Jeremy Shepherd founded Pearl Paradise in 1996, after a trip to China. While there, he bought a strand of pearls in a market only to discover that back in the U.S. they were selling for 20 times what he paid. He learned that the stateside mark-up on pearls was mainly due to a slew of middleman. And so Shepherd cut them all out – he traveled through Asia to buy from the pearl farmers himself. It helped that he had a willingness to go on the road, plus a knowledge of Mandarin Chinese, Japanese, and the South Pacific Micronesian Islander language, Chuuk — he could build up direct relationships with his suppliers. Now, PearlParadise.com is the world’s biggest online pearl company.
It’s hard not to be fascinated by such an innovative entrepreneur, so we sat down with Shepherd to pick his brain.
The High Low: You created your own website several years after starting your business. How did that change things? Do you feel the move really made the company take off, or had it already?
Jeremy Shepherd: I started selling on the Internet from the very beginning, using the auction platform that Amazon used to have and on eBay. I created my website, PearlParadise.com, after four years. Business was successful even prior to launching the website, but it really took off after PearlParadise.com was born.
HL: This is one of those ingenious ideas where we have to wonder about copycats. Have you experienced a fair amount of competition?
JS: Over the years, dozens of other players have entered the niche. But very, very few have become successful, and most have closed their doors or abandoned their websites after a short time.
Today, fewer and fewer companies attempt to enter the market because the barriers to entry have increased significantly. A few barriers would be:
1. Technology – In order to sell online and garner consumer trust, a professionally designed website and professional photographs are a must. It would be easy to spend as much as $100,000 to simply launch a site that *might* succeed.
2. Inventory – When I first began in the ’90’s, I carried very little inventory. Today, we have nearly 1000 products and several million dollars in immediate inventory. It would be very difficult for an upstart to compete on this scale.
3. Reputation – Selling online, especially luxury goods, requires a reputation. Over the years we have been reviewed and discussed thousands of times. It takes only a moment for a customer to research our company to read the experience of countless online shoppers on numerous social media sites such as Pearl-Guide.com, Pricescope.com, etc. This would take years to replicate.
HL: Speaking of inventory, the site offers an incredible range of pearls and jewelry styles. Are there certain standout customer staples, or is it fairly varied?
HL: We’re impressed with your direct relationship to pearl farmers all over the world. Was the cultivation of those partnerships a direct result of your broad language base, or were there other factors?
JS: Yes, the language base has a lot to do with this. Also, I have always been very hands-on and have traveled directly to the producing areas of the world myself. I’ve been able to develop close working and even personal relationships with producers and processors. This business is conducted by handshakes, and I have always taken care of our suppliers.
HL: On that topic, we’re just curious — how much time do you spend traveling these days? Do you have a field team?
JS: Yes, I do have a field team, but I do a lot of the traveling myself. So far this year (2011) I have been to China twice, Hong Kong twice, Japan, The Philippines, Fiji, New Zealand and Tahiti. I will leave for Hong Kong and China tomorrow night, and will be returning to Hong Kong in June.
HL: Any favorite pearl-farmer or travel-related anecdotes?
JS: A producer/processor I had worked with in China for a number of years refused to honor an agreed upon price when I arrived in Zhuji. I left the producer’s office, walked a few blocks to the pearl trading center and spent nearly $50,000 with a competitor. I had the competitor deliver all the pearls to the office of my usual supplier, and had the goods FedExed back to my office in the states.
When I arrived back in the States I had an email waiting from the original producer. It was only two words: “You win.”
HL: Lastly, do you have any personal favorites when it comes to the many varieties of pearls? And…any tips for a pearl layman to quickly discern quality?
JS: My favorite pearls are freshwater because of the sheer variety in colors, sizes and shapes available. Every year we try to introduce something to the U.S. market that has never been seen. The farming technology is changing fast, and new goods are constantly being produced.
As for quality, the most important attribute is luster. Luster is defined as the quality and quantity of light reflected from the surface or just under the surface of a pearl. The more mirror-like the luster, the higher quality and more valuable the pearl. Surface cleanliness also plays a role in value. The fewer imperfections a pearl has, the more valuable the pearl.