From Jewellery News Asia - April Edition
Part One (Too big for only one post)
Part One (Too big for only one post)
PearlParadise.com, a specialist pearl jewellery retail website established in 1997 in the US, reported sales growth for the 8th consecutive year. Its sales in 2005 were nearly US$11.8 million, more than double the figure for the previous year.
The man behind the online pearl empire is Jeremy Shepherd, 32, who discovered the multi-million dollar business when working the skies as a flight attendant. He is probably among the very few that benefited from the SARS epidemic, taking it as a golden opportunity to buy pearls and develop friendships with akoya and freshwater pearl producers in China. Now he travels to China almost every month, buying quality pearls from his farmer friends at reasonable prices, and secures reliable supplies of Japanese akoya, Tahitian and South Sea pearls.
In an interview with Melissa Wong of Jewellery News Asia, he shares his tips for success, his experience of buying in China and his dream ? selling natural pearls online.
JNA: How did PearlParadise.com do in 2005?
Shepherd: Our sales increased from US$5 million in 2004 to US$11.8 million in 2005. It was the most incredible year we have recorded yet. Our sales for Thanksgiving were about 300 percent higher than for the same week last year. December sales were much brisker than usual and higher than anticipated.
JNA: What are your targets in 2006?
Shepherd: We have not yet determined our sales target for 2006 because we have not finalised our strategy. I can assure you it will be substantially higher than 2005's, and that we will probably shoot for a more moderate 50-percent growth. This should be accomplished without much difficulty as we intend to focus more on higher-end goods, which means Tahitian pearls and South Sea pearls. We started focusing on them in early 2005 and have seen a tremendous jump in revenue as a result. We just sold a triple strand of AAA golden South Sea pearls to an online customer for US$98,500.
We are working with a lot of celebrities this year to promote the high-end goods. The Academy Awards was one of the events. Last year we presented the celebrities with gift certificates, which require the recipients to pick up their jewellery at our showroom in Santa Monica. This year we presented them with jewellery in the ?Luxury Lounge? at the Peninsula Hotel in Los Angeles. It was a high-profile event for the top-list celebrities only. We designed five special pieces for five of the nominees as well. This was a big investment for us, but the publicity was very good.
In addition, we may go into natural pearls this year. I have been talking to a natural pearl dealer for quite some time. We are discussing selling only the pearls themselves, not finished jewellery, and we will probably target collectors. If this goes well, we may design some pieces that can be replicated to sell on a larger scale. It is more difficult online because we must be able to make more than just one design to keep prices low.
JNA: If it happens, you will be the first to sell natural pearls on the Internet.
Shepherd: That is one of the main reasons for getting into natural pearls. There is just no other company providing a truly complete selection of pearls, especially on the Internet. The man I would be working with has been selling natural pearls for more than 10 years, and is quite well known in the industry. He tried to sell online at one time, but it did not work well for him. Making an Internet site successful takes a lot of dedication and concentration. This cannot easily be achieved when one is flying all over the world collecting natural pearls.
Buying in China
JNA: When was your first visit to pearl farms in China?
Shepherd: The first time I visited a pearl farm in China was in 2000. I didn?t have anybody with me, and I had to rely on the people from Beihai, an akoya trading centre in Guangdong Province, that I had come into contact with over the Internet. That was a very bad experience.
About a year later I started again. I contacted as many pearl farmers, or people who said they were pearl farmers, in Xuwen (an akoya farming and processing base, also in Guangdong Province) and Beihai as I could. I spent two to three weeks in the two cities, just visiting pearl processing factories and pearl farms, and I could tell immediately if they were merely traders or just wanted to be middlemen, or if they really had their own factories or their own farms.
Finally I settled on two suppliers. One of them is now my good friend. He has a decent-sized factory, and his processing skills are amazing. He saves all his higher-quality pearls, mainly 6mm to 7.5mm and some 7.5mm to 8mm, for me, and I help him sell his lower-quality pearls without commission. As we are good friends, I can buy 50 percent AAA quality and 50 percent AA+ quality for the same price every time. I have to trust him to divide them, 50 percent of each. Sometimes I find there's a mistake, and I just ask him to correct it.
JNA: How about Chinese freshwater pearls? Do you have good friends in that sector?
Shepherd: I have a good friend at a leading Chinese freshwater pearl producer in Zhuji, Zhejiang Province. She goes to different companies in Shanxiahu in Zhuji to find AAA quality 7mm to 8mm freshwater pearls for me. In turn I help her buy akoya pearls. Sometimes we go to Xuwen together. I also help her, and my friend in Xuwen as well, buy Tahitian pearls because I am a bigger Tahitian pearl customer and get better prices. Typically I charge them only 10 percent over my costs.
JNA: Where do you source Tahitian pearls and other ?non-Chinese? pearls?
Shepherd: I have a good friend in the Cook Islands who supplies Tahitian pearls and separates the lots for me, just as though I am buying at auction. He brings me the pearls after fresh harvests if I don?t have time to go there. I pay a very slight premium.
I also use Hong Kong to supplement the Tahitian pearls when I need to, but only if the companies sell to me at a price I can agree to. Many Hong Kong companies have a high mark-up, almost 400 percent. You can get a 50-percent reduction if you are a big customer, but you still pay a high price.
For larger akoya pearls, of which there is little supply in China, I deal with a factory in Japan which is strong in 7.5mm to 8mm. We have a good relationship because I speak Japanese and have lived in Japan, and they know me and know the company. When they get the quality that they think I will like, they send the pearls to me. If I like them, I keep and pay. If I don't, I send them back.
I go to Kobe about four times a year. I don't need to go very often as our Japanese pearl business is not as strong as our business in Chinese akoya. However, I do go to Kobe to visit other factories to gauge the prices and make sure that my supplier is the best, or to look for specific sizes or qualities.
JNA: It seems that you buy pearls mainly from friends?
Shepherd: I like to work with people that want a strong, long-term business relationship. If I can get to know them on a personal level, if I can give them a fair price, and they can consistently give me a fair price and a fair supply, we can work together and they will know I am a long-term customer. I have had very bad buying experiences in China and even in Hong Kong in the last 10 years. If I don?t trust somebody or don't feel there is friendship between us, I will not do business with them.