Ashford.com, which went public last month, joins the laundry list of this year's Internet IPOs that are battling to find a money-making niche in online commerce, including eToys in the toy business, Drugstore.com in pharmaceuticals, and soon-to-go-public Webvan in groceries.
Ashford.com began by selling watches online, but it has been expanding its offerings to include leather goods, fragrances, sunglasses, and writing products. Next spring, it plans to begin offering crystal, chief executive Kenny Kurtzman said in an interview.
The company's stock is trading below its initial offering price, but it hopes to capitalize on the booming e-commerce market, particularly since the busy holiday shopping season looms.
Ashford.com is the only publicly traded company that sells luxury goods online. Its competitors include smaller companies such as World of Watches and AAA Jewelry.
Ashford.com's backers include venture-capital firms Benchmark Capital and Sequoia Capital. Its management team includes Kurtzman and David Gow, both former Compaq executives, as well as cofounders Robert Shaw and James Whitcom, formerly with Synergy Technology Corporation, an information-technology consulting firm.
The company remains confident that it can create a niche in the high-end luxury goods market, where consumers pay more per purchase than other e-commerce providers, including Amazon.com. One of its advantages: cutting exclusive deals with luxury goods makers, Kurtzman said.
Ashford.com orders the products and stores them in a vault that once belonged to a bank in Houston, Texas, its headquarters. It ships products throughout the country for free, and insurance is included.
Selling high-priced goods such as diamonds online can be difficult, because it is hard to persuade consumers that they have the same grade of quality--cut and clarity, for example--that is promised on the Web site.
To make headway, Ashford.com has inscribed each diamond with a certification number that matches the one offered for sale on its Web site. The inscription is invisible to the naked eye, and does not affect the value of the diamond, according to the company.
News.com's Jeff Pelline contributed to this report.