David Zinberg, president and CEO of bidz.com, the fast-growing Internet auctioner of mostly clearance jewelry, very nicely took some time to talk to me at the show this week.
Bidz.com is now one of the largest jewelry sellers on the Internet, and it’s done it mostly under the radar. It is also currently on a bit of a roll: Its first quarter sales increased 38% and it won the recent auction of LID’s inventory. The company is also launching buyz.com, which sells jewelry in a more traditional retail format, as well as a Spanish language version of bidz.
Bidz and Zinberg were also honored by the Indian Diamond and Colorstone Association as “e-tailer of the year” at its gala Saturday night. While Bidz is mostly a retailer, Zinberg said his company may increase wholesale activities and would even like a booth at a forthcoming JCK show.
I should note that Zinberg stayed good-humored and gracious even during difficult questions. Highlights of our talk follow:
Why did you start Bidz?
I had a chain of about 20 pawn shops. I wanted to take it public. I was worried I couldn’t control sales of jewelry so I began selling on ebay.
But ebay was not effective. You can be one of 1,000 people selling the same product. Also, Ebay closes at a set time. Bidz.com extends auctions for 15 minutes [when there is a high bid], allowing me more profit.
Your auctions start at $1. About how much sells below cost?
About 20% to 25%.
What is the thinking behind Buyz?
Bidz.com does not have fixed prices. There is something called “natural [Internet] search.” People click based on relevancy. Because Bidz is constantly refreshing we don’t come up high on natural search. In addition, because we don’t have fixed pricing, we don’t show up on comparative shopping networks like froogle.
How do your company stock up against Blue Nile?
The first quarter, they made $2 ½ million. We made $4 million. Hopefully we are going to make more money than them this year. Obviously, they sell bigger stones but we are very close to making more money.
If you look at pieces, Blue Nile sells about 500 pieces a day. We sell about 15,000 pieces a day. They have a profit margin of 22%. We can work on as low as 5%. (UPDATE: The company adds that it has an overall profit margin of 29%.)
And yet their stock is valued higher than yours.
Eventually we will be there, once the investment community gets more comfortable with us. We are a brand new company. In one year the stock has gone up 15% 50%.
Who are your buyers?
We have many jewelry store owners who buy from us and resell. Because our boxes are generic and not stamped, they can be easily resold on ebay, amazon, and overstock.
In the first quarter, we had 84,000 new buyers.
How about the future?
I see us selling $1 billion annually within the next five years. I think we should be more effective than the TV home shopping channels. They are able to show one piece an hour. We have hundreds of pieces all the time.
Now for some of the criticism. I’ve seen things on bidz compared to a “Rapaport” price on your site, and they weren’t diamonds –
It never said that.
I definitely saw it. And I linked to it.
It would be something unique. It’s not normal. We don’t list Rapaport. Maybe one of the jewelry describers used it.
How do you do the price comparisons on your site?
A lot of them come from manufacturer tags, a bit of it comes from [other sites] online.
If it’s nationally advertised at a retail price, we will say, “Nationally advertised retail price.”
I also get a lot of spam advertising BIDZ.com.
That is not spam. Somewhere you allowed someone to send you email. Maybe you signed up for email from [a jewelry trade magazine] and they sent it to you. Forward me the email and I will show you [who the referring company is.]
[Ed. note – Will do.]
One of the biggest criticisms of Bidz has been its “F” from the Los Angeles Better Business Bureau.
If you go to the Better Business Bureau site, we have 250 complaints in three years. We are selling 400,000 pieces a month. Do you know any company selling 400,000 pieces that only gets about ten complaints a month, and all of the complaints answered to the customers’ satisfaction? The Better Business Bureau isn’t used to companies that do such a big business.
We only have a three to four percent return rate – the lowest in the industry. That probably speaks better of our customer satisfaction.
Bidz.com said it was investigating people who bash the company with the intention of making money by shorting the stock. How is that going?
These investigations are very long and usually fruitless. As CEO of a company I am not focused on investigations. [Company critics] Andrew Left, Samuel Antar, this is how they operate. They have a lot of money behind them. They load up short and make a profit. They don’t do it for the consumer.
Were you hurt from the bad publicity?
Half of the stores that were written about us are gone. And even when we got so much negative publicity, we grew as much as 42%. These issues were brought up and did not stick.
The [shareholders] who believed in the company, the ones who believe that performance should not be based on innuendo and rumor, they got hurt.
We want to be part of the jewelry industry. We are removing a lot of the inefficiencies from the industry. We are creating efficiency and that is why people are coming to us.