• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

Click To Dazzle

Photo Credit :

It's three days to Akshaya Trithiya. Three women are in animated conversation in Bangalore on what jewellery to buy. One of them has a brainwave: why not shop online? The idea, though out in the open, is no less daunting for Asha Shankar, Roopa Srinivas and Arunya  Ramesh. "I cannot imagine buying jewellery without touching it," says one of them. This is in marked contrast to their husbands who say they will certainly shop for jewellery online as it is far easier. This jewellery divide is indicative of an Indian phenomenon — 70 per cent of e-commerce in India is propelled by male shoppers.

This skew is no deterrent for jewellery entrepreneurs; they are bent on getting women to change their perceptions about online purchases — with better designs, a wide variety of products and great service. "Jewellery sale depends entirely on the impression that you make with the online buyer; it should be perfect," says Vidya Nataraj, co-founder and CEO of, a four-month-old jewellery website.

According to the Indian Brand Equity Foundation, the Indian gems and jewellery market stands at $30 billion and has been growing at a 15-20 per cent CAGR (compound annual growth rate) over the last five years. Just four per cent of this is in the organised sector; the online business accounts for about Rs 150 crore, including organised players such as Tanishq and Gitanjali.

The new names in the online jewellery business are niche players. Though their business models differ, they share the pluses of cutting out middlemen, providing tremendous choice, ease of delivery and an exchange policy.

The Differentiation Dividend
In 2008, Mithun Sacheti, scion of the well-known jewellery business Jaipur Gems, decided to focus on selling diamond-based jewellery online. His cuts out the middleman and offers diamond jewellery at a 25 per cent discount to store prices. "When shopping for jewellery you actually don't have a varied choice in a store," says Sacheti, CEO of Caratlane. He says the website offers more than 100,000 stock-keeping units (SKU) in over 1,000 designs. A large jeweller would, at best, stock only 10,000 SKUs. Caratlane is an aggregator of diamonds and sources from 4,000 vendors across the globe. "Aggregation differentiates us from the competition and that is why we have built so many SKUs," says Sacheti.

Back in 2008, bank payment gateways would not allow Caratlane to accept payments of more than Rs 1 lakh. "Banks would not trust us with high value payments; when a customer swiped for Rs 4 lakh back in 2008, we had to take permission from the bank to accept his payment," says Kalai Sadagopan, senior vice-president at Caratlane. Although cash on delivery (CoD) is now the preferred mode of payment in India's e-tailing business, Caratlane does CoD for only sub-Rs 10,000 products. "Our average ticket size is large, say Rs 2 lakh, and the CoD model does not work," says Sadagopan. She adds that the business was growing by more than 100 per cent on the strength of global sourcing and customised designs. is a year old and was started by Gaurav Issar, a first-time entrepreneur who studied gemology and started a certification company called the Institute of Diamond Trade (IDT) to certify jewellery retailers in India. "I had built a 1,400-strong network in the certification business and realised that there were so many good jewellers who do not use the online platform," says Issar, CEO of Jewelsnext, which started out in 2010 as a marketplace for jewellery. Issar signed up over 100 jewellers to sell their products on his platform. "I believe people trust traditional jewellers more, so I became a bridge of sorts with the real jewellery businesses of India," says Issar.

In this model the billing and the shipment is done at the jeweller's end, much like the marketplace Being a bridge, Jewelsnext earns about 25 per cent as commission from each jeweller. Issar expects Jewelsnext to touch a turnover of Rs 100 crore in a couple of years. The website accepts payment through CoD, cheques on delivery and credit cards. The money is aggregated and paid to the jeweller. "I have business development teams across 12 states and we manage more than 2,000 pin codes," says Issar. He says that by accessing traditional jewellers he has access to some of the best design teams.

Then, there are those entrepreneurs who believe in affordable luxury. Peyush Bansal quit a high-paying job in Microsoft a few years ago to start an online fashion accessories business. "I already have websites for eyewear, watches and bags. It was a natural progression into the affordable jewellery segment," says Bansal, CEO of Valyoo Technologies and founder of, launched 10 months ago. His website sells branded jewellery too. "The jewellery business needs design teams to succeed," says Bansal. He has a design team that works with five jewellery manufacturing firms in Hong Kong. Jewelskart allows CoD for products valued up to Rs 25,000. "The biggest costs in the business are warehousing and people; so we try to ship our products in 48 hours," says Bansal.

Sourcing the right product is key to success. For Nataraj of Bluestone, online jewellery retail was the perfect outlet as there were no barriers to competition. Having worked at Landmark, the books and music chain which was owned by her family before it was sold to the Tatas in 2005, and as an investment banker for several years, she decided to become an entrepreneur.  "We are the only ones who do a one-month return on products. We also offer a lifetime exchange policy and in case of a return, the product is picked up by the logistics team," says the CEO and co-founder of Bluestone, which has its own design team and gets its jewellery manufactured from three vendors in Mumbai. "We make it easy for the customer. EMI options are a standard in this business," adds Nataraj.

The Delivery Dilemma
"There are several different business models in this category. The only barrier is the touch-and- feel habit of the Indian shopper," says Pinakiranjan Mishra, partner at Ernst and Young.

"To control warehousing and people costs, we try to ship our products in 48 hours"
Peyush Bansal of Aerens Gold
(BW Pic By Bivash Banerjee)

Assocham (Associated Chambers of Commerce and Industry of India) is upbeat and predicts that the online jewellery retail market will reach a size of Rs 700 crore in 3 years.

The average investment of all these niche companies is around Rs 2 crore, including the development of the website and maintaining standard inventory or moulds with the vendors.  Operational costs include logistics, staff, sourcing and design. Online jewellers could also use the traditional Angadia network to deliver products to customers. This network often carries jewellery in bulk to retailers in the city and is often cheaper than the couriers. However, according to Nataraj of Bluestone, "the logistics cost does not matter in the case of jewellery as the absolute margins are high and the courier delivery mechanism is professional".

But logistics continue to pose a problem with items either getting stolen in transit or customers refusing to pay on delivery. This has prompted many firms to insure goods under a jewellers block policy, which covers loss of or damage to the stock in trade and also cash and currency. The premiums are usually set at 10-20 per cent of the value of the item shipped.

"E-commerce is still evolving and the delivery mechanisms are being figured out. None of the companies have made money, but the growth story exists," says Kanwaljit Singh, managing partner at Helion Ventures in Bangalore. For the moment though, all these firms are trying to keep costs down by controlling their back-end operations."Having our own manufacturing unit allows us to control the quality of products. Customer surveys have shown that our unique designs are one of the reasons why customers buy from us," says Sacheti of Caratlane.

Branding Exercise
Caratlane, being the oldest among the niche players, has launched a branding exercise. It has recently opened a solitaire "experience" lounge in Delhi. It is designed to provide a hybrid experience where the customer can come to a physical store, see prototypes, and buy online. "We believe this will help us get closer to the customer and drive volumes," says Sacheti. The store will also help facilitate transactions by hand holding customers through the entire online buying process.  Caratlane plans to open 6 experience centres within the next year with two coming up in Hyderabad and Mumbai.

Venture capital firms have invested close to $15 million in online jewellery stores, so far: Accel Partners has put in $5 million in Bluestone, Tiger Global $6 million in Caratlane and IDG Ventures $4 million in Valyoo Technologies. "There is no nationwide brand in jewellery other than Tanishq; jewellery e-commerce firms can create that footprint, they work on good margins, offer private labels and have many categories that can be stocked," says Prashanth Prakash, partner at Accel Partners India.

Like other businesses in the e-tail segment, jewellery has tremendous potential. Entrepreneurs draw inspiration from the US, where online sales of jewellery are close to 18-20 per cent of total retail sales. Let's wait and watch.


(This story was published in Businessworld Issue Dated 02-07-2012)