Mega e-commerce sites like Amazon have become the bane of small brick and mortar retail stores. But “clicks and mortar” partnerships being struck up between the giant diamond seller Ritani and a network of local jewelry store owners offers a new model for how e-commerce and Mom and Pops could cooperate to increase sales for all.
President Brian Watkins says Ritani has been in the bridal jewelry design and manufacturing business for 15 years. He says that retail industry statistics show that “multichannel” shoppers—those who shop thru multiple online avenues as well as by phone and in physical stores—are the most desirable across most consumer product categories. But jewelry sales were an exception.
For engagement ring purchases, he says, 99 percent of buyers browse diamonds and settings online, but fewer than 10 percent make their purchase there. “When it comes to putting down the credit card, at the last minute there’s a hesitation,” Watkins says. Why? “When you’re buying one of the most expensive items in your life, it’s emotionally fraught. You need to touch it, feel it,” he says. Plus, people making such big purchases are wary about being swindled or unable to make a return (what if she says, “No?”).
While Wal-Mart is the largest jewelry-seller in the nation, it only represents 3 percent of the engagement ring market; Tiffany & Co. represents 1.5 percent. Ritani knew it was losing most if its opportunities to the 22,000 independent jewelry stores around the country.
So, in 2012 Ritani, which has an inventory of more than 30,000 diamonds at prices from $184 to $1.7 million, launched an initiative to enable customers to enjoy the convenience of designing an engagement ring online with the comfort of handling the final product at a trusted Main Street jeweler before purchasing it.
Watkins says his team went to the leading independent jewelers in territories around the country and said, “Here’s our proposition: Imagine a model where we invite people who are about to get engaged into your store. How much would you pay for lead generation like that?” Jewelers said they’d pay hundreds or even thousands or dollars per customer, because “half of people who buy their bridal engagement ring in a store come back for future purchases,” Watkins says.
Ritani offered that, whenever someone within that retail shop’s geographic territory closed on the purchase of a ring they chose off the Ritani website, the shop would make a commission—whether or not the customer ever came into the store. The customer would be offered the option to have their ring delivered in the local store’s box, and Ritani would suggest that the bride-to-be go to the local store for fitting.
Conversely, the store would be obligated to track that customer’s future in-store purchases and share a small commission with Ritani. Watkins says the amount is reasonable—smaller than the share of revenues shopping malls demand from tenants, which can run between 1 and 8 percent.
Ritani was also offering something that fewer than 30 percent of jewelers have yet to deal with: an e-commerce platform. The diamond seller told potential partners that it would co-brand their shops, give their stores a presence on its own website, and offer them millions of new web page impressions.
Watkins claims that Ritani’s jeweler store partners love the arrangement. So far, 125 participating stores nationwide enable Ritani to recommend 50 percent of the U.S. population to a retailer within 25 miles. “When a jeweler sees that customer walk into the shop, they know it’s a qualified customer,” Watkins says. They can finish up answering questions in the engagement ring category and say, ‘Let me take you over and show you wedding bands that match your engagement ring’.”
Steve Padis, owner of Padis Jewelers in San Francisco, says accepting Ritani’s proposal was a no-brainer. He had long bought wholesale from Ritani as his area’s exclusive carrier of its bridal jewelry line. But he attributes a significant increase in business to the “clicks and bricks” partnership. In business more than 30 years, Padis says revenues this year climbed back up to his peak 2006-2007 rates.
Before signing up with Ritani, Padis had a website, but didn’t offer sales online. Located in the same neighborhood as tech businesses like Zynga, Airbnb, and Twitter, he acknowledges he was behind the times. Thousands of young people were walking past, but not into, his store every day, he says.
Now, Padis says, “When people are searching for diamonds online, they find Ritani and it shows us as a retail affiliate.” In addition, he says his store benefits from joint advertising with Ritani that far exceeds what his competitors can afford to do.
Fink’s Jewelers, a chain of 15 stores in Virginia and North Carolina, boasts similar results to Padis. Third-generation owner Mark Fink says the leads generated for his business by Ritani have been “amazing,” and “anecdotally, the experience for the consumer is great.”
He says, “We’re being exposed to a tremendous amount of clients that I don’t believe are as comfortable shopping in person as on the web. Going on their android or iPad or laptop is a more comfortable way to do research and shop. But when they see they can go to a trusted, quality jeweler or gemologist, it legitimizes their purchase.”
Fink already had an e-commerce platform and was marketing on social media when Ritani approached him. But, he says, “You have to be pretty sophisticated and have deep pockets to reach out to consumers via the web. This company obviously has the capital to make that happen. When you have someone with a laser focus doing it, they’re doing it 100 times better than us. It’s a supplement to our business and we’re getting to ride that wave.” And, he says, it lets him focus on what he’s best at: “Building an emotional connection with our clients and developing the repeat business.”
Like Padis, Fink says his sales are back up to pre-2008 levels. “We’re seeing our engagement ring sales going up. The exposure of the Fink’s brand has never been greater. Our unit sales are up, which means we’re waiting on more diamond customers, and we’re selling more Ritani.”
Ritani is just as pleased with the results of the year-old initiative. Every single month has been a record over the previous one, Watkins says. “Every retailer that’s working with us is seeing double- and triple-digit growth in special orders. We are truly on the forefront of retail.”