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Online Jewelers Lack Engagement with Customers
Q&A with Nikolay Piriankov, Co-Founder and CEO of Rare Pink
Feb 20, 2015 8:27 AM
By Avi Krawitz
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RAPAPORT... Rare Pink was launched in 2013 as a jeweler focused on creating bespoke engagement rings for its customers. The startup was recently named New Jeweler of the Year by the British Jewellers' Association having increased its sales seven-fold in the past year. Rapaport News spoke with Nikolay Piriankov, co-founder and CEO of Rare Pink, about the company’s plans as it is currently embarking on a second round of fundraising:
Rapaport News: How did you start in the industry?
NP: I met my business partner David Sutton in high school in South Africa. Upon graduating I left to study at the University of Manchester and at the time David wanted to start his own business. I introduced him to my aunt who was in the diamond industry with the idea that she could help him get started in the industry. So we’re first-generation diamond jewelers and had no previous experience.
While I studied, I started doing all sorts of ecommerce projects, gaining experience in online marketing. Meanwhile, David was working as a trader. During the last few months of my master’s degree, David and I decided to combine our experiences to develop a website to sell diamonds.
We started a project called “Diamonds in Africa” but soon realized that there wasn’t much of a market for consumers to buy loose diamonds online. So we started thinking about jewelry instead.
At the time, a friend of ours was looking for an engagement ring but wasn’t interested in any of our designs. He wanted to create a bespoke piece and had a lot of ideas, including some crazy ones that he wanted to incorporate into the piece. So we went through a process to find designers, understand how manufacturing works and gain all the expertise that was required for the ring. It took about a year because we were new to it and he wasn’t in a rush.
In the end we designed a ring that was very much within his vision and he proposed to his fiancé with our first bespoke piece. At the time we didn’t realize how significant this would be in terms of our vision and strategy but afterward we received inquiries from some of his friends who heard about his involvement in the design. There is something contagious about creating something bespoke in terms of the resulting story that would not come from a standard ring purchase, especially one made online.
We realized then that there’s a great opportunity to create bespoke rings. The challenge for us as a business would be to discover how to scale that idea. We launched the website in October 2013 and raised a round of investment in April 2014 through a crowd-funding platform in the U.K. called Seedrs.
Rapaport News: There’s an impression that you’re an online platform, but it seems to be more than that. How have you positioned yourselves in the market?
NP: Our brand promise is about the experience. Therefore, our philosophy is to give the customer an opportunity to interact on a personal level with a consultant and designer and allow them to see the product as much as they want before making the purchase.
An important part of our business model is to have small locations which allow customers to have consultations and see samples. We have small but very important offices in New York, London and Hong Kong and the idea is to have many more locations around the world where customers can engage with the brand and have an experience. It’s not a store, it’s more of a combination between an office and a showroom.
We also wanted to have some ecommerce on our website. However, we have limited this to a line of pieces which would be suitable for people who don’t necessarily want to go through the bespoke process. These pieces also serve as a source of inspiration for the bespoke process from which customers can build on the design.
Rapaport News: How do you source your product?
NP: We mostly source from the U.S., India and Hong Kong and we only source GIA-graded stones. We do own a small inventory as we have customers who come in and want a one- or two-day turnaround. For that we obviously need a stock of our bread-and-butter ring designs as well as a small inventory of diamonds. But that’s part of the experience. If the experience for you is to have a quick turnaround then we want to be able to offer that. Also, some customers want to see a product when they come in, not necessarily for purchase, but to gain an understanding of what they want, and of the different sizes, designs, colors and so on.
In terms of the finished product, we’re working with a prestigious jewelry manufacturer in the U.K. We’re British made and part of our brand message is exceptional craftsmanship and an ethically-sourced, quality product.
Rapaport News: Explain the customer’s buying process through Rare Pink.
NP: We tailor the experience around what’s important to the customer. For those who want convenience, there’s always the click-and-buy option on our website.
But that’s just one part of the business. We really promote the consultations. Customers have come to realize how much quicker we can get through the process if we have a better understanding of what they need. Our perfect customer makes an inquiry on the website for a variety of things, and at that point we schedule a consultation. If they prefer to communicate via email then that’s fine, but most of the time we push for the consultation because we know that it’s going to be easier for them.
The consultation is done either on the phone, via live chat or, if possible, in person at one of our locations. The face-to-face consultation is our best performing metric and the best experience we can offer our customers. Before they come in we have a telephone conversation to get a sense of what they are looking for. When they come in we show them some designs that have already been prepared. They give us feedback and we show them some diamonds to establish what size and quality they prefer. Then it’s really about when the time is right from a financial or planning point of view before they commit to us making the ring. They pay before we make the piece and we ship it out when it’s ready.
The idea is to put the customer in the driving seat and allow them to shop the way they want to, and source the kind of product that they’re after. By understanding that early in the journey, we are able to design the rest of their experience around their needs.
Rapaport News: It still seems very much technology driven as the initial interaction is done online.
NP: I’d say word of mouth accounts for about 20 percent of our business, so the bigger part of our business is driven by our online marketing channels.
We’re positioning ourselves as a luxury jewelry brand, which we’d struggle to achieve if we were only online. Because we’re a hybrid, we’re able to offer an experience and as a young luxury brand still be quite competitive on price.
Rapaport News: What’s lacking in the jewelry market that’s enabled a company like yours to develop?
NP: The way I see it is that shopping for jewelry has always been about the experience. This is especially true for an engagement ring purchase.
The online experience became all about efficiency because companies had to think about scalability. To achieve scale they had to think about ecommerce that minimized interactions with the consumer. Talking to customers was an inconvenience and their businesses were reduced to introducing more tools and technology, as opposed to giving that personal experience that gives confidence that a company is going to deliver something the customer will love. I think that was lost in the interest of maximizing profits when online companies started appearing.
The approach that we’re taking is to deliver that personal experience in a cost effective and profitable way.
Our vision revolves around what we call the design studio. That is the communication between the customer, designer and the sales consultant, which is done in such a way that everything is recorded. And the interaction that the customer has available to them can include a consultation method built for their convenience.
For example, many customers interact with us via WhatsApp. They want to communicate with us during the day, during work hours when they can’t use their email. So we’ve had several high-value purchases where the entire communication was done via WhatsApp. That’s a very personal experience the person went through that required a report with our consultant.
Rapaport News: It sounds like your target audience is the more professional but slightly higher-end engagement ring customer.
NP: Exactly. We’re not going to make a dent in the convenience that Amazon-type shopping provides. At that level, what matters is the best a customer can do with a limited budget. Because it’s limited, the customer looks for the largest stone and doesn’t really care about its quality or grade. The problem with competing in that space is that it ultimately results in a price war and a lack of transparency.
Rapaport News: What are the biggest challenges that you’re facing?
NP: Investment. We’re a U.K. business and therefore the kind of valuations that we get from investors are more conservative than the likes of Blue Nile got when they were raising capital in the U.S. – which is a far more optimistic market for investors.
We’re trying to grow very ambitiously and have grown our revenue seven times since our first round of fundraising last year, in which we raised about $300,000 (GBP 200,000).
However, being a product and tech business requires substantial investments and overheads, as does having some kind of stock holding. So one of our challenges is just being able to deliver on our vision. Currently, the speed with which we can do that is constrained by the investment we have.
We’re doing an investment round now that started in January, talking to venture capital firms and private investors. We already have a few committed investors and we hope to complete it by April or May. We’re hoping to raise between $750,000 (GBP 500,000) and $1.5 million (GBP 1 million). That would enable us to jump to the next level in our business development.
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Tags:
Avi Krawitz, Bridal, diamonds, engagement, Jewelry, Rare Pink
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