customers for life.
With the shift towards online shopping, traditional brick-and-mortar retailers are exploring creative strategies to attract customers back to their physical locations. One approach is providing services that can only be done in person, like professional piercing. CVS and Target are among the big box retailers to recently start offering piercings.
In parallel, the average age of a first piercing is decreasing, in part because of the evolution of piercing shops. Historically, piercing was done in tattoo parlors which made them less acceptable for parents taking in younger kids. Many parents felt off-put by the stigma of entering a tattoo parlor with a young child.
The piercing market too has largely been fragmented and dominated by independent businesses, with no major players. In response to these shifting dynamics, Rowan is growing its piercing service which trains registered nurses to do piercings, even offering piercings for consumers as young as 1.
Keyword | Graph - 5 Years | Growth - YoY | Search Volume |
---|---|---|---|
Mejuri Piercing | 30% | ||
Skinkandy | 34% | ||
Rowan Piercing | 55% | ||
Flat Stud | 34% | ||
Hypoallergenic Earrings | 27% | ||
Kids Earrings | 22% |