JamesAllen.com coaxes consumers to design and buy jewelry online

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Jewelry retailing is undergoing a seismic shift. New technologies have led to the emergence of online retailers that offer quality jewelry at discounts of up to 50 percent below retail costs. Specialists such as JamesAllen.com offer an additional perk to customers — the opportunity to design their own rings.

Few jewelry retailers have enjoyed more success online than James Allen and its parent company, R2Net. Its model — based on selling fine, customized jewelry online at steep discounts — could upend the very notion of folks rushing to the mall jewelry store to buy their engagement rings. Why bother, when you can buy that same ring online — and design it yourself — for substantially less?

The man behind this is R2Net co-founder and CEO Oded Edelman, who began his career as a diamond polisher at his family’s diamond business in Israel. Edleman discusses what’s next and how technology is changing the industry with STORES contributing writer Bruce Horovitz.

For decades, couples faithfully went to the mall jewelry store to buy diamond rings, but now many Millennials would rather buy them online. What on earth has happened?

A lot has happened. But the main thing is price. The high rent in the mall creates huge overhead. When you don’t have the costs of rent and all the employees, it creates a big discount that can be passed along. What you save on the ring can mean the difference between an OK honeymoon and a great honeymoon.

Why should anyone feel comfortable buying something as expensive — and intimately personal — as a diamond ring via something as cold and impersonal as a marketing website?

It’s not cold. It’s as warm as a store. We have great customer service reps and most customers call and talk to them for a long time. It’s not just about the ring. We get very personal with our customers. Some people talk about how they met their significant other.

Also … the website allows you to see everything much closer than if you were buying in person. You get to see every gem at up to 40 times its actual size.

Your customers design their own rings, right?

Yes. Customers design their rings online and we make them. You choose the diamond and you choose the ring — then we set the diamond on the ring that you choose. We do it very quickly because we have our own factory and make them within a day or two.

Why is designing your own ring such a big deal?

Millennials all want to be unique. They account for about 90 percent of our customers. It’s a big deal to post a picture on social media with a ring that no one else has. It’s difficult to be different in a world where social media has made everything equal.

Since you have so few locations and employees, just how much less expensive are your rings than the exact same ring I might buy at the mall?

The cost of our average ring is $6,000. If you purchase the same ring at a standalone jewelry store, it will cost you about $8,000. If you buy the same ring at a mall location, you’ll pay $9,000.

What makes your salespeople tick?

I don’t call them salespeople. I call them consumer psychologists. They have been through the process many times. They are real consultants who don’t work on commissions. Their advice is real and genuine. If someone calls on the phone, we’ll answer from the heart. They have no incentive but to make the customer happy.

I understand the training process is quite extensive.

Many of them are moms in second careers. They must have very calm voices over the phone. We give them a several hundred-page book about diamonds. They must take and pass a test about jewelry and diamonds. Then they go on a three- to six-month training course that’s mostly about listening to others. Their average pay is higher than at just about any other service center.

Many folks would still never buy a wedding ring online. What would you never buy online?

I don’t think that pets should be bought online. You need to look in the eyes of the pet and see the affection.

What’s the biggest drawback to buying something online?

The biggest drawback for online purchases of all types is that you can’t feel or touch the thing you’re buying. I still haven’t found a perfect solution for letting people feel our jewelry. But we allow for this via our free return policy. And we recently opened a New York showroom.

Sounds like you’re trying to have it both ways.

Some people will only buy things that they’ve seen with their own eyes. But even when they come to the showroom, they ultimately go online and make the orders on a screen. Then there’s the confidence factor. People sometimes feel if you have a store, you’re a more legitimate business.

Are you legitimate?

Well, we are thinking of opening more stores — probably in the states where we already operate. Our headquarters is in New York and our customer service office is in Maryland.

I understand that you’ve made a lot of money.

Let’s just say our sales have tripled over the past three years, from about $100 million to close to $300 million.

How big can you get? Will you do to mall jewelry stores what Uber did to taxis?

We predict that we will keep growing at a very fast pace, though we can’t triple our size every three years. I think we’ll continue to grow mainly because there is no good reason to buy a piece of jewelry anywhere else.

Do you market to customers who have been to your site?

We do. But we’ve learned to do it less than some other retailers because many of our customers are guys who are shopping secretly for rings. You don’t want your fiancée to know if or when you’re going to propose.
If you suddenly show a lot of banner ads about engagement rings on someone’s screen, the ultimate receiver of the ring will probably see it too, and the surprise will be ruined. We found this out the hard way and scaled way back on doing this.

How did your buy your wife’s engagement ring?

Since I was in the trade, I went to a friend in the industry and had it specially made. That was 15 years ago. But every day I remind myself, I would only sell something on JamesAllen.com that I would buy for my wife.

How techy can ring buying get?

Very. We specialize in visualization. We spend a lot on research and development to create visualization. We think the next thing will be virtual reality, where you can try on any piece of jewelry with virtual reality.

Bruce Horovitz, a freelance writer, is a former USA Today marketing reporter and Los Angeles Times marketing columnist. He can be reached at brucehorovitz@gmail.com.

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