- Online jewelry startup Fenton was launched in February 2019 to offer a ‘build it yourself’ digital engagement ring service using ethically sourced gemstones.
- The British company says it has grown more than 40% month-on-month since the lockdown in March and made more revenue in the third quarter of 2020 than in all of 2019.
- In February 2020, Fenton raised a seed round of £1.9m ($2.4m) from high-profile investors including Alex Chesterman, property website founder Zoopla and car market used Cazoo.
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Online jewelry startup Fenton was launched in February 2019 to shake up the traditional engagement ring market.
Traditionally, engagement ring buyers have stuck with brick-and-mortar jewelers – but Fenton is bringing a digital-first approach that he says undercuts traditional retailers by about three times.
Shoppers unwilling or unable to go to physical stores and try on rings, so they look to digital options.
Fenton also differentiates itself from the traditional diamond engagement ring market by focusing on ethically sourced gemstones.
After a strong first Christmas season, with net sales of £100,000 ($128,000) in November 2019, Fenton says it’s up more than 40% month-on-month since the start of the pandemic.
According to founder Laura Lambert, he made more revenue in the three months to October than in all of 2019.
“So this year we think we’re going to be 3x, maybe a little more, than we were last year,” Lambert says. “In a year when retailers have suffered so much, it’s really exciting to be a story of growth rather than a story of survival.”
But, despite Fenton’s success, she says when she first launched an online engagement ring business, she was met with a lot of skepticism from investors.
“We launched purely online, which was a big step,” says Lambert. “I have been told by a number of investors that no one will ever buy and engage with me online and luckily that turned out to be untrue.”
She adds: “We mainly talk to customers on WhatsApp. Facebook Messenger is our secondary channel, email and phone are really support channels because I think people want to interact with brands like they do with their friends.”
One benefit is that Fenton is not just focused on the London market, says Lambert: “We have a wide range of professions and ages, and many of our clients, over 50%, are outside of London, which I love because I think so many luxury brands are really focused on the London shopper.”
COVID-19 validated Fenton’s business model but threatened its supply chain
Fenton has benefited from the shift online in the wake of COVID-19, with many traditional family businesses collapsing due to a lack of digital innovation, Lambert says.
“The majority of the market is owned by independent retailers, often family businesses… There has been very little digital evolution in the space of most of these independent players,” she says. “I think the pandemic has had the effect of accelerating changes that were already incipient. It’s like we shot five years in advance.”
The broader luxury goods market has been hit hard by the pandemic. The sector is expected to see sales drop 35% in 2020, according to a survey by consultancy Bain in May.
But, Fenton saw resilient demand, Lambert said.
“Engagement ratings are one of the few things that people will prioritize over a lot of other things in their lives…I would say the luxury goods market has shrunk, but we’ve probably taken greater market share, which is what has fueled our growth,” she says.
This matches McKinsey statistics, quoted by the FTsuggesting that 25% of US and European consumers shopping for luxury goods online during lockdown are doing so for the first time.
Although COVID-19 has not changed Fenton’s business model, it has threatened its supply chain.
“We mainly manufacture in India and [so] we have opened several other manufacturing centers around the world to try to cover any future lockdowns,” says Lambert. “We created them in about a week. So our production was virtually uninterrupted.”
In February, Fenton raised a seed round of £1.9 million ($2.4 million). Investors included serial entrepreneur Alex Chesterman, founding real estate website Zoopla and used-car marketplace Cazoo; and Camilla Dolan, founding partner of Eka Ventures and investor in startups such as Gousto.
Lambert says the funding will be more focused on scaling the business than expanding the product line.
“We are already making sales in Europe, which is great. We are running a very cheap and very good ROI campaign on Facebook and Instagram, and have made sales in Germany in particular,” says Lambert. “So I think next year we will go a lot more in that direction.”
She adds, “But, always keeping in our hearts this idea of being the luxury engagement ring for every customer. We’re not a household name yet, so we have to double down on that.
Another round of funding isn’t on the horizon right now, but Lambert says it’s not something she will rule out.
“We continue to have these months of balance, which is really exciting, but we continue to drive growth,” she says. “We believe we will be profitable at the start of the second half of next year.”