how we built a business in japan

My partner and I run Japan’s newest jewelry business. It’s a store you’ll only find online and only in Japanese. This is the tale of how two foreigners with a background in information technologies made a business.

In 2006, I took my girlfriend for a walk on a country lane. It was about seven in the morning, we hadn’t even eaten yet. I told her that I’d like to marry, and she agreed.

Returning to Tokyo, we started hunting for an engagement ring. We did the rounds of specialty stores in places like Ginza, Okachimachi, and Omotesando. But we also did a lot of research on the Internet—we’re that kind of couple.

What we found was surprising. Prices here in Japan were far higher than they were outside the country. And despite the high prices, we rarely met any sales staff who made it clear that they knew what they were talking about. Frequently, they couldn’t describe the qualities that set one stone apart from those around it.

We decided to cast our search wider. We started going to boutiques inside department stores and to shopping malls. If anything, the prices seemed to worsen the farther we got from the competitive downtown neighborhoods that see a lot of traffic.

In the end, the prices were so much higher than what we saw on the Internet that we decided to put off our purchase until a planned trip to Canada the following year. In Canada, we found the style and the diamond that we were looking for. The price savings were great enough to cover our air fare! I told my wife that there was a business opportunity there.

The year after that trip, I was working at an investment bank when our child was born. Sleeping in the hospital overnight following the delivery, I took a call from one of my staff. Our Director had just been sacked, and there was talk of significant cuts to come.

After speaking with the departed Director, I swore to myself to start looking for an alternative to the roller-coaster of on-and-off contracting for the financial industry.

Two years and two weeks later, we opened our virtual doors on February 14, 2010. It was both St. Valentine’s Day and the start of the Chinese New Year.

What we built

Diamonds are synonymous with luxury, and a diamond solitaire is an elegant and eye-catching luxury item—as dazzling as it is enduring. But an engagement ring is also a symbol. In Japan as elsewhere, an engagement ring makes a statement that a life-long partnership is being founded.

And in Japan, an engagement ring is considered so precious that many women wear their ring only on special occasions. A true luxury item.

As an enduring symbol, an engagement ring must be of the finest quality and lasting style. That’s how Caritas decided to shape our business.

We’ve adopted a strategy that avoids expensive stock and retail floor space in favor of crafting each piece to order. We also eschew expensive advertising in favor of building a connection with prospective clients. This allows us to do two things. First, we can keep our prices down and pass on savings to our clients. Secondly, we are able to meet the concerns of our clientele in the forums where they’re asking the questions: in today’s social networks and Internet/mobile communications venues. This is an age where even luxury purchases are coming under scrutiny in terms of value, sourcing, and ethics—our outlook allows us to respond quickly and to be able to play a leadership role.

Wedding practices are a defining element of any culture. The ceremonies we hold, the giving of gifts, the rules governing who can marry—these are dearly held convictions. In Japan, there are considerations that add complexity and even difficulty in arranging a wedding. It’s expected, for instance, that you’ll invite the boss. But married couples do not automatically attend weddings together the way they do in the West. So one’s boss is more likely to attend the ceremony than the spouse of one’s best friend.

Caritas respects the traditions in Japan and alleviates the complexities by putting together a bridal service that is honest and simple. To help a prospective client make a decision, we offer a free ebook on buying diamonds and a free ring-sizing tool. Our diamonds are chosen from only the most superior cuts, color and clarity—we’ll never make an attempt at hiding an inclusion under a prong in the ring’s mounting. Our ring styles are chosen for elegance and lasting appeal as well as enduring quality. We’ll deliver to any address in Japan for free. We even guarantee every piece of jewelry—if our clients can’t accept the piece, we’ll take it back for a full refund.

Understanding the place of the engagement ring in Japanese culture has helped us craft a business that contributes to this unique culture.

How we did it

First, we needed to understand the market we were getting into. This required a good deal of meeting with people, reading, and attending trade shows. It meant surveying retail prices and obtaining price lists from wholesalers and manufacturers. To deduce running costs and the profits we could make on different products meant finding suppliers both for services and the goods we’d be retailing.

This meant sourcing accountants, couriers, marketing specialists, web designers, and illustrators. After we’d launched, it also meant bringing aboard a native-Japanese-speaking intern who could help us with a lot of the day-to-day work of dealing with these many outside parties.

And it meant incorporating a business in Japan. Incorporating isn’t easy in this country. What can be done in three days in Canada took us three months.

While this in of itself may seem excessive, it’s worth pointing out that a KK is more than a simple incorporated company. In a country with several types of business available, the KK is the one that’s expected of reputable going concerns. It’s one that requires capital investment by its owners, and it’s the one our clients would expect to deal with when buying jewelry online. I write more on this subject on my website.

When we had a good idea as to what was involved, we reviewed the figures. It looked good, and it looked doable. The only question was, did we have an accurate view of the market demand for the products we wanted to sell?

To our minds, the answer was obvious. We’d offer a select line of quality engagement jewelry at prices well below those offered by the bricks-and-mortar retailers, and we’d support the shop with content that was both informative and engaging. But we created a survey just to be sure.

The survey results were encouraging. Our respondents—made mostly of people who found our survey doing a search on the Internet—were enthusiastic about our prices and our products. They also gave us answers that helped us shape some of the fine details such as delivery times.

But it was when we started talking with some industry insiders that we learned a lot about the specifics of what we’d need to offer. Because many of the things we’d initially thought were arrived at as much through ignorance as anything else.

Executing

My partner spent a long time wrangling with the user interface. The idea behind our storefront was that it had to be dead simple to use—we could never put off people with an overly complex selection process. This tied to our vow to have a simple product set. In the end, it took more than a year and three rounds of testing with users before we had the design that we launched with. Along the way, countless other designs were scrapped due to complexity, non-intuitive areas, or difficulty in getting the software to work under Microsoft’s Internet Explorer 6 (the standard in Japan, with well over 50% of the market).

I left the (now defunct) bank in April of 2009. I spent the ten months until launch working on the business deals, choosing products, writing copy, and developing a distinctive product photography style that would show our work to good advantage. The latter part alone took three months in various fits and starts. Along the way, I was renting photo equipment, making queries on forums, and generally soaking up whatever I could. Again, talking to pros always helped.

The two recurring themes that kept us on track to our successful launch were a) trial and error and b) speaking with people who knew more than we did. If something we did bore fruit, it was one or the other.

Feedback

When it came to testing out our ideas and getting feedback on what we’d done, we turned to friends and business acquaintances. I was always amazed at the generosity of those around us in helping out when we needed some advice. Some of these were new to us, such as a veteran of the Japanese e-commerce scene who gave us many helpful contacts and insights. Others were old coworkers (my partner I and I had been involved in a successful start-up back in 1997) or were colleagues we knew to be thorough testers. To these people we owe a debt: without them who knows if we’d have been able to complete the project!

The site is now live. Our first press release went out last week in both English and Japanese (日本語のプレスリリース). We’re proud of our accomplishment but know that the real work has only just begun.

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