31 Aug 2016
DIY Jewellery Workshops Woo Mainlanders into Creative Expression
Rewriting the traditional business model of the jewellery industry, DIY workshops are allowing mainland consumers to fashion their own precious metal accessories, winning over a generation of customers keen to express their individuality.
Over recent years, do-it-yourself (DIY) workshops have started to appear in a number of Beijing's medium to high-end shopping malls, offering customers the opportunity to make their own jewellery items. By combining training in jewellery-making techniques with consumer input, these workshops allow buyers to create their own unique necklaces, earrings, bracelets or whatever form of precious metal accessory appeals to them.
Traditionally, the jewellery industry has favoured the 'front shop, back factory' model for its production and sales activity. In line with this, more than 90% of factories that serve Hong Kong jewellery retailers are based on the mainland, primarily in Shenzhen and Guangzhou.
More recently, as the business model of the jewellery industry has diversified somewhat, both a bespoke service and the DIY model have become more widespread. As a result, in certain sectors, customer experience is gradually coming to play a more significant role in the production-marketing function.
Silver: A DIY Mainstay
According to the sales staff at one Beijing DIY workshop, silver jewellery items are the most popular with customer. Tellingly, more than 90% of the earrings, rings, necklaces, pendants and key chains made by customers use silver as their primary material.
According to Mr Lu, the Owner of the workshop, his customers' lack of professional skills and his desire to avoid high business operating costs, offering his DIY patrons the chance to make simple silver jewellery items makes most economic sense.
Overall, it is this lack of professional skills that is seen as the biggest challenge when it comes to maximising the customer experience. Standard gold and silver processing, for instance, requires a mastery of wax model carving, debubblizing, casting, burn-out and gem setting techniques, abilities beyond most amateur jewellery-makers.
Indeed, each one of these processes requires specific technical abilities. Debubblizing, for instance, has to be conducted in a vacuum or the finished product will be riddled with air pockets. Similarly, powder filling and casting require strict control of very high temperatures and precision timing, while gem setting requires the orderly and symmetrical setting of stones, as well as the construction of firm and steady metal rims. In addition, the casting and burn-out processes involve high temperatures and the use of corrosive chemicals. For those lacking many years of traditional apprenticeship and training, such technical feats are well beyond them.
Another problem is the inevitable loss of gold and silver material during any processing. One consequence of the high-temperature smelting and casting process, for instance, is that more and more gold and silver will oxidise and volatilise the longer the process takes to complete. Similarly, while polishing and finishing, tiny fragments of gold and silver are inevitably lost. Naturally, any business operator is only too keen to reduce any such loss.
The advantage of using silver bars as the raw material of choice is that no model carving or empty trays are required. Customers can make jewellery simply by filing, engraving, polishing and soldering without needing any additional skills. This saves on the amount of time required and reduces the loss of raw material, ultimately lowering the costs for the business operator.
The low price of silver is another plus point here. Currently, silver is trading for around US$0.84 per gram, making the 3-4g of silver required to make a ring cost less than $4. By comparison, the price of gold is $48.33 per gram.
Using silver, then, means that business operators do not have to worry too much about cost. In fact, by using a silver alloy with a purity of under 100%, the loss of silver material can be further reduced, while the quality of the finished product is enhanced as the material is more durable.
The downside of using silver bars – as opposed to standard gold or silver – is that DIY jewellery-makers are not free to make any design that comes into their heads. This is because the silver exists in a form that places certain constraints on the design and style options. In fact, customers looking to create their own jewellery pieces can only make relatively simple items by utilising annealing, engraving and shaping techniques.
Due to the constraints of a limited skill base and the cost considerations, the jewellery items created in these workshops tend not to be overly-sophisticated. Acknowledging this, one customer said: "The finished product can't really compare with the sample, largely because I have no professional skills."
In terms of cost, the unit price of a DIY silver jewellery item ranges from Rmb288 to Rmb688. When purchasing through online platforms, such as jd.com and tmall.com, the price of similar items is generally lower. Some 70% of the silver rings and earrings offered online, for instance, have a price tag of around Rmb200, with a small number priced at Rmb500 or above. By comparison, similar DIY-made products are up to Rmb100 more expensive.
Despite that fact that DIY jewellery items may not fully meet their maker's creative expectations, while also costing more than comparable online products, they remain surprisingly popular. For many customers, the experience of making the item themselves gives them a totally different level of emotional involvement compared to simply purchasing online.
Commenting on this sense of involvement, Dingdingccxo, a Beijing-based user of DIY jewellery workshops, said: "A simple ring can stand out from the crowd after you have carefully taken it through the processes of annealing, hammering, engraving, filing, sanding and polishing. It is only after you have had personal involvement with these processes that you can get a true sense of achievement and satisfaction."
Furthermore, as living standards rise, Chinese consumers are no longer satisfied with simply buying products. They are increasingly willing to invest their free time in creating products that express their individuality.
At present, the practice of integrating high street jewellery stores with this kind of direct user experience is still in its infancy in China. It is, however, a growing trend, one driven by rising income levels and the popularity of experiential marketing.
Four Key Challenges
A number of mainland industry experts now believe that this business model is likely to prove a boost to downstream jewellery enterprises. For a start, it dispenses with the notion of homogenous products, while also clearly enhancing personalisation. It also broadens the options open to users, while adding new vigour in terms of possible product innovation. In another bonus, it could also support the growth of new brands, ultimately maximising user loyalty.
Although the prospects for this particular business model are now seen as generally bright, a number of constraints still exist. In fact, according to analysts, there are four particular challenges that need to be addressed.
- The desire for such a hands-on user experience is often seen as specific to medium to high-end consumers. This had led to a need for DIY jewellery workshops to be located in medium to high-end shopping malls, inevitably requiring business operators to pay high rents.
- Unlike in traditional jewellery outlets, the sales staff in DIY shops must have certain technical jewellery-making skills, incurring higher costs in terms of staff wages.
- The creative design of samples needs to be continually updated.
- With considerable emphasis now placed on the protection of intellectual property rights, business operators must be ever-vigilant when it comes to discouraging customers from copying existing designs.
It is worth noting that, while China's DIY jewellery industry is seen as lagging compared of many of the more developed markets, Hong Kong – a city where the jewellery sector is far more sophisticated than its mainland counterpart – is still further behind.
In both Japan and Taiwan, however, the sector is far more mature. By drawing on the experiences of these two territories, mainland business operators could transform their traditional jewellery marketing and make a real breakthrough in the currently lacklustre downstream jewellery sales sector.
Wang Tao, Special Correspondent, Beijing