Stone and Strand, an e-commerce marketplace for upscale jewelry, has had to make adjustments and sacrifices to thrive in the Amazon era.
“The jewelry market is so fragmented, and wholesale brands were watching their businesses being set back by department store traffic. Those companies weren’t adapting to online. We wanted to unite those brands in one marketplace,” said founder and CEO Nadine McCarthy Kahane. “Then Amazon decides to enter the space with Shopbop, and that changed a lot for us.”
While leading a company in the jewelry industry, McCarthy Kahane is in a space undergoing a tumultuous period of change. She’s had to convince fine jewelry brands that there is a market online, test the offline waters, experiment with nice but expensive perks like free returns and free international shipping, and design special products for influencers who don’t really move sales, anyway. All that is to say: McCarthy Kahane sees the traditional jewelry business, with its seasonal collections and slow-moving inventory, stale. Her company, which sells its own private-label brand with new products added each week, is focused on newness.
McCarthy Kahane joined the Glossy Podcast to talk about what she’s learned in the past five years since Stone and Strand started. Edited highlights, below.
The offline myth
Stone and Strand opened a New York City showroom in 2016 as a way to attract new customers who’d wander in while walking through the Tribeca neighborhood and learn more about the brand. That was the idea, at least — but that didn’t really happen.
McCarthy said that online brands looking to move into physical retail need to realize that the store will be a place to interact in person with existing customers, not acquire new ones.
“The people who happen to be in the same geographic location of your store aren’t going to become customers just because it’s there,” she said. “We needed to switch gears to make our store an integrated part of our online business, so those customers would know to visit.”
Stone and Strand’s experience with influencer marketing echoes that of a lot of brands working in the space. Exposure has to count for something, right?
McCarthy Kahane worked with two photographers and Instagram influencers to design a special line of products through the company’s private-label line that was “giftable” (cheaper than sending out free product from its third-party sellers) and would help drive awareness. The exercise was paid back in awareness, but not so much profit.
“If we measured success of the collection on response, it had a great reception,” said McCarthy Kahane. “We were looking to raise awareness, get feedback from these followers. It hasn’t done super well from a sales perspective.”
Competing with Amazon-style perks
Stone and Strand positioned itself to its jewelry partners as an antithesis to a Shopbop, which runs frequent discounts and promotions on its site. McCarthy Kahane said she wanted her marketplace to be a partner, where brands would feel safe from that level of promotion — but they still wanted fast shipping and other Amazon Prime benefits.
McCarthy Kahane quickly realized that wasn’t sustainable. She had to roll back perks like free returns and free international shipping, because the cost of those benefits were being reflected in the prices of products and driving customers away.
“We needed to focus on one or two things that we would be proud to offer, which the majority of customers value,” said McCarthy Kahane, who defined that as a continuous flow of new product and better prices. “As the owner of a brand, you want to please everyone, but that’s no way to run a business.”