In 2006, Internet diamond and jewelry sales reached $2.5 billion, an increase of 20 percent from 2005. Today, the online jewelry business represents 4 percent of total jewelry sales, according to data from IDEX online research, and that number is expected to increase to 7 percent by 2010.

At McGivern Jewelers in Perrysburg, online jewelry sales represent 95 percent of their business. Owner Michael McGivern said, “Our business is almost double what it was last year, due to the overall growth in the diamond Internet business. Ten years ago, who would have thought that? Let's put it this way: I am glad we do not have to rely on the walk-in retail business as our bread and butter.”

McGivern Jewelers was one of the first jewelers in the country to go online and did so in 1997. It proved to be the best business decision the company ever made.

“When Google first came online, I remember the sales rep calling me, and thinking Google was the stupidest thing I had ever heard of,” McGivern said. “When you buy online advertising, you only pay for results, so we felt we had nothing to lose and we signed an agreement with Google where if someone typed in the word ‘diamonds,' we would always be the first online listing.

Of course, we all know what happened with Google.”

 “This business is always changing. Banner ads, at the top of the search engine, are a perfect example. When they first came out, everyone clicked on them. Now, everyone tunes them out. In the late '90s, they worked well for us. Now, banner ads are a total waste of money, so we have to find new avenues,” McGivern said.

“We started spending about a thousand dollars a month, so that is the most we could lose,” he said about advertising. “Now we advertise on the Internet and spend anywhere from $50,000 to $100,000 per month.”

“Our niche is as an Internet seller. Our Web site has over 15,000 loose diamonds listed where consumers can view every detail of the diamond and can see the certificate copy,” McGivern said. “The selection is much greater than at any retail store. We ship to every continent, and have sold to every state on a regular basis. There isn't a day that does by where we don't send 20 to 30 packages out.”

When people shop on the Internet, price is their main concern, McGivern said.

“Customers wonder, ‘How do you sell this at such a cheap price?' And the answer is that it is less expensive for us to operate on the Internet,” he said. “When we sell online we only have a five-minute phone call invested. Whereas when someone comes into a retail store, there is a salesperson's time, and a lot more time invested with the sale.

“This is also a sale that is not local, no matter what small percentage we make on this, it is extra profit for us,” he said. “While it may not be the profit we made years ago because we have so many more sales on the Internet, the overall total picture is much better.”

McGivern works with DeBeers, “the OPEC of the wholesale diamond industry,” he said. That company, he said, controls nearly 80 percent of the world's rough diamonds and was not allowed to operate in the United
States due to anti-trust laws until recently. He said Zales and Sterling are two diamond sales giants and Blue Nile is the major player online with diamonds being 90 percent of its sales.

“There has been consolidation in the jewelry business with the increase in the online jewelry business. There have been a lot of closings on the independent jewelers' front and less start-up independents,” McGivern said. “That area is certainly not growing at the rate it was. Online jewelers are increasing at a faster pace than the overall jewelry industry.”

An ordinary day for McGivern involves arriving at the office early and responding to e-mail comments or questions. He tries to finish his online work before 9 a.m. — the time when the phones start ringing.

“We are different from other online competitors because we don't allow online orders,” McGivern said. “We like our customers to call. Our average sale is quite high and customers like to be speaking to a human being — they are more comfortable with that and we are too because that way we can guide them correctly and give them correct advice.”

McGivern said his best-selling item is still the loose diamond. About half of his customers buy a loose diamond and have it set locally, he said.

“Diamonds are easy to buy over the Internet. They are like a commodity,” McGivern said. “As long as they are certified, they're easy.”

Kristine Hoffman is host and producer of “Business 360,” which airs every Monday and Friday night at approximately 7:45 p.m. during PBS' “Nightly Business Report” on WGTE-TV.