The jewelry industry has long since been considered a high-risk industry for payment processors. The reason for this is the higher rates of returns and chargebacks on expensive items.
Merchant Processing Profit Margins
The profit margins for merchant processors are typically not extraordinary. It is for this reason that merchant processors prefer not to handle high risk industries such as jewelry. The margins may be small but over the course of millions of transactions this can be mitigated. However, when dealing with high risk industries that sell expensive items, there is a concern that the general instability of those transactions will end up posing too much harm to the assigned merchant processor through chargebacks and returns.
High Risk, High Reward
Although the jewelry industry is high risk, that doesn’t mean that nobody wants to work with you if you’re a jeweler. The fact of the matter is, according to the report published by Daedal Research, the forecast for the global jewelry market from 2019-2023 is that it will continue to grow due to a multitude of factors. The factors include but are not limited to a growing female workforce, the growth of international tourism, and increasing middle-class population. Last but not least is the growing number of digital buyers.
Jewelry eCommerce is on a steady rise with the advent of new technology providing innovating ways to sell merchandise prized for its tangibility. In terms of selling objects like art, furniture, or jewelry—all of which are highly dependent on their physical dimensions and the customers’ ability to visualize them in their home or on their person, technology is bridging the gap.
Instagram has rolled out shoppable posts earlier in 2019—a feature in which content creators can tag their merchandise directly on the post and users can click on the tag and purchase the item without ever leaving the app. According to Instagram, many businesses have confirmed that the feature has increased the traffic to their website by leaps and bounds. The feature reinforces Instagram as a powerful marketing tool for businesses to increase revenue. Most people would agree that selling jewelry is all about what lifestyle the jewelry conveys. There is a stark difference between a diamond ring, a sport watch and a ruby necklace say about the occasion and the wearer.
In terms of jewelry though, perhaps nothing is more powerful to aiding customer decision making than 360-degree viewing capabilities for jewelry products online. If your customers have at all paid attention to profile pictures on social media, we know that angles can be deceiving. Being able to view a product from all angles to assess its dimensions and see for themselves if there are any strange design choices on the offsides is a huge factor in making jewelry purchases online.
Where a Good Payment Processor Steps In
The jewelry market is expanding not only due to the eCommerce boom in the West but also due to commercial participation of many developing nations. Due to the global nature of the internet, these previously unreachable markets are being penetrated and can be made accessible due to online shopping. If more and more people are turning to purchase jewelry online, you can be sure a good portion of those people will be making mobile purchases. According to Business Insider, the amount of mobile payments is estimated to arrive at $503 billion by 2020.
To summarize, jewelry is a market that is experiencing a respectable amount of growth that is fueled by technology. The trend is that eCommerce jewelry market is set to grow and what many businesses need is a reputable merchant processor that offers reliable eCommerce payment processing solutions. Going forward, the need to have a merchant processor that can handle businesses like jewelry that are susceptible to fraudulent activity and chargebacks will be paramount.
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