A Flashy Startup

Plukka founder Joanne Ooi isn't one for doing things small and subtle, which is why she predicts that her new website for designer jewelry—which combines flash sales, group buying, and social shopping—is going to change the way the jewelry business is done.

“This paradigm is something that is really going to disrupt the jewelry industry and shake it to the foundation,” Ooi told Portfolio.com at a recent press event where the site was introduced.

That’s a big statement, but Ooi says the company, which was founded in July, is challenging traditional jewelry retail through several methods that, together, represent a new model in jewelry retail: selling jewelry online, which automatically shaves overhead costs and allows for cheaper prices; commissioning Plukka-designed pieces directly from jewelry factories in Thailand, Hong Kong, and China; eliminating inventory risk by only producing pieces to order; and, finally, marketing them via social media rather using a big expensive ad campaign, giving discounts—on a scale—for social referrals.

The site, which launched today, offers designer jewelry at 70 to 90 percent off typical retail prices, in a flash-sales format that offers pieces for a limited time of one to three days. How is she doing such deep discounts? Ooi says her research revealed that retail prices for designer jewelry—often made at the same factories Plukka works with—are routinely marked up by five times, and sometimes as much as 30 times for the most prominent designers. (She gives the example of a sterling-silver bracelet with a designer name that would sell for $975 and costs just $32.50 to make.) Plukka is designed to tantalize the fashion-minded consumer who might otherwise buy a Céline handbag to instead buy, say, an enamel cocktail ring by making them deals they can't refuse.

The site explains its discounts through what it calls the Plukka Value Proposition, which is based on two core principles: First, no product gets made unless enough customers like the item enough to buy it (for fine jewelry, you’d need at least three buyers). Second, the more customers that buy a product (each of which is offered for a limited time only), the less it costs, a concept that is similar to when a Groupon deal “tips” only after a certain number of consumers sign on.

For the latter, the site features patent-pending technology with a unique scale that has the price of an item dropping in real time as more people purchase it. Those who share an item with friends get an additional discount if those friends buy—up to 40 percent off for those who refer three friends who end up purchasing.

Ooi, who projects that Plukka will generate between $5 million and $10 million in sales in its first year, has gained notice in retail and business circles before. As creative director at Hong Kong-based luxury brand Shanghai Tang, owned by luxury conglomerate Richemont, the Singapore native, who was raised in the United States, landed on the cover of Fast Company in 2006 after being credited with reviving the retailer and turning it into China's first luxury brand.

Now 43, Ooi has teamed up on Plukka with Jai Waney, an international investor whose holdings include the Zuma/Roka international group of restaurants, and who recently opened the Arts Club in London. While Ooi would not say how much she and Waney invested, she said that it was on the level of Series A funding.

She also has a veteran of the jewelry industry on her team: The company's business development director is Elle Hill, a 20-year veteran of the jewelry manufacturing industry who has been with designer brands including Dalumi and M. Fabrikant & Sons. After rolling the Plukka concept out in the United States, Ooi is looking at Europe and then Asia.

Today's deal is for a 13-carat blue topaz cocktail ring with two carats of amethysts and one-carat diamonds set in 18-karat rose gold. Because three people signed on to buy it, it is priced at $1,800, but the scale shows that if 12 people were to buy it, the price would go down to $1,400, which is the lowest possible price for the piece.

One of the drawbacks for consumers who buy in, though, is that they will have to wait four to eight weeks for their jewelry to arrive, because it is literally not being made until enough consumers buy in.

“That is the trade-off of buying one of these exquisite pieces,” says Ooi, who thinks that customers will understand the waiting period.

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Teresa Novellino writes for Portfolio.com