Atlantic Canada winner: A Tale of Two Customers

Written by Chris Atchison

Company: Jewel Pop Inc.
Location: Dartmouth, N.S.
What it does: Produces jewelry with interchangeable beads

The game-changing idea at the heart of Kameleon Jewelry is remarkably simple: a system of interchangeable beads that can be swapped among the silver rings, pendants, earrings and other stylish accoutrements in the Kameleon line, which allows fashion-conscious wearers to colour-coordinate with their outfit du jour.

“When the concept came to me, I knew it was something that could go worldwide because no one else was doing it,” says Robert Smith, the creator of Kameleon and president of its producer, Dartmouth, N.S.-based Jewel Pop Inc.

Smith is also quick to point out that the simplicity and appeal of a product has no bearing on the complexities of getting it to market. Since launching in 2005, Jewel Pop has been a case study in overcoming the many and often surprising obstacles between great products and the people who want them — especially people who live beyond Canada’s borders. But by combining a novel idea with innovative but simple business tactics, Smith built Jewel Pop into a company that generated $2.7 million in export sales last year — out of $3 million in total revenue — and has earned the 2009 Canada Export Achievement Award for Atlantic Canada.

From the moment Smith finalized the Kameleon concept and design, he was determined to turn Jewel Pop into an export-driven business able to capitalize on the $9-billion-a-year U.S. jewelry market. He took samples to the Atlanta Gift Show in January 2007, and came home with $100,000 in orders. “That trade show was very emotional,” he recalls. “I called my wife after I had all these people coming up to my booth to place orders. We knew we’d rolled the dice, and it worked.”

But if Jewel Pop were to get big fast, it needed to develop a way to mass-produce jewelry incorporating an interchangeable beads system. With the help of a skilled manufacturer in Thailand, Smith, a 16-year veteran of the jewelry trade, produced a casting tool that can stay within the ultra-fine tolerances that allow Jewel Pop pieces to snap easily into place without just as easily falling out.

Just in time, too: word of Jewel Pop’s hot new product spread quickly, attracting sales agents keen on representing Kameleon to jewelers and gift stores across the U.S. That agent network remains a crucial driver of sales. “With a new product that needs to be demonstrated,” says Smith, “you must have people who will take it directly to the decision-makers [at the retail level].”

Although the one-of-a-kind nature of Kameleon Jewelry attracts many would-be distributors, Smith knows from experience that many retailers carry a product without ever pushing it. That’s why Jewel Pop offers a tiered set of purchase packages. A Diamond Package, for example, gives territorial exclusivity within a 25-km radius, plus free shipping on any ensuing order of $1,200, to any retailer that buys $4,700 worth of merchandise. (To retain exclusivity, retailers must continue to meet certain sales targets.) “When people hear the word ‘free,’ they think they’re saving money,” says Smith. “They are saving money, but they’re also buying more.” Some independent retailers are selling more than $100,000 in Kameleon product a year, accounting for up to 40% of their annual revenue.

With 89% of Jewel Pop’s sales originating outside of Canada, Smith has been forced to overcome several challenges specific to exporters. One was the 3% currency-exchange transaction fee charged by credit-card firms to Jewel Pop’s foreign customers. “Some of our customers were spending $4,000 at a time, and when they saw that extra [charge] on their credit card, they’d get upset and we’d get the blame for it.” Smith nullified the issue by setting up a U.S. company and a U.S.-dollar account so that American purchasers — which account for 95% of Jewel Pop’s export sales — are technically buying from a domestic supplier. And when the fuel surcharges applied by the overnight-shipping company used to fill Jewel Pop’s orders began to dent Smith’s margins, he threatened to take his business to a rival supplier — and the surcharge was dropped.?

Those savings have come in handy: this year, Jewel Pop bought advertising space worth $240,000 in such top-flight women’s magazines as Vogue, Elle and Lucky. “We just started advertising,” says Smith, “and we’re going to be doing that on a much more vigorous basis next year.”

He also plans to branch out the Kameleon line into other fashion accessories, such as belts and handbags, and to crack more export markets, such as the U.K. and Japan. “I think this company can grow to over $100 million in sales in the next five to six years,” he says. “At least, that’s the idea.”

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