What The Titan-CaratLane Deal Could Mean For Online Jewellery Retail
Titan’s recent announcement that it was acquiring a stake in CaratLane is likely to herald in a new round of change in the online jewellery retail business, just as it may also spur transformation in the world of the tradtional jewellery retailer
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‘Titan to acquire stake in online jeweller CaratLane’. At first glance it may have seemed like one of those now-so-common headlines heralding yet another massive investment in yet another online start up.
But, in many ways, the recent announcement that the Board of Titan Company Ltd has approved the decision to acquire a majority stake in online jewellery start-up CaratLane was actually quite different.
Though details of the acquisition may not be available till mid-June, as the exact stake that will be acquired and valuation are currently under discussion, clearly this is a possible game-changer in the Indian jewellery market – both online and offline.
For one, Titan is not a VC or a Fund. It is the Tata group company behind India’s premier jewellery chain Tanishq. It has built and established the brand over the last two decades or so, and today has a robust all-India chain of stores, a well-developed manufacturing and sourcing network and even has its own e-commerce enabled website. In the jewellery industry it is virtually one of a kind – the only completely professionally-managed jeweller with a sizable network, and possibly, the only jeweller that never did business the ‘traditional’ way.
CaratLane too stands out in the world of India’s online jewellery portals. It is among the ‘seniors’, having been launched in 2008, but more importantly, it has a fairly different history from many of the other visible start-ups in the field. Unlike many of them who came into online jewellery retailing after association with Internet businesses, CaratLane’s founder and CEO Mithun Sacheti comes from a well-known family of jewellers.
However, he has built the online venture as an independent entity, not as an extension of Jaipur Gems, the family business, and his grasp of both worlds shows in some of the innovative moves CaratLane has taken. For example, it has already moved towards an online-offline combo model with 13 brick and mortar stores across the country; it was one of the first online retailers to launch the ‘try-at-home’ before you buy option; it has a well-developed presence in social media, and most recently made waves with its tie-up with Uber for delivering gold coins purchased online on the occasion of Akshay Tritiya.
What impact will their coming together have on online jewellery retail? After all this is a very nascent market, small in absolute numbers and minuscule when compared to general online retail.
In more advanced markets like the US, online jewellery retailers are estimated to have a 4-5 per cent share of the market. In India, online jewellery retail with an estimated size of Rs 2-3 billion is believed to have a 1-2 per cent share of overall jewellery retail. Projections indicate that the sector could grow at a CAGR of 60 per cent or more over the next few years.
Different players have adopted different strategies to try and corner a slice of this pie. Among the big online marketplaces, Amazon, Snapdeal and Flipkart have all tried to develop a section for precious jewellery by bringing big brands and retailers on board. Jewellery focused portals like Velvetcase, Bluestone, WearYourShine and others have adopted a mix of ascociating with established names in the field as well as offering products from less well known names as well as design services.
Last year, one of the largest jewellers in the north, PC Jewellers, announced that it has tied up with Blue Nile, the largest and pioneering online retailer in the US to assess the long term potential of the Indian online jewellery market. At present, there is clarity that this is a market that is going to grow – but no one can conclusively say how and when.
At the other end of the spectrum, every major jeweller / retailer has ventured into E-commerce, either through their own site, or selling through other online stores, or most often, through a combination of both. By acquiring a stake in an established online player, Tanishq has taken a new step in a different direction.
In all likelihood, the Titan-CaratLane deal is an early indication that the online jewellery sector is poised to take its next big leap in the not-too-distant future! But it could also be a harbinger of change for the brick and mortar jeweller – an interface that could redefine many things about the way it goes about its business in India.