One might argue that there exist some areas of retail that do not lend themselves to eCommerce, that certain products are so valuable (monetarily, sentimentally or both) that transactions surrounding them require a degree of personal interaction between the consumer and the merchant that the online realm simply cannot duplicate.
Were any retail category to fit such a description, it would be fine jewelry … right?
If that point of view has softened somewhat during the last decade or so, it might be in large part due to online custom jewelry companies like Gemvara. While Gemvara (then called Paragon Lake) began in 2007 as a Web-based supplier for small and midsize jewelers, by 2010 the company had pivoted to become a consumer-facing site that allowed users to create their own custom jewelry.
While the notion of a jewelry business — in particular a custom jewelry business — operating entirely in the anonymous realm of the Internet with no face-to-face (or even voice-to-voice) communication between merchant and client and no physical handling nor inspection of the merchandise on the part of the customer before making his or her purchase was all but unheard of among the industry establishment, the business model caught on with investors. Gemvara raised $5.8 million in funding in 2008; another $5.2 million two years later; $15 million the next year; and then, in 2012, an additional $25 million.
A total of $51 million in venture capital — not a bad few years for a jewelry outfit that doesn’t even stock any inventory (because all items are made to order).
“It was an idea to change the way a traditional age-old industry was run,” Bob Davis, a general partner at Highland Capital, which initially invested in Gemvara, told The New York Times over the summer.
Presently, the Boston-based Gemvara (while its jewelry operations are in New York’s Diamond District) is projecting $20 million in sales for 2015; although the company — which at one time counted about 100 employees among its ranks but is now down to 60 — still remains unprofitable as of yet.
Though the money had been coming in fast and furious (from the investment side, anyhow, if not so much the consumer side), Gemvara found itself on somewhat shaky ground around 2012, when its founder, Matt Lauzon, left the company; his replacement in the CEO position lasted less than a year.
It appeared, for a time, that perhaps — in spite of all the hype that Gemvara had generated in its infancy — the jewelry industry was simply too ensconced in its proudly old school, offline practices for there to be room for an eCommerce innovator to gain any longstanding traction.
“Getting people confident in jewelry is not easy,” Matt Nichols, a former Google exec and venture capitalist who took over as Gemvara’s CEO early this year, told The Boston Globe. “Particularly going online and going away from their local jeweler — despite how much they may not really like their local jeweler. There’s so much unknown.”
In this uncertainty of the traditional jewelry customer, Nichols saw an opportunity. As he told Inc., he and Gemvara President Jon Blotner noticed in late 2014 that the website was fielding a lot of requests from customers not to customize and purchase entirely new pieces but for Gemvara to apply its services to resetting gemstones that the customers already owned.
Thus was born StoneReset.com — now called Sequel — a Gemvara-run site through which customers can order free, insured shipping kits that they then use to mail their precious heirlooms (and the like) to Gemvara, along with design instructions for the new piece into which the gemstone will be incorporated.
The new business plan has worked out like gangbusters, with Gemvara telling Inc. that customer requests for jewelry-shipping kits grew 300 percent between June and October of this year.
If people are willing to entrust some of their most beloved and monetarily valuable, irreplaceable jewels to a website, perhaps that’s proof that there is room in a decidedly offline industry for online commerce … just as the original founders of Gemvara believed all along.
“The American fine jewelry market is more than $60 billion a year,” Nichols remarked to NYT, “and it has to go somewhere.”
It sure does … and it sure is — just not always to the jewelry store anymore.