It competes with other flash-sale sites like Gilt, ideeli, and HauteLook, which sell a broader array of apparel and accessories, including jewelry. But by focusing only on jewelry, BaubleBar hopes to distinguish itself. (Last year, Ideeli raised $20 million and HauteLook raised $31 million earlier this year).

BaubelBar won’t sell diamonds or precious jewelry, only generally items below $1,000—usually baubles which go for around $50 to $80. These are more impulse buys driven by the season’s fashions, but they still bring in incredible margins. Mark-ups on this type of jewelry in retail stores are typically 300 percent or more, so there is a lot of room for discounting while still operating at a healthy margin.

Turning inventory over and offerin great deals is the key to getting repeat customers. When Jain and Yacobovsky were testing this concept over the past few months with Eight1six.com, they found that 40 percent of women who bought something once last June came back to buy another item.

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Authors: Erick Schonfeld

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