The Future of E-tail: Online Retailers Experiment with Brick-and-Mortar



How online jewelry brands are adding bricks to their clicks—and what the industry can learn from them

Since the dawn of e-commerce, there has never been more crossover between the physical and online retail channels. But unlike the early years, when traditional retailers added online shopping to their offerings, formerly pure-play online outlets now want shop windows of their own.

Brands as diverse as Warby Parker, Birchbox, and even Amazon—e-tailing’s 800-pound gorilla—are experimenting with brick-and-mortar storefronts.

“Customers today want to shop wherever they are, and they shouldn’t be constrained to home, work, in the mall,” says Oded Edelman, CEO of James Allen, an 8-year-old online brand that added more than a dozen outlets colocated in Sears department stores late last year.

Edelman is far from the only online jewelry business executive adding bricks to clicks these days. Even Blue Nile CEO Harvey Kanter told investors on a February conference call that, following experiments with in-store showcases in two Nordstrom bridal salons, the online jewelry purveyor would open a stand-alone store. 

It’s a big step, but if it’s done right, incorporating an offline element can have big benefits. “The more seamless the customer brand experience…the greater the return for the brand in terms of loyalty and customer lifetime value,” says Vivien Wang, director of corporate communications at consulting company RichRelevance.

By and large, these new ­forays into physical retail space don’t look like traditional ­jewelry stores, though. Some have the feel of pop-ups or are located within other stores. Most are not stocked with full inventory—iPads and similar high-tech tools help bridge the gap. The brands get to enjoy lower overhead while still satisfying customers who want an in-person retail experience.

Carving Out Space

Gemvara’s pop-up shop on Boston’s Newbury Street

Many of the new online ventures are located within existing stores—similar to Blue Nile’s Nordstrom experiment—or are temporary installations intended to close after a number of months. There are a few reasons why these are popular routes for online retailers.

“A pop-up shop or store within a store presents a great opportunity for a brand to [test] location and timing,” Wang says. “This is particularly helpful for pure-play retailers that want to dip their toes and experiment in offline before committing to a long-term lease.”

The benefits go beyond the real estate logistics, though. Co-locating has the potential to expose an ­Internet jewelry brand to a brand-new audience. “It’s brand recognition,” Edelman says. “You’re getting in front of the eyes of many consumers.” Indeed, James Allen’s partnership with Sears expands the brand’s pool of potential customers.

“We can reach a customer who might not be so savvy online or who might not have considered buying online,” Edelman says.

Picking the right retail partner can also help a ­jewelry business strengthen its own brand. Fast-fashion ­jewelry line BaubleBar grew its profile considerably by augmenting its e-commerce platform with sales through stores that cater to the affluent and trendy like Nordstrom and Anthropologie.

Pop-up stores are another popular choice for e-tailers: BaubleBar has gone that route. So has online jeweler Gemvara, which maintains a showroom at its headquarters and opened a pop-up shop in Boston for four months in late 2013 and early 2014.

“Millennials shop dramatically different than their older counterparts,” explains CEO Matt Nichols, who says the store footprint endeavored to reflect that. “We didn’t want to mimic the traditional retail ­inventory–heavy model. We didn’t have typical behind-the-­counter, ­multisided display cases.… It was a really interesting, innovative retail concept.”

Gemvara kept the by-appointment-only showroom it maintains at its headquarters after its pop-up closed in February 2014. “Our in-office showroom does serve a small subset” of customers who want to literally see and touch before they buy, Nichols says. “It’s always nice for people to know there’s a physical location you can go to.”

Technology replaces inventory

Outside Brilliant Earth’s location in downtown San Francisco’s Union Square…

Although display cases full of jewelry aren’t necessarily the norm at many of the new clicks-and-bricks experiments, stores have found other ways to entice buyers. Some, like James Allen, offer a real-life approximation of what the customer’s piece will look like.

“We put 110, 120 pieces of jewelry in Sears stores so the customers can get the look and feel,” Edelman says. James Allen keeps its cost down by having the showroom designs made out of silver or gold-plate, with cubic zirconia stones.

Most click-and-brick initiatives rely on the practice of “webrooming,” where online research makes up the bulk of the shopping experience. The difference here is that frequently customers buy on their mobile phones while they’re actually in the retail location—generally with the help of a salesperson. Staffers often are equipped with iPads or similar tools to give customers a chance to virtually browse.

Many buyers, especially the younger ­generation, expect to be able to research purchases online, so retailers need to have a wealth of information. A number of these companies have invested heavily in technology that lets a prospective buyer see a high-resolution, 360-degree image of a piece of jewelry or an individual diamond.

“People are amazed at our assortment of diamonds” that can be viewed online, Edelman says. “We see them browsing our website for hours. I think it’s more of a challenge for online retailers that don’t have our display technology.”

Think of how people shop today in an Apple store, says Brian Watkins, president of Ritani, an online ­jewelry brand that has partnerships with independent retailers in more than 200 locations. People interact with the gadgets on display, then place their orders online while still in the store.

Building trust

…and inside the Brilliant Earth West Hollywood, Calif., showroom

Selling jewelry is traditionally a high-touch transaction. Salespeople build relationships, sometimes spanning years, with their clients, and that investment of time and energy pays off in trust and loyalty.

The question Web-based retailers have always ­wrestled with is how to replicate that experience through a screen. Buying an engagement ring is a big jump from ordering a sweater or a laundry hamper from an online retailer.

“I think ultimately the biggest challenge is conveying trust and quality over the Web,” Nichols says. “It’s a ­different animal. Other retail markets are dominated by brands, which you can rely on to indicate the quality.”

To solve that problem, Ritani partners with locally known jewelry brands, and offers a no-obligation chance to view pieces—two steps that go a long way toward reassuring buyers that they’re working with a reputable brand, Watkins says.

“It depends on the strength of that jeweler’s brand name,” he says. “The consumer just wants to know they have a safety net.”

Ritani customers can choose to have their purchases shipped to that retailer—retailers have territories defined by ZIP code, Watkins says—with no obligation to buy after viewing. About half of customers pick that option.

Watkins says Ritani’s retailers benefit as well. “What they’re winning on is it’s a different consumer coming into their store than what they’ve seen traditionally,” he says. “What we’re doing is really capturing that next ­generation of consumer.”

Creating customization

Buchroeders in Columbia, Mo., a Ritani retail partner

Delivering exactly what customers want—and working with them beforehand to ensure that they get it—goes a long way toward both fostering loyalty and avoiding potentially costly returns.

“Brands that can seamlessly connect with their consumers…will differentiate themselves from the rest of the pack,” Wang says.

Innovative digital tools are one important element; so is being able to customize. For instance, Brilliant Earth, which certifies that its jewelry is ethically produced, finds out what kind of pieces potential buyers are interested in prior to their visit. That way the brand representative can personalize the shopping experience when they arrive at the showroom.

At Gemvara, patrons become partners in creating their customized pieces. “They’re actually building a piece of jewelry with us, and they’re much more invested in that process than if they went to J.Crew and bought a sweater online,” Nichols says. Despite the high average dollar value of Gemvara’s orders, Nichols says the company has a low return rate. “They feel like they know what it’ll look like before they order, so that alone has given people confidence.”