With $10 million, BaubleBar continues its foray into brick-and-mortar retail

July 29, 2014, 12:59 PM UTC
BaubleBar's "Peony Pendant" necklace, which sells for $36.
BaubleBar's "Peony Pendant" necklace, which sells for $36.
Courtesy: BaubleBar

For online retailers, brick and mortar is the new black.

Last year, the hip eyeglass purveyor Warby Parker chose to open its first real store after spending two years testing “store-within-store” concepts for its once web-only wares.

Earlier this month, Birchbox, the subscription mail order service, opened its first physical store in downtown Manhattan, just two blocks west of Warby’s.

This month, BaubleBar, a three-year-old fashion jewelry e-tailer, will deepen its March partnership with the upscale department store Nordstrom—which has been in search of a younger customer—to expand the sale of its affordable, glittery goods from 35 to all 117 of Nordstrom’s U.S. locations and, interestingly, on its website, too.

That’s not all. BaubleBar, which sells trendy accessories priced as low as $24, is experimenting further with its own bijou boutique in Manhattan’s Flatiron district. (Notice a trend here?) The goal of its pop-up shop wasn’t just marketing and advertising, according to co-founders Amy Jain and Daniella Yacobovsky. BaubleBar shoppers, on average, spend three times the amount in physical stores that they spend online, they say, and offline sales accounted for 20% of the company’s revenue last year.

Which might explain why startup companies on the cutting edge of retail are entertaining a strategy that is centuries old. For many brands, brick and mortar is just good business.

“Daniella and I believed since day one that offline presence would be important to build the brand, talk to our customers, and to achieve the vision and scale we’d envisioned,” Jain tells Fortune. Jewelry shopping in stores is a fun experience, she says. “But when you shop online, it’s easy to talk yourself out of [buying something]. It isn’t about the higher spend. It’s about [the customer] purchasing outside her comfort zone, which is exactly what we want.”

Partnerships with established retailers were always meant to be links in the chain, Jain says. “Last summer, we started getting calls from Nordstrom and Anthropologie,” she says. “We knew we’d get calls for wholesale partnerships. But hearing experienced leaders in the industry identify our model as a way to build our businesses and help our customer bases got us excited about exploring.”

Jain cites favorable customer overlap and ideal target demographics as two reasons BaubleBar paired with Anthropologie and Nordstrom. “Our customers are already shopping [at these stores],” she says, adding that both retailers are highly invested in jewelry sales and marketing.

On Tuesday, BaubleBar announced that it raised an additional $10 million in venture capital to continue fueling its growth. Led by Burch Creative Capital, the Series B round included existing investors Accel and Greylock Partners as well as TriplePoint Capital, Comcast Ventures, and Aspect Capital, and brings the young company’s total investment to almost $16 million.

It will need all the money it can get as it continues to experiment in ways to sell its products. For example, the company last month launched same-day shipping in Manhattan, presumably to enable last-minute impulse buys. For $5, customers can select any style currently in stock and have it delivered by courier the same afternoon or evening, if ordered before 4 p.m. Orders are fulfilled in-house.

“People love to talk about innovation on the front end. But our innovation is on the backend,” Jain says, referencing her company’s vertical integration. In fast fashion, she notes, “that differentiates us and significantly compresses time to market.”

On a recent fundraising trip to San Francisco, Jain and Yacobovsky stopped by the Nordstrom jewelry counters to see firsthand how customers discover and shop for BaubleBar jewelry in a department store. “We were hiding behind the earrings,” Yacobovsky says with a laugh. “One girl said, ‘Oh my god, Baublebar is here!’ We literally watched this girl pitch our company to her friend and then buy three pairs of earrings.”

In online-only sales, Yacobovsky notes, friends may email a link to a friend and encourage her to buy. “But there’s friction in that,” she says. “‘I told you about this, I emailed you, I expect you to buy. But if we’re [two friends] walking around, I can turn to you and say, ‘This is what I was telling you about!’”

That, like BaubleBar’s continued growth, is an almost frictionless process.

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