How I Did It
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How BaubleBar Undercuts the Competition

Amy Jain and Daniella Yacobovsky, the co-founders of online retailer BaubleBar, talk about how they convince customers they sell quality designer jewelry, despite their lower prices.

How BaubleBar Sells Quality on the Cheap

BaubleBar co-founders Amy Jain and Daniella Yacobovsky developed an expanding customer base through name brand partnerships and and enticements for first time buyers.

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Video Transcript

00:00 Amy Jain: Amy Jain, co-founder of BaubleBar.

00:02 Danielle Yacobovsky: And I'm Danielle Yacobovsky, also co-founder of BaubleBar. And really what BaubleBar is, is we source designer jewelry direct from designers and then we sell it online without the mark-up that a middleman or a traditional brick-and-mortar retailer would apply to that category. We work with about 50, 55 different designers and its been a really fun year, I think, we've had a great time just sort of introducing women to the concept of buying this category online and really having a destination for it because I think that's something that was missing before we really came to market.

How do you keep costs low?

00:39 Danielle Yacobovsky: We don't have a lot of the high cost that a brick-and-mortar retailer might have. We don't have the rent. We don't have the salespeople. We don't have the mix of other sort of low-margin products that we need this particular category to prop up, so that allows us to take as much cost out for the consumer as possible. A piece of jewelry that would normally retail on our site for $25, we would argue would normally retail at a brick-and-mortar retailer for much higher than that. So it's an incredible deal for the consumer and really allows us to put product in peoples' hands which is ultimately what we want to do.

Does a low price point hurt customer perception?

01:17 Amy Jain: When we initially came up with the concept and realized that the consumer needs weren't being met, we spent a lot of out time really understanding the supply side of the business and when we went to the suppliers and all these manufacturers and designers and saw that necklace we have just seen in a retail store for $75 and saw what the retailers were buying it at, we almost didn't believe it. You have to kind of touch and feel it to realize that its the same exact product and then we thought, if we put this on our site on under our private label brand name for a fraction of that price, for $35, people are just gonna assume that the quality is gonna be different. That I think what we saw early on when the brand was so, so new with people came to our site and were buying that entry-level price point item and even that might have been a hurdle for them. You know, the $25, they still think they're gonna get a $12 piece of jewelry. So everything from how the business models been designed to the policies that we put in place to a lot of our marketing efforts; everything's been aimed with the goal of encouraging that first point of trial. Because we see the minute someone touches and feels our product, they really understand what we're doing. They understand through the weight and the workmanship and the materials what they would be typically paying in a normal retailer and we've seen that hypothesis really play out this year.

How do you hook repeat customers?

02:30 Amy Jain: And so we have free shipping to the customer, free shipping on returns. Again, it's to encourage that trial. We offer a small discount on the first purchase. And then we really try to offer a kind of a broad section of price points. I think when we initially started, when we didn't have a lot of the third party validation, we saw a lot of our customers coming and buying, our entry level price point, the $20 item, $30 item, and they would come back really quickly afterwards and pick up something that was higher-priced cause they understood that the price was corresponding... Was correlated to the quality. And I think over time, we've kind of seen that shift as our brand has been built and we've had a lot of support and people are seeing our product on their friends and through word of mouth. We're seeing that people are actually much more inclined to try us without these things that we had initially put in place.

Last updated: Feb 9, 2012

NICOLE CARTER is Inc.'s San Francisco bureau chief. She was previously an editor at New York Daily News, and her work has also appeared in Consumer Reports magazine.
@nicoleckinc