Five years ago, Tom Larson and his brother Jonathan made a bet that opening an online-only jewelry e-tailer would be more successful than a brick-and-mortar store. Larson Jewelers, which specializes in wedding rings, has recently celebrated its fifth birthday and has more than made good on the brothers’ bet. Tom Larson recently discussed operating business that faces a very unusual set of challenges.
“I have learned that just having the best products at the best prices is not enough to be successful,” he says. “It is much more difficult to do this business on the Internet than it is to do it using a brick-and-mortar store. Customers can’t see and try on the products before making a purchase. I had to re-create the jewelry shopping experience without the customer seeing the product until they get it in the mail. For example, we try to have very clear and large pictures of the rings so customers can clearly see what they are getting.”
Larson Jewelers debuted during the throes of the Great Recession. Larson saw more and more people becoming comfortable with making jewelry purchases on the Web—even big ticket items. A brick-and-mortar venture that needs real estate, staff, and a Web business was too expensive. “Online, you can do all of that and it doesn’t cost you more money,” says Larson. “And you can serve the whole world, not just one country,” he adds. While his clients are mostly English-speaking customers from the United States, Canada, and Australia, he’s sent goods to every continent. “I shipped a ring to a customer in Egypt during the revolution.”
The brothers also carefully positioned themselves, focusing on wedding bands that don’t cost much more than $1,000, leaving bigger companies such as Blue Nile to sell engagement rings in the $5,000 to $10,000 range. They also saw that as gold prices soared more and more companies were turning toward non–precious metal rings. (See these tungsten wedding bands.) “We were able to compete because all the big boys had the same amount of experience,” says Larson.
White tungsten wedding band
Although he doesn’t rule out one day opening a brick-and-mortar store when growth options diminish, Larson says he invests in the areas that have the highest returns. The online business—which is seeing an average of a 23 percent increase in sales each year—is where the focus will remain.
Black ceramic and tungsten ring
“It is a constant struggle because consumer behavior changes over time and they aren’t going to tell you their shopping habits have changed. You have to interpret that from looking at sales data, trends, questions they ask,” he says. “In a sense, I kind of have to be a mind reader, since the customer is not in front of my face for me to ask them how I can serve them better. It is an ongoing process and I wouldn’t even dare say I have perfected it. I have just become good enough at it to make a living.”
Tungsten wedding band