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Rare Pink is a fast-growing online retailer of bespoke engagement rings and fine diamond jewellery. In the aim of refining the customer experience, Rare Pink offers a bespoke design service and both an online and in-person route to market – a clicks and bricks business model.
Offering over 100,000 ethically sourced diamonds and the ability to design your own ring, customers can then choose to meet an expert in one of our showrooms to get advice, perfect their design, receive a 3D printed replica and touch and feel the product before buying. Of our consultations, 88% have converted to sales – so almost 9/10 people who walk through our doors go on to purchase their ring from us. Based out of London, Rare Pink already sells across Europe, the US and UK.
Many people start their engagement ring shopping journey online. Despite the long list of benefits of shopping online (more competitive prices, convenience, choice, privacy), less than 10% of sales are currently completed online. While ‘online’ is fast growing, 69% of people who purchased on the High Street, said that was because they were able to touch and see the ring before committing to purchase.
In addition, the same research suggests that 42% of all rings purchased are bespoke or customised, in line with a growing trend towards made-to-order products, which allow customers to express their individuality. 20 years ago technologies such as 3D printing and CAD design were not widely available, making bespoke jewellery not easily accessible. Now these products take a few days to manufacture, at a cost comparable to mass-produced rings and jewellery.
The two trends, together, have lead to an opportunity to transform customers’ shopping experience into one that is almost entirely driven by their needs.
The hybrid model allows customers to choose how they want to communicate: online, via phone, chat or in person. The ability to design a bespoke piece with Rare Pink means they also have complete freedom of choice so far as the product goes. Our lean, low overhead model allows us to offer this refined shopping experience to a large and growing target market, making a Rare Pink piece both aspirational and accessible.
Substantial accomplishments to date
Since raising investment on Seedrs in 2014, Rare Pink has grown sales from £110,000 to over £750,000 pa*, with continued improvements towards profitability.
We have a strong pipeline of engagement ring sales as well as an existing customer base for repeat purchases.
We have built a solid foundation through inventory and CRM systems, relationships with large jewellery and diamond manufacturers and a growing list of talented designers.
We have shown that our marketing capability is scalable with sales from the US growing to 20% since expanding to New York last year. Traffic to the website has increased by achieving top 3 rankings on Google for many popular search terms including “bespoke engagement rings” and “custom engagement rings”. We have reviews on TrustPilot with an average score of 9.5/10, have been featured in Metro, Elle, Glamour, the Guardian and the uk.gov website and finally, in December 2014 we were awarded Best New Jeweller by the British Jewellers Association.
* According to unaudited management accounts.
We believe that market trends indicate an increasing opportunity for a ‘clicks and bricks’ hybrid model offering the ability to be found online, combined with a bespoke ring design and a in-person experience to touch and see the product or to talk to an advisor before buying.
Our average order value is £3,000, higher than other UK-based online competitors, suggesting the hybrid model allows customers to trust us more than online-only propositions. By offering a bespoke design service we build a rapport with our customers and offer them a product they cannot easily compare with competitors.
We believe there is currently a gap in the market for hybrid companies that focus on improving the buying experience. Online propositions have business models competing almost entirely on price and while high street stores offer trust and service, their high stock requirements and overheads make them extremely uncompetitive on price.
There are business model barriers to entry for competition and it is difficult for new entrants without prior experience and contacts in diamond supply, design and manufacturing.
We have found that we can remain agile through lower overheads and stock requirements using a direct supply chain and fewer sales staff. Our automated CRM (Customer Relationship Management) system increases the efficiency of our sales staff.
Due to the above, new locations can be opened at a far reduced cost, allowing us to expand faster.
Our innovative use of 3D printing and CAD design allows us to create bespoke products at a cost comparable to that of mass-produced jewellery.
Our model is lean. Our cost structure is lower than offline, closer to that of ‘touch-less’, better converting and provides lower barriers to new store expansion. Rare Pink’s ‘clicks and bricks’ approach, when rolled out across the UK, US and eventually China, we will capture the hearts and loyalty of our customers with a superior personal shopping experience.
Use of proceeds
Following our first successful Seedrs investment, we have built systems in marketing, sales and operations and hired the right people to ensure a scalable business.
We have further refined our ‘clicks and bricks’ model and we are now ready to grow. We hope this will be achieved by expanding our product range to include wedding bands and other jewellery and increasing our website conversion rate through an even further improved user experience.
We will also invest into getting more people ‘through the door’ through a strategy of growth in:
• Search engine optimisation
• Social media campaigns
• Affiliate marketing
• PR and Brand Reputation
The ability for customers to visit our stores in person, significantly boosts sales, this is why, with further investment, we wish to replicate what we have built in London in more cities around the world with a focus on the U.S. and then China.
Rare Pink’s typical engagement ring customer is a tech-savvy male, aged 27 to 40, a busy professional or business owner that values their time and individuality.
There are four significant factors that define what our target customers want.
1. There is high demand for bespoke engagement rings and jewellery with 42% of rings purchased being bespoke or customised.
2. Valuing privacy and convenience, many start their search online; 27% of the offline market say they would consider buying a ring online.
3. They want to touch and feel before committing; 69% who did not buy online wanted to see the ring in person.
4. Service really matters to them. Online touch-less offerings lack the human touch. 35% who purchased engagement rings were worried about online customer service and 33% felt they needed a more personal approach.
While men are our current core demographic for engagement rings, we are building a brand with core values that make it desirable to women too. Following this round of investment with our new product launches of wedding bands and fine jewellery we will market our products to couples and women too.
Characteristics of target market
The global jewellery market is worth £108bn. Fueled by demand in emerging economies, the market is forecast to grow by 5-6% to £178bn by 2020.
A McKinsey & Co report suggests there are three key market trends:
● Increasing demand for branded products.
● High growth in e-commerce.
● The market is becoming polarised into high-end and value propositions.
As an online retailer with brand potential we are well positioned to benefit from these trends.
The US is the largest diamond jewellery market with an estimated 25% market share. China climbed to be the 2nd largest in retail sales size in 2013.
The online market is growing fast. It was indicated by the McKinsey report to be growing by 1% globally in 2003, 5% in 2010 and is expected to reach 10% by 2020. In the US, online sales are estimated to be 13% of the market.
A typical customer journey begins with finding the website through online marketing channels or from a referral.
Customers can browse designs and diamonds and often want to speak with an advisor for advice or assistance. We quote and design their ring using our network of designers on our proprietary designer platform, called the Design Studio. Finally, when the design is ready and gemstones are selected, the customer can choose to see a 3D printed replica before buying to confirm they are happy with the product. Our free re-sizing and 30 days return policy give customers the confidence they need to complete the purchase.
Traffic is driven to the site from a number of different sources including SEO, PPC, Referrals and PR. These channels will increase to include, paid content distribution networks, affiliate marketing, offline advertising, social media and strategic partnerships.
88% of meetings convert to a sale. This is because of our sales process. Our cost per acquisition (marketing cost per sale) reducing from £420 to £96 over a 12-month period and website conversion (from visit to sale) improving from 0.17% to 0.40% over the same period.
Despite working with a small budget and manpower, SEO has been our principal source of marketing revenue. Two people (Nikolay Piriankov and Andres Mejia) have dedicated circa 20% of their time to reap circa £400,000 worth of revenue. At Rare Pink we have a robust SEO strategy to get to the top rankings on Google for competitive search phrases like “diamond engagement rings”. For continued growth we have partnered with 90 Digital, an SEO firm with experience in getting Unibet and 888 Casino to the top in the highly competitive gambling market.
Rare Pink’s consultation approach will be recreated to scale in many cities worldwide. This will include a brand guidelines document to recreate the intimate environment and to ensure advisors use a consistent, tried and tested approach.
Competition falls in to two categories, online and the high street. Against competitors online like Gemvara and Blue Nile, we have been able to match their value proposition of competitive prices, trust and usability, while also offering customers a bespoke design service and the ability to touch and feel the product before buying. Compared to the high street we are substantially more affordable due to our lean business model.
Winning the award of best new jeweller of the year is a testament of our progress in a very short period – this award looks at all companies that have been trading for less than three years.
We rank in the first position or top three for many popular and relevant search terms on Google and our traffic from these terms has increased month-on-month over the past year.
Our average order value of £3,000 is higher than many touch-less competitors and we are able to maintain a health gross margin of 30%.
Companies like 77 Diamonds have also invested in a hybrid model but have taken a different approach, choosing to open a high street store requiring higher prices to cover the cost of rent, insurance and stock. We believe a leaner version using concessions or showrooms will allow us to scale faster while still giving customers an optimum experience.