WHEN SETH ROSEN bought custommade.com in 2009, he initially turned it into a marketplace for makers, woodworkers, jewelers and furniture makers. Then he brought in $30 million in venture capital funding from Google Ventures to create the largest marketplace available for custom made items.
Rosen, who began his career in finance as an investment banker, also owns Ganoksin, an online educational site for the jewelry, gemology and metals fields and the International Gem Society.
“I’m very interested in these old-line industries that are ripe for disruption,” he says. “It’s fascinating to me. The fine jewelry industry is trying to define itself in the age of the Internet, and it’s anxiety provoking for everyone, including us. But customers are still out there; they just don’t buy the same way.”
By 2015, CustomMade had signed up 4,000 jewelers to make custom pieces. “But that year, it also became clear that rather than link up customers and jewelers together, we should become the jeweler ourselves and control the entire process,” Rosen says. So Rosen partnered with Sasha Shusteff (a Princeton-trained computer scientist), Tyler Wilson (an operations expert), Brandon Wirth (a software engineer), and Ryan Davis (a product management guru) to purchase back the assets of the business and build a new one — the world’s largest online custom jeweler.
Relaunching the business with that idea in mind meant they had 30,000 customers coming in every year already. Last year, they handled 53,000 customers and designed thousands of pieces. In 2020, they expect revenue in the eight-figures.
It turned out to be easier once they controlled the design and manufacturing process, so they built an entire software system and business infrastructure to run a full custom jewelry business, direct-to-consumer, in a 100 percent online format.
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Due to the business model, the COVID-19 pandemic has been more of a dip in the road than a pothole. “Everything has been moving along nicely for us,” Rosen says. “Some of our more discretionary categories are down, such as signet rings and pendants, but our bridal business is still going strong and growing. If anything, I believe this major disruption will expedite the transition of fine jewelry into the online sphere, and those with innovative, customer-focused, service-based models will prevail. We are still manufacturing, and still hoping to grow this year over last, perhaps 15-20 percent year over year. Or more.”
In many ways, the company is a hybrid, he says, of old-school jeweler and internet-only sales.
They are tightly integrated with three U.S.-based contract manufacturers and have about 100 people on staff, including sales and design consultants, a team of sketch artists and a team of design leads, who make sure that the design the customer wants is actually able to be manufactured at their quality standards. They ship to 60 countries.
“It is operationally pretty complex,” Rosen says. “A lot of our challenges are operational. We talk to a large number of customers to get one customer to buy, so we expend a lot of soft costs in our sales process. We also spend a bunch of money on advertising and we have people who might come back six months or a year later to buy what they designed — making measurement of returns on marketing spend challenging. Without our deep focus on predictive analytics, this wouldn’t work.”
Closing ratio at the sketching stage is much higher at a retail jeweler who has a brick-and-mortar store. Still, there are no plans to open one of those any time soon.
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A lot of Rosen’s friends, who are in their 40s, say they don’t know if they would buy this way. But CustomMade’s target age is currently 28.“Our plans revolve around building software and systems to make custom available at lower and lower price points,” Rosen says. “We believe the average order values in this space are going to continue to fall. Millennials and younger people are going to spend less and less on engagement rings and they value experience more and more.”
“We ask what their budget is and we try to be very respectful of that and find them something that works. We definitely are not an upsell type of culture, we’re very low pressure and we think that’s the right approach — but time will tell.”