The Next Blue Nile? Ritani Launches Jewelry Site With a Bricks-and-Mortar Twist.

Steve Padis opened his jewelry store 30 years ago in San Francisco.

From where he sits now, high-tech companies surround him: Zynga is across the street, and Airbnb will soon move in upstairs. But even though the young professionals are buzzing all around him, they rarely patronize his store.

Based on watching his four twentysomething children, Padis says he understands why: “Literally, all of their processes start online,” he said. “A great deal of young people don’t even think of walking into a store to make their decision and purchase.”

That reality is hard for most local retailers to swallow. Online retailers continue to gobble up local sales with the lure of convenience and, often, cheaper prices. In the jewelry business, the main opponent has been Blue Nile, which got its start selling engagement rings online back in 1999, and now operates as a lucrative publicly held company.

But instead of bemoaning this trend, Padis now hopes to benefit from it by partnering with a new e-commerce site that is launching today.

Ritani, a New York-based designer of engagement rings and other jewelry, is unveiling a new way to buy engagement rings that unifies both the online and offline shopping experiences. Under the new model, consumers will be able to purchase an engagement ring from the Web site and have it delivered directly to their home. Or it can be sent to a local jewelry store, where they can decide whether to buy it or return it.

The new business marks a major transformation for Ritani, which quietly got started about nine months ago with $15 million in funding led by Cantor Ventures.

As part of the overhaul, it hired a 20-person e-commerce team in Seattle, and named Brian Watkins president. Watkins, who previously worked at Blue Nile and Nordstrom, said the first-generation of online engagement stores, like Blue Nile, are missing out on the opportunity to offer personal service. He estimates the engagement ring business at $60 billion annually, of which less than 10 percent occurs online today.

Watkins said Ritani is going after the substantial percentage of people who like shopping online and doing research online, but are uncomfortable with buying one of the biggest purchases of their life without seeing it first. “That’s the gap we are going after,” he said.

Ritani’s main purpose, however, is not to take away sales from local retailers.

Generally, you can think of local jewelry stores as an extension of Ritani. Customers can create a custom engagement ring online and have it delivered to a local jeweler, without any obligation to buy it. Since Ritani is a manufacturer, rings can easily be sent back to its New York plant, where the metals will be melted down and the diamonds will find new settings. Every order offers free overnight shipping and a 30-day return policy, no questions asked.

That’s the process that the customers will see, but on the back end, Ritani has formed tight partnerships with local retailers to make it work. The most complicated part is in the revenue share: Ritani will share a percentage of every sale made within a certain distance of a jeweler, regardless of whether it played a role in the sale. Likewise, if that customer ends up patronizing that retail store in the future — to service a ring or to buy a watch — the retailer must share a percentage of the revenue back to Ritani.

“If you truly believe in integrating the online and offline experience, then putting people out of business is not good,” Watkins said from the company’s Seattle offices, which are a short drive from Blue Nile, his old employer and new competitor.

For Padis, it was easy to say “I do”: “These are customers that we otherwise may not have seen. I like the idea of a revenue share; it eliminates the animosity between online and offline retailers. We are cooperating.”

In addition to working with Steve Padis Jewelry, Ritani has partnered with a handful of other stores for today’s launch: London Jewelers in New York; Underwood Jewelers in Jacksonville, Fla.; Fink’s Jewelers in Virginia and North Carolina; Bachendorf’s in Dallas; and Brown & Co. Jewelers in Atlanta. More territories will come as Ritani expands the number of jewelers it works with. It plans to lean heavily on the 380 stores that sell its jewelry today.

In addition to setting up the back-end infrastructure, the company also had to completely redesign its Web site. Previously, it was just a catalog of rings; now, it has the look and feel of a glossy magazine with joyful pictures of newly engaged couples. Watkins said they were also careful to create some balance, so the site was attractive to both women and men. For men, that meant having a heavy spreadsheet component, where diamonds could be compared side by side. Other features include high-end photography and videos that offer 50-times magnification of the diamonds. There’s also a service called “Virtual Gemologist,” which provides one-on-one consultations with diamond experts.

Watkins said all those steps are necessary in order to make customers comfortable about buying online. Even as the head of merchandise at Blue Nile, which is the largest diamond buyer in the world, he would order four diamonds and inspect each one before selecting the very best.


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