Ritani has been in the diamond business for more than a decade. But the engagement ring designer is adding a fresh shine today, announcing $15 million from Cantor Ventures and a new strategy that combines brick-and-mortar retail with e-commerce.
That’s a hot concept right now, highlighted by concepts such as Amazon.com’s locker service and efforts by Wal-Mart to introduce same-day shipping and in-store pick-up.
Ritani is based in New York, but it established a sizable software development operation in Seattle earlier this year under the direction of former Blue Nile executive Brian Watkins. That operation now employs 20 engineers and designers, and will continue to grow with the new cash infusion.
Speaking of Blue Nile, Ritani appears to be going right after the Seattle online diamond engagement retailer.
But Ritani’s approach is different, in part because it is partnering with independent diamond retailers across the country, putting forth what’s best described as a “bricks and clicks” strategy.
“There is no one out there today addressing this consumer need of being able to work online and with a local trusted store,” said Watkins, the former vice president of merchandising at Blue Nile.
Here’s how it works. Customers can shop online at Ritani, going through the entire shopping process without ever touching foot inside a physical retail store. Or, they can choose to browse online, and then have en engagement ring or two delivered to one of Ritani’s retail partners where the customer can compare settings, stones and other elements of the ring. There’s no obligation to buy at that time.
“We are really trying to combine the strength of both models here,” explained Watkins. “You have an online model that is 24/7; you have transparency of information; you can get educated — all of the things you like to do online. And we are merging that, since it is such a considered purchase, to talk to a trusted person …. and have the instant gratification of having something to look at and pick it up in the store.”
In fact, Watkins’ interest in the concept was born from his own experience. Even while working for Blue Nile — which he said transformed the way people shopped for engagement rings online — Watkins chose to get a hands-on view of the four diamonds he was considering buying when he got engaged.
“Even someone who was in the industry and telling people that you could buy online sight unseen, I, for one, didn’t have the comfort level until I saw those diamonds to make that final decision,” he said.
To start, Ritani has partnered with six independent retailers comprising 30 different stores, including London Jewelers in New York; Fink’s Jewelers in Virginia and North Carolina, Steve Padis Jewelry in San Francisco; and Brown & Co. Jewelers in Atlanta. Those stores will get a cut of the transaction, no matter whether the sale occurs online or in the physical store.
That means, even if the entire process takes place online, the San Francisco retailer will get a cut of the transaction if the deal occurs from a shopper living in that region.
“We want to tell that person that we have a local presence,” said Watkins, adding that it allows shoppers to be more comfortable with the purchase or possible return.
Watkins declined to offer specific terms with retailers, citing competitive reasons. But he said they plan to expand the network of retail partners in the coming months, with plans to bring the concept to Seattle and other cities. The goal is to expand the concept beyond Ritani’s current network of 380 stores.
Watkins said that local jewelry retailers have not been able to properly integrate e-commerce solutions, with less than a third offering online shopping capabilities on their Web sites.
“We have these consumers wanting to shop online, and the local retailer is not prepared to make that investment,” he said. “So, we really feel like we are filling that gap.”
Blue Nile remains an industry giant in online jewelry retailing, with a market value of nearly half a billion dollars and second quarter revenue of $91 million. (Blue Nile did not comment for this story).
Watkins said jewelry sales in the U.S. remains a huge $60 billion market, adding that “it’s not a question about taking share from someone else.”
“We think this is the next trend in consumer behavior,” said Watkins, citing research that says retailers who successfully combine bricks with clicks are rewarded with shoppers who spend 30 percent more.
Here’s an overview of the company’s new strategy.