A number of portals that offer jewellery for sales online
have surfaced in recent months and are growing at a fast pace, even at a time when the precious metal is going through a rough patch. They offer you the comfort of the couch, promise genuine products at competitive prices, and safe delivery. Can they nudge more and more customers to buy and herald a revival in demand for jewellery in its biggest turf? Some say yes
The might of the mouse is scripting a golden trail in India. Despite a drop in gold demand in the world?s biggest consumer, a number of portals selling jewellery online have cropped up in a year or so, with some bracing for their first Diwali. And they are doubling businesses every quarter, posing a contrast to the metal?s drubbing in the physical market. Start-ups apart, established companies, too, have scrambled to tap the promise of the web, as customers increasingly seek to shop in the cosy comfort of the couch.
?The beauty of showcasing jewellery through our own website and other online platforms is that we can offer the widest range of our collections to a consumer, which is otherwise difficult to stock in a store because of the heavy investment nature of the business. Also, due to our presence in more than 300 towns in the country, the consumer has the choice of selecting a jewellery piece online and then purchasing the same from our store in nearby vicinity, and the vice-versa. But, the most important aspect of our initial success in the online space is the trust factor which we have built over the years,? says Mehul Choksi, chairman and managing director at Gitanjali Group, the country?s largest player in the jewellery business.
The online jewellery market is likely to reach $1 billion in the next five years, compared with $80 million now, says Deepak Tulsian, head of e-commerce at Gitanjali. More important, each product sold online influences the customer decision on purchases of four to five products at the physical outlet, he says, explaining the rationale behind the rush to promote product sales online by established jewellers. Moreover, customers are increasingly resorting to research online before buying a precious product from the physical market, he adds.
The optimism also stems from some key findings: more than 10% of Indians have Internet connections and 20% of them shop online; the Internet penetration is growing at 41% a year and the country has been one of the three fastest-expanding markets worldwide; around 75% of online audience is in the age group of 15-34 years, which values convenience; of the 125 million Internet subscribers, almost 40% are women.
Some analysts say with the advent of another credible avenue of purchases, jewellery consumption would get a push. For instance, the rich in rural areas, who have no dearth of money and intend to invest in jewellery, expecting gold prices to soar further, would be among those driving gold demand online, they note. Gold jewellery demand in the country dropped 8% in value and a whopping 30% in volume in the first half of 2012 from a year before, and industry executives have blamed high prices overseas, a weak rupee and an import duty on gold. The precious metal advanced for an 11th year in 2011, having surged by 28% in dollar and 32% in rupee terms.
Although the online jewellery market is still tiny, compared with the overall jewellery market of $27-30 billion, industry executives say the pace of expansion suggests its growing acceptance, thanks to fast-building trust between sellers and buyers. All the sellers are offering products that are certified by established agencies, building the much-needed trust that forms one of the most important pillars of the online model.
?Convenience, extensive reach even in tier II and tier-III cities, wide range of certified and branded products, buy-back options, life-time guarantee and safe delivery anywhere in the country, along with select places abroad, are the major attractions of the online business,? says Gaurav Issar, co-founder of jewelsnext.com, an online marketplace for jewellery. It went live in October 2011 and has so far tied up with 150 jewellers across the country to sell their products.
?The jewellery market is vastly unorganised and pricing can be random. So the organised market has a better acceptability. As people become very busy with their work, they rely on online transactions and it saves time of travel too. Plus, they get the options of different certified products at competitive prices,? says Peyush Bansal, an IIM-Bangalore alumni who has set up jewelskart.com, another portal for jewellery sales.
For the uninitiated, the e-commerce in jewellery in India involves mainly four categories of players: the established jewellers who offer items online, those that act as just online facilitators for sales, those that source from dedicated vendors or manufacture in small scale and sell online, and those that offer various items online and jewellery is one of them.
Jewelsnext?s Issar says: ?We have tied up with jewellers across India and we are providing a platform for selling their products across the country. We have a 360-degree model in which we are involved in business development to photography to customer call centre to logistics. We evaluate the credentials of each jeweller and choose the best in the business for the tie-up. But we don?t have dedicated vendors, and we are not into manufacturing either.? The average ticket size is around R25,000, and the portal facilitates 30-40 transactions a day, and the number can go up to 50 at times, he says.
The portal is aiming at tie-ups with 1,000 jewellers within a year, reflecting the voracious appetite of the market.
?We have witnessed 100% growth every quarter since starting operations in February. With the certification of jewellery by established agencies, we are building trust among customers. We are providing the EMI facilities and offering the kind of jewellery that is not available in neighbourhood stores, mainly in tier II and tier-III cities,? says Shipra Jain, chief marketing officer at bluestone.com. The portal has dedicated vendors supplying to it, and it has also started making jewellery, albeit at a low scale. It has tied up with courier companies such as Blue Dart and Sequel for the safe delivery of products.
Interestingly, although the market is still at a nascent stage, portals have devised customised business models to suit their purpose.
?We are doing very targeted promotions, keeping in mind the need of a particular occasion or product. Engagement rings and ear rings are well-performing segments for us. Although we have jewellery worth even R5,00,000 each, the best performing catalogue is the R8,000 to R10,000. So we are developing depth in those segments. We have also tied up with some MNCs for sourcing products and are offering discounts to attract customers,? says Amit Maheshwari, vice president of fashion merchadising at snapdeal.com, which offers a wide range of products, apart from jewellery. The portal boasts of adding a million subscribers per month.
?We hold the money in an account and deliver to the jewellery manufacturer only when the customer gets the delivery, which adds to the element of customer trust in the sense their money is in safe hands,? says Tej Kapoor, vice-president (fashion category and corporate development) at tradus.com, which offers products ranging from jewellery to laptops to fashion apparel.
Asked why an established jeweller would choose such an online platform when he can sell products through his own website, Kapoor says: ?We attract a lot of potential buyers than any particular jeweller does through his own website. The reason is that buyers, who log on to us for something else, may also be interested in purchases after seeing the jewellery. Plus, there are serious buyers of the jewellery segment who want to see products of more than one jeweller to compare the prices and designs.? The portal has been in business for the past three years, and its businesses have doubled in the past six months.
Portals that act as platforms to offer products of different jewellers usually charge a margin from the sales, although the model varies at times. Usually there is a 30% margin retained by a jeweller while selling the products, and part of it goes to the portal, while the product prices remain the same.
Products of jewellers, including Mehrasons and Surat diamonds, showcased on tradus.com are being sold at a discount of 7% in the run-up to Diwali, while bluestone.com is offering gifts in the range of R 2,706 to R11,039, depending on the size of purchases.
For an established player like Gitanjali, which has tied up with around a dozen websites, including myntra.com and tradus.com, the online platforms are generating adequate purchase interests. The company had adopted e-commerce in 2007 but started promoting it only in September last year in a big way, says Tulsian.
Suspicion about the purity of gold at neighbourhood jewellery shops is also driving up customer interest in online purchases. According to a survey by the Bureau of Indian Standards, 90% of the 162 samples drawn from 16 cities were found to be lacking the declared purity standards. Gold is adulterated with alloys and what is sold as 22 carat may actually be of inferior quality, which means a customer forks out 20% to 30% of the the precious metal?s value for something other than gold, says a senior official with state-run MMTC Ltd, the country?s largest gold importer. Although the government has made hallmarking mandatory, a lack of adequate infrastructure has been a hurdle and many are still selling jewellery without having the quality certification.
However, despite the glow, challenges remain. Many customers want to pay by cash after delivery, even when they want to purchase expensive jewellery, while many others don?t want to pay by credit or debit cards fearing risks. Internet penetration is still low, awareness as well as understanding of purchases through online platforms, too, are limited and visual impact of a product calls for greater attention.
?(But) These challenges are more of behavioural phenomena,
which would take some time to change, but they would change nevertheless,? says snapdeal.com?s Maheshwari. Until then, your complacent neighbourhood jeweller can breathe easy.