Before they were bootstrapping entrepreneurs, Amy Jain and Daniella Yacobovsky were investment banking analysts with plenty of spare cash and a penchant for lunchtime shopping at Saks Fifth Avenue. Don’t hate them.The two, both 29 (they have the same birthday), turned their shopping pain point into BaubleBar, an online jewelry retailer that they believe will rack up $11 million in revenue this year. Here’s how they did it.
Be open to inspiration. “We were at Saks, shopping and talking about how we spend a lot of money on clothing, shoes and handbags, but that we rarely purchased fashion jewelry,” says Jain. The two friends thought about why that was, and came up with a simple explanation: Women will tolerate large markups for clothing and bags because they are brand loyal. But with jewelry, they are relatively brand agnostic and balk at paying a premium for a designer’s name. “That was the first spark of our idea,” says Jain. What if the same jewelry was private labeled and sold online at a fraction of the retail price?
Do your research. The two, who had their spark of inspiration between their first and second years at Harvard Business School, decided to use their classes to research their idea. “We had to go out and really understand the supply side of the industry, so we met with designers and manufacturers, and we got class credit for it, ” says Yacobovsky. “They immediately understood the opportunity because they wanted a partner that would help them push volume.”
Execute quickly. The next step was to build a website, which the partners also did as part of their class work. “It was really not a nice looking site at all, to put it mildly,” recalls Jain. (Read more on the importance of good design.) They persuaded 30 or so designers to feature their products on the site, which was originally called 816, after the partners’, shared Aug. 16 birthday. “We did very little marketing,” says Yacobovsky. “We sent out some e-mails to friends.” (Get more e-mail marketing tips.)
Address your weaknesses. “Our biggest challenge is convincing women to make their first purchase,” says Yacobovsky. There’s some natural skepticism that a product priced over 50 percent below retail could be the real thing. So the company offers free shipping and free returns for any reason. Early brand partnerships with jewelry companies like Erickson Beason, which sells to Barney’s and Net-a-Porter, also helped establish credibility, as did some positive press in magazines such as InStyle and Us Weekly. “When the press says we carry the same products as retailers, customers believe it,” says Jain.
Leverage your success. “When we saw people telling friends about the site, and saw that we had a great repeat rate on this really terrible website; that’s when we decided to raise a small seed round of capital,” says Yacobovsky. In November 2010, they closed a seed round for $1.1 million with Accel Partners, and both partners nixed the idea of going back to jobs in finance. The website was revamped and the company’s name was changed to BaubleBar.
Keep it fresh. Jain and Yacobovsky have now met with more than 3,000 designers and work with 70 to 75 on a day-to-day basis. “We introduce new products three times a week,” says Jain. A new partnership with DKNY, which now sells its jewelry only in its own stores and through BaubleBar, was recently launched, and a partnership with a well-known beauty brand is in the works.
Plan for the future. With 200,000 unique visitors a month, a 4 to 5 percent conversion rate, and $65 to $75 average purchase, BaubleBar is growing fast. The partners and their 20 employees are quickly outgrowing their co-working space in Manhattan and will soon move to new offices. “People are seeing the quality of brands that we’ve collaborated with and that has generated a tremendous amount of interest,” says Yacobovsky. Jain adds that the two would also like to hire an in-house tech team (currently, all IT is outsourced). A hunt for more capital may be in their future before too long. We’re guessing that’s a lot more fun than hunting for shoes and handbags at Saks.
Illustration by Cannaday Chapman