Precious jewellery is a fast-growing segment in e-commerce, with a jewellery item sold every 20 seconds
If an industrialist chooses to invest a part of his personal wealth in a start-up, it creates a buzz for the company. And if that investor happens to be Ratan Tata, it makes a statement about the whole sector.
The online jewellery business in India is humming, aided by growing acceptability of e-commerce, aggressive promotion and a string of investments by well-known business leaders. Tata has invested in Bangalore-based BlueStone in his personal capacity; US hedge fund Tiger Global is believed to have invested in Caratlane recently; PC jeweller has hired a US company to do a study on the long-term prospects of the market; Gitanjali Group looks to push online sales aggressively to revive lost fortunes.
The result, as Deepak Tulsian, head of jewellery at eBay (India) puts it: a jewellery item is sold online every 20 seconds in India.
The domestic online jewellery market will likely grow at an average 60-70% annually for the next several years, from roughly $200 million now, says Tulsian. Jewellery accounts for roughly a half of eBay’s exports from India to countries, including the US, the UK and Canada, he adds. The company has a tie-up with 2,500 jewellery manufacturers in India.
“Unlike two-three years ago, many portals are selling fine jewellery items in addition to the usual fashion jewellery stuff. And that’s a big change, reflecting improving consumer sentiment towards e-commerce,” Tulsian says.
According to Gartner, the overall online retail market in India is expected to rise to $6 billion in 2015, compared with $3.5 billion last year. CLSA Asia-Pacific Markets has forecast that the market might grow to $22 billion by 2018.
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 facilitators by providing an online platform for jewellers, those that source from dedicated vendors or even manufacture in small scale and sell online, and those that offer various items online and jewellery is one of them.
Vishwas Shringi, founder of a leading online jewellery store, voylla.com, says his company has witnessed a four-fold rise in revenue in the last fiscal from a year before, albeit on a relatively low base. The company, apart from selling high-value stuff, has been targeting especially those people who are increasingly buying 14-16 carat gold items for daily use. Voylla has its own team to design jewellery and has a tie-up with 10 manufacturers.
Although the online jewellery market is still tiny, compared with the overall jewellery market of $55 billion, industry executives say the fast pace of expansion suggests its growing acceptance.
Branded and hallmarked products, convenience, extensive reach, wide range, buy-back options, guarantee and safe delivery anywhere in the country, along with select places abroad, are the major attractions of the online business.
Gaurav Issar, founder of jewelsnext.com, says the most popular ticket size on his website is R5,000-15,000. The company makes at least 25 transactions on a normal day, and the number can even triple on festivals like Akshaya Tritya. It started operations in 2011 as an online market place for jewellers and last year changed its model to design and sell its own products.
Initially to beat the trust deficit of customers, portals like tradus.in would hold the money in an account and deliver to the jewellery manufacturer only when the customer gets the delivery. For established companies, the possibility of showcasing all products on one platform and at much lower costs is the most important driver of the online push.
Gitanjali has tied up with around a dozen websites, including eBay and Amazon. Gitanjali Group chairman Mehul Choksi expects online sales to make up for as much as a fifth of its overall sales in two-three years from barely 1% now. It had adopted ecommerce in 2007, but started promoting it in a big way only in recent months.
The country’s gold jewellery demand has also rebounded after a rough patch in 2013, which would continue to boost online purchases. Indians bought 662 tonnes of gold jewellery in 2014.