Cavorting on the beaches of Bali, touring Venetian glass factories, and wandering through New York’s Metropolitan Museum of Art might seem the stuff of dream vacations. For serial entrepreneur Mike Bisceglia, it’s all in a day’s work.
Three-quarters of the year, he travels the world hunting for treasures and ideas for Stauer, his print catalog and online retail business that sells watches, jewelry, and other luxuries -- generally priced from $100 to $1,000. Many are replicas of famous items, like Abraham Lincoln’s watch; all are accompanied by promotional stories Bisceglia writes. A men’s black onyx Navy ring triggers the nostalgic tale of his uncle’s Navy buddies gathered around the kitchen table trading stories deep into the night.
In 2003, when Bisceglia founded Stauer (its name is derived from the ancient Greek sculptural hot spot Stauropolis), he sold a wide range of goods, from natural sunlight lamps to diamond-coated pots and pans. Almost three years in, Bisceglia noticed buyers returned predominantly for the affordable jewelry. He dropped the Hammacher Schlemmer-like variety and focused Stauer’s offerings. Profit margins improved. When consumers cut back during the Great Recession, Bisceglia says aggressive pricing kept the company’s revenue growth strong. Stauer, which has 400 employees at offices in Minneapolis and Richmond, Va., brought in $230 million in 2010, Bisceglia says, and he forecasts $280 million in 2011. He plans to make as many as 50 new hires by yearend.
Bisceglia, 52, spoke recently with Bloomberg.com contributor Megan Shank for this as-told-to Entrepreneur’s Journal:
We redefined ourselves in late 2005 to only jewelry, watches, and coins, because the way you make money on direct marketing is through the repeat buyer. Now, we have a million customers who have bought from us several times. The customer led us to understand there was a hole in the jewelry and watch market. On one end, there were drugstore watches and “fashion jewelry,” and on the other there was fine jewelry -- in which you add several zeros to the price. But neither represented the products most people wanted to buy. Even at Tiffany’s, a high-end jewelry store, the average customer only spends $135. They buy the little silver bracelet and hope the box impresses.
Guys needed to buy jewelry every year. Most wanted to spend $100 to $500. But what existed in the market that was interesting for that price? We did a study on where baby boomer guys bought jewelry. The answer was the mall -- quite generic, but it was the price point pull. They’d look at the product behind that glass case without any understanding of it. We thought we could do a better job explaining the product, telling its story. That’s what makes a gift great -- if it has a sense of history or a deeper meaning.
We don’t consider a product ready to sell until it has a headline and a story -- not just a price. The success of a product often largely owes itself to the success of the story. For example, for two print ads, we had two slightly different headlines about the first automatic watch in 1922. One story delivered business. The other did not. It’s similar to journalism that way -- if you have the right headline and a great first sentence, you’ve got them hooked. But if the first sentence doesn’t grab the customer right away, you’ve lost them.
We like to advertise in magazines, because it’s a predictable market and magazine readers are educated people with an interest in travel, art, and history. We’re one of the largest print advertising buyers in the country -- we buy 100 million pages a month in over 300 different publications, including National Geographic, Car and Driver, Better Homes & Gardens, Discover, and AARP. When we run our print ads, we’re testing out stories. If we hit one out of three that works, we’re happy.
Our stories take the voice of the authoritative traveler, the Indiana Jones approach. It’s authentic because we source all of the materials ourselves. And we make stops at museums around the world to find inspiration. From the Museo Nacional del Prado in Madrid to the Uffizi Gallery in Florence to the Met in New York, we’re constantly looking for ideas. We borrow from ancient Egyptian jewelry and Renaissance art, among many others. Most of these designs are in the public domain.
We’re one of the only companies that sells affordable historical-inspired jewelry. The big museum catalogs are probably our biggest competition. We have designers and manufacturers in New York, Hong Kong, Switzerland, and Italy. Because each place has something they excel at, we can make the best product for the best price. We might buy emeralds in Brazil, have them cut in India, and then strung in China.
We try to find pieces of the jewelry business where the pricing doesn’t make sense. For example, several years ago, a mineral called tanzanite was expensive. Then a bunch was discovered, so we went in and bought a lot. A few trade companies control the white diamond market, but the black diamond market is priced more affordably, so we make large purchases there.
More generally, when fellow retailers had a problem in 2009, we still grew 38 percent because of aggressive pricing. We were aggressive with coupons and free promotions. We took a hit on the margins, but our customer growth was terrific. People still needed to buy gifts. We didn’t stick our heads in our shell.
Our customers are mostly men in their 40s, 50s, and 60s. They like classic things. They don’t understand the Manolo Blahnik shoe of the week. They have an average income of $100,000 a year. There are all different levels of pearls, but 99.9 percent of people can’t tell the difference between a string of pearls that goes for a couple hundred dollars and the thousand-dollar pearls. We buy large stones with less clarity but at a better price. Guys like being able to afford a big, beautiful 50-carat ruby necklace.