Nadine McCarthy: Carat Cake offers beautifully curated collections of the best fine jewelry to a discerning female customer. We source unique pieces of fine jewelry from a highly fragmented market place and bring the pieces to life through a combination of design, storytelling and curation.
WJ: What aspects of the online jewelry market make it an attractive space in which to launch a new venture? Conversely, what elements of the market represent the biggest impediments to the eventual success of a new entrant like Carat Cake?
NM: The jewelry industry represents a very large market with over $54 billion in annual sales per year in the US alone. 80% of this comes from fine jewelry and online sales are growing quickly at 11% a year. Moreover, the industry is very conservative, stale, and ready for disruption. The way in which people shop for fine jewelry hasn’t changed for hundreds of years, and we want to be a breath of fresh air in the market.
On the flip side, the conservative nature of the industry will also be a key challenge for us. People are used to going to their local jeweler to buy expensive pieces and we will need to establish a level of credibility with our customers that enables us to compete with their services.
WJ: Jewelry is a tangible item that most consumers like to experience in person before purchasing. As an online-only business, how to you intend to overcome this potential barrier to conversion?
NM: We agree that there remains some reluctance to purchase jewelry online, but we believe customer mindsets are changing rapidly. Gilt and One Kings Lane occasionally have fine jewelry sales with pieces that cost up to $50K but are non- refundable! The key to our success will be building a brand that people trust and drawing in new customers through innovative customer acquisition techniques.
WJ: I understand you’ve gone through the preliminary phases of building the business without a CTO. Can you tell us a little bit about this experience?
NM: I initially spent quite a bit of time looking for a CTO at various events including start up weekend, as well as at hacker meet ups in Northern Liberties wearing the pre-requisite plaid and black glasses. However, I soon realized that the business needs to be in New York city, and that the chances of meeting a person that I liked, was available to make a job transition, AND move to New York were slim to none. I decided to outsource the beta product and my intention is to recruit a CTO when I have some traction and actually live in the city! Having said this, there is no denying it is a challenging process to embark on without a CTO. For example, I received a range of quotes for the website – all the way from $5,000 – $50,000 for the same product – and one vendor put me in touch with his friend as a reference, claiming he was CEO of a large paper company! (LinkedIn saved the day)
WJ: What internal metrics will you be tracking to measure success, and what have you set forth in terms of company goals for the coming months?
NM: We are going to launch our website in a private beta over the summer, and have outlined a list of key metrics that will be used to measure our success. We will be paying special attention to understanding the different stages of the customer acquisition funnel, as the cost to acquire a customer will essentially make or break this business.
WJ: Thanks for speaking with us today, Nadine. The floor is yours. What do you want to tell your fellow Whartonites before we end the interview?
NM: Please help us by signing up to be part of the private launch of our website! You can find us at www.caratcake.com. We are also constantly looking for jewelry designers, so please get in touch if you know anyone suitable!