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To: H James Morris who wrote (143281)	6/23/2002 1:32:59 PM
From: Glenn D. Rudolph	Respond to of 164684

"Glenn, give us an update on your on-line business. " James, Not much to say presently. The traffic on eBay is down during the summer so we decreased the number of auction listings although continue to increase the number of eBay store listings. Items in high demand for us during this time of year have been belly rings, toe rings, anklets and generally lightweight gold chains in white and yellow gold. The decrease in the number of auctions has increased the gross margins due to fewer items on which to bid from us. Our "private" on-line store has traffic but not a lot of actual business due to seasonal issues and our lack of resources to add content. Our focus will be a rebuild of our private site for this fall using some of the newer tools available that were not available at the time we first created the store. It is time to remodel<G> eBay's actual stores I do not believe are doing as well as they claim. We were "courted" by Tia Miller and three other eBay jewelry division management people at the Las Vegas jewelry show. Also, Andale is seeking our business as an "enterprise" business from their enterprise division. I have always thought of myself as a successful operation for a few brick and mortar stores doing retail. I never thought of my firm as being enterprise. Anyhow, that is how we were classified even though I continued to look around to see if they were referring to some else;-) This meeting was of interest to me because I noticed eBay not promoting their stores during the last three months. There was an announcement from eBay a week after we returned that eBay is adding multiple items at fixed price within the regular auction section where a search will search all auctions rather than within one's eBay store. No mention of this was made at the meeting but Nick and I clearly knew there was a change in the works. It appears we have one of the few high volume eBay stores, which I believe is due to our constant promoting it in our regular auctions. We also have more than three times the listings within our eBay store than any other in the jewelry division. Note that eBay receives five cents per month for each listing in the eBay store regardless of how many units one offers. EBay of course gets their normal percentage of a sale made there. The new multiple fixed priced format is very beneficial to eBay and likely to boost their bottom line. The new multiple fixed price listing has an insertion fee with the same table as used for a regular auction. This means the cost using that format is $3.30 per listing for seven days compared to five cents for a month. See the chart below: Minimum Bid, Opening Value or Reserve Price Insertion Fee $0.01 - $9.99 $0.30 $10.00 - $24.99 $0.55 $25.00 - $49.99 $1.10 $50.00 - 199.99 $2.20 $200.00 and up $3.30 Our gross margins are up about 300 basis points over a year ago on eBay. Our volume is a little more than 1000% greater. The new format may throw a monkey wrench into our plans in that it will reduce our gross margins or our volume depending upon the consumer's reaction to this format and how much other sellers which to spend on their listings. I am not fond of being so much at the mercy of eBay itself. This gives them tremendous pricing power. This is another reason for the revamp of our on-line store outside of eBay. The customers we obtain on eBay we can drive to our own on-line store and plan to monetize that division this fall. By the way, whe have had a slight decrease in sales in our brick and mortar sales but have tremendous growth on-line. If it were not for being on-line we would be down for the year a touch. This is not an easy retail environment. It feels more difficult than 1990-1992.

To: H James Morris who wrote (143281)	6/23/2002 1:40:30 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

James, One last comment. I wish to give credit where credit is due. The on-line sales have grown faster than we anticipated and we could not find enough computer literate people to hire to provide the kind of customer service we are known for providing. My wife has in a sense gone back to work using her computer handling email questions, payment processing, etc. This feels like a family team effort which is kind of fun in its own way. We are not living in a loft driving a Honda, however;-)