Starting Out : The Online Diamond Business in ChinaZbird was founded in 2002. The company name is a combination of the names of the brother, Xu Lei, and his sister, Xu Xiao. Xu Lei’s Chinese name contains three characters that mean “stone,” which connects it to diamonds and gemstones. Xu Xiao’s English name is “bird,” which also connotes a highly efficient ecommerce business. The company’s name set the course of the business.
When the company was founded, there was no EBay or Taobao, and only one online trading company called YiQu. Three months after posting its first loose diamond on the internet, Zbird had its first sale, which launched the online diamond business.
Xu Lei said that, at first, their biggest challenge was to inspire confidence in their customers. They were selling diamonds online at about half the price charged by most department stores in China. Zbird had to reassure potential clients about the quality of the diamonds they were offering for sale online. Since Xu Lei was a gemology major and GIA Diamonds graduate, he had confidence in the GIA grading system and the value of its diamond-grading reports.
In 2002, he rarely saw loose diamonds being sold with diamond grading reports. Most diamonds sold with reports were over 1 carat, while most diamonds sold in China were 30 points to 1 carat. Xu Lei decided to import diamonds in that size range with GIA grading reports. He said most dealers laughed at him at the time due to the cost difference but he was sure that the grading reports would add value.
Through the years, Chinese consumers became more educated about diamonds, and the reports became crucial to sales. Xu Lei believes that GIA reports play a very important role in today’s Chinese diamond market. Almost all online diamond dealers now sell loose diamonds with GIA reports as well as reports from other professional grading laboratories.
“Clicks and Mortar”According to Xu Xiao, Zbird pioneered the sales model they call “Clicks and Mortar” in the China retail diamond market. Clicks and Mortar combines the ease and speed of online sales with a physical offline experience. The internet makes it possible to combine a wide range of diamond products with fast, high-quality service. This makes it very popular with the younger generation, which is a very important demographic for Zbird’s business.
Most of their younger customers were introduced to Zbird through the internet, which provides Zbird with a convenient way to quickly contact and interact with their customers. The “mortar” portion of Clicks and Mortar encompasses what Zbird calls their Experience Stores, which provide customers with a real-world environment where they can physically connect with the brand and products.
While the products offered for sale are often the same, there are shopping differences between online and Experience Stores. Customers looking for engagement and wedding rings are more likely to actually buy the ring in the Experience Store. Online customers tend to buy more personalized diamond jewelry like pendants, earrings, and other pieces that are less likely to require opinions from family members.
This explains why the per-transaction value of their online products is lower than in the store. More rings, especially engagement and wedding rings, are sold offline, while more diamond accessory jewelry is sold online. In 2007, Zbird received its first international venture-capital investment, which allowed for Experience Store expansion. Further venture-capital investment came in 2008 and 2010, helping to fuel 200% growth in the last few years. Zbird currently has 15 Experience Stores in 14 cities, with approximately 500 employees to service the offline business.
Customer DemographicsZbird has worked hard for more than 11 years to develop their online business, which is why most of their customers are younger—ages 25 to 35—and so-called “white collar.” They became familiar with Zbird through the internet. Zbird was ranked number one in China for both quantity of jewelry sales and customer satisfaction, and their status has grown steadily. According to Google, Zbird is the internet’s most popular brand for diamond wedding rings in China. Zbird also uses the internet to make after-sale follow-up contacts with their customers and build long-term relationships.
Most of Zbird’s individual in-store wedding ring sales amount to about $10,000 RMB, about equal to a young man’s three-month salary. The average is a bit lower for internet purchases. The customers are often couples. They come in together to look at engagement and wedding rings, but it is usually the woman who makes the final choice.
When it comes to other diamond jewelry decisions, the woman almost always decides and often shops alone or on the internet. A woman might put the jewelry item on her online wish list for her boyfriend or husband to check and buy for her. Ultimately, however, it is the woman who makes the buying decision and women are the majority of Zbird’s customers.
Xu Lei’s Vision of the Chinese Diamond MarketXu Lei describes his vision of the Chinese diamond market’s potential with great enthusiasm:
Zbird places a lot of focus on the wedding jewelry market. Xu Lei feels the market has changed. He explains: “Before, couples would primarily pick a simple solitaire mounting in 18K and platinum with a center stone.” Today he sees more interest in design. He feels the design of the company’s wedding jewelry is one of the leading features attracting young customers today.
Zbird’s Jewelry Designs and LinesXu Xiao says that Zbird’s design style is primarily contemporary. They offer jewelry themes such as their “Promise of Love” wedding ring line, a joint effort between Zbird and international designers. This series of wedding jewelry features flowers surrounded by diamonds and symbolizing lovers’ hugs and kisses. These themes are created for eye-catching effect and to add deeper meaning to the jewelry. They also market a diamond brand called “Aurora Borealis” for their top-cut-grade diamonds.
Zbird offers classic and traditional jewelry along with its more fashion-forward designs. An example of the latter is called “Angels and Demons.” During the day at a typical white-collar office in China, a woman can wear the Angel design as a stylish diamond accessory. At night, she can wear the more edgy Demon design to after-work parties.
Besides style, another design consideration is cost. Today’s customers in China want expensive and elegant jewelry for formal occasions and less expensive, more fashion-forward pieces for casual wear. Xu Xiao says that Chinese customers generally prefer simpler and smaller jewelry pieces than customers in the West, and far less extravagant styles than customers in India.
Recently, Zbird’s chief designer worked with Platinum Guild International to jointly launch a series called “Two People One World.” There is a Chinese saying, “Fly next to each other,” which refers to two people moving through life together toward a better life. The style resembles a bird's wings to symbolize two people pursuing happiness in their lives. It also symbolizes the Zbird brand’s brother and sister team.
Zbird also sells a series of personalized jewelry called “In Fashion,” which can convert into different styles to coordinate with different outfits, allowing every woman to find her own jewelry style. The Zbird slogan is “Shine for You,” and Xu Xiao strives to deliver that feeling to her customers in the company’s products and service.
Over the past 20 years, Chinese customers have come to realize the importance of jewelry design. Twenty years ago, jewelry was valued for just the quality of the components, and customers based their buying decisions on that. For example, if they wanted to buy a gold ring, they would pick a simple band. But now, with the promotion of fashion concepts, they don’t just want the material to be real and valuable, they want its design to reflect their personality and taste. This is why Zbird has been creating different styles beyond the classics.
Zbird thinks that there has been a lot of progress in all aspects of Chinese jewelry design over the past 20 years. Xu Xiao feels that jewelry design in China is getting better in terms of originality. There are more and more opportunities and levels of artistic freedom for young designers. And the market is also more and more open to original product designs.
Customized Designs and VIP customersEven with all these design choices, some customers still want unique custom jewelry that expresses their personalities and attitudes. To meet this need, Zbird has set up a platform for them to work with skilled designers and other professionals. This provides Zbird with many design options to appeal to a wide range of customers’ tastes and help them show their individuality. Xu Xiao says, “Today, customers want to buy more personalized products, not the same ones everyone else has. So we’ve introduced the design-it-yourself service. They can select a diamond and then choose a setting for it.”
Zbird also creates special customized products for VIP customers. Along with custom jewelry design, the company provides a global diamond-search service for them, including a search for the finest-quality colored and fancy-shape diamonds. The designs are all one-of-a-kind, so VIP customers receive the most exclusive service and choice possible.
Quality ServiceIn addition to providing customers with superior jewelry values, Zbird strives to provide good service. In Xu Xiao’s opinion, “Our promise that we will provide worry-free follow-up service is just as important as the diamonds they buy from us.” Zbird offers their customers a lifetime guarantee. When customers buy products from Zbird, they can enjoy services that include maintenance, upgrading, and more. Xu Xiao believes that a wise customer considers not only the price but also the whole package. “And only a good brand can provide the whole package, which is the thing that keeps our customers coming back and makes our business a success.“
New Opportunity: Diamond Investment BusinessXu Lei describes how, a year and a half ago, the company decided to seize another business opportunity. With the rise of the wealthy class in China came the rise of investment options. Xu Lei said, “They all have their own individual ways to invest their money. Some of them buy property, stocks, or gold. China recently applied a lot of new policies to try to control land prices, so property is not as good an investment as it was before. The stock market is not very thrilling either. Gold prices are not that stable. We thought that maybe we could educate those wealthy people to purchase collections of diamonds as part of their investments.”
Zbird took action by contacting several well-known Chinese banks. Two of them agreed to work with Zbird: China Merchants Bank and China Construction Bank. Currently, Zbird services and supports both banks’ personal diamond investment businesses.
Xu Lei elaborated, “We made a lot of progress during the past year and a half. In the first year, we launched a team of 10 staffers to work on this investment project. This team’s sales figures for a year were 100 million RMB—about 15 million US dollars. The largest stone they sold was over 23 carats. It sold for over 13 million RMB—about 2 million US dollars. Today, there are many wealthy people in China who can afford this type of diamond, but they need a convenient way to buy and also to know more about diamonds. The most important thing is to have someone trustworthy to serve them and help them manage their money. Our team is more like a private jewelry consultant team.”