This article is originally from USA Today. Read it HERE.
LOS ANGELES — Some $2,000 worth of jewelry is spread out across the kitchen table and most will be purchased tonight here at Maya Brenner’s home. Both Brenner, the host, and the woman who staged this “trunk show” will get commissions for their efforts.
If this sounds like a traditional Tupperware or Avon party — friends make money by selling goods to their social network — it should. But there’s a twist: The enhanced online social followings of the digital age and new apps are being utilized to make fewer cold calls and more sales.
San Francisco-based jewelry and accessories retailer Stella & Dot updates the old model and considers itself a tech company. It has $37 million in investments from blue-chip venture firm Sequoia Capital, the company that helped seed Google, Apple, Yahoo, Dropbox, LinkedIn and Funny or Die.
“We’re a social-selling company,” says Stella & Dot founder and CEO Jessica Herrin.
Her salesforce — called “stylists” — use digital tools to sell Stella & Dot products. Each stylist has a distinct S&D website to do business with clients. At the trunk shows, they whip out their “Dottie” — that’s the name of the private S&D iPad app for stylists, who use it to show merchandise at the shows, and take orders.
S&D has struck a major chord with shoppers. It will ring in over $200 million in sales this year, up from $100 million just three years ago.
And Herrin predicts she’ll hit $1 billion in yearly sales before the decade is over.
(She has a long way to go to catch up to Avon, which reported sales of $11 billion in 2012.)
Alfred Lin, a partner with Sequoia and a Stella & Dot board member, says he was motivated to invest in the company because he was impressed with Herrin. She “is mission-driven, passionate, and full of energy. She has a wonderful ability to light up a room.”
The old-fashioned women’s network selling to each other has been around for years. The twist, and why it’s resonating today, is because women and society have changed so much, says Herrin.
The 1950s model of staging an afternoon party has been updated for women who are working, hauling their kids around from event to event and eager to socialize and unwind in the evening, she says.
Maggie Jackson, a vice president with New York-based researcher Center for Talent and Innovation, says Herrin has excelled at taking the old direct sales model and updating it with new technology. “She’s made direct sales appear to a certain younger, Gen X woman, by selling very fashionable jewelry through social media,” she says.
Herrin’s challenge: managing the company’s fast growth. “This is really fast. The challenge is continuing the growth model while also expanding at the same time.”
Herrin, who founded Wedding Channel, an early website that offered one-stop planning services to brides (it’s now owned by the Knot), was looking for the next opportunity when the inspiration for Stella & Dot hit in 2006. (The firm is named after the grandmothers of Herrin and her chief creative officer Blythe Harris.)
The idea wasn’t to do a modern Avon, but instead, emulate more contemporary companies like Creative Memories (scrapbooking) and Pampered Chef (selling cooking supplies).
“These were great experiences you couldn’t get in a retail store, for the modern woman,” she says. Even with the shift to online sales, “women wanted to gather, they wanted a group event.”
Because jewelry is generally housed under lock and key in retail stores, Herrin bet correctly that having items spread out on tables and available to try on and sample would have great appeal. (She’s since also added accessories, like handbags.)
Hillary Fogelson said the L.A. gathering was her first time attending such an event. With the emphasis on online shopping today, “it’s nice to have an event where it’s a party, and you can really put the jewelry on and see how it looks on you,” she says.
To become a Stella & Dot stylist, you pay from $200 to $500 for a kit that includes jewelry samples. Then you start working your social network to set up trunk shows at friends’ houses. The stylists and the friend both invite folks to attend. The stylist gets a commission for total sales of the evening, while the host gets free jewelry.
Items are shipped directly to the customer by Stella & Dot, eliminating the need for the stylist and hostess to have to buy inventory and deal with the hassle of shipping.
Herrin says yearly pay for a stylist can range from $50,000 to $300,000. The average profit for the stylist is at least $250-$300 per trunk show, Herrin says.
She has roughly 16,000 stylists. Some work full time, others seasonally. The whole idea is for women to be able to have a side business, she says. “We don’t have quotas. We’re about a business that’s there when she wants it to be.”
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