Till the end of 2011, ecommerce pundits have voiced reasons as to why apparel wouldn’t see the same kind of sales online as electronics in India. Indian consumers need to touch and feel everything before they buy, was the common line to tow. That is changing fast as buyers show good appetite towards categories such as jewellery and importantly, are using ecommerce services for convenience (and not just discounts).
In the month of March this year, jewellery products saw a rise in online visits. The number of visits more than doubled to 3.76 million as compared the same month last year, according to a report by the Internet and Mobile Association of India (IAMAI).
The domestic gems and jewellery market is roughly Rs 1.2 lakh crore, out of which only under 1% is sold online, according to a study by PwC. A major chunk of online sales comprises of imitation jewelery. The current market size of imitation jewellery in India is pegged around Rs. 8000 crore, out of which online retail contributes 2% (approx Rs 150-180 crore).
Online Jewellery Business in India : Growth drivers
In-depth catalogue: Indians are known to be fond of accessorizing themselves with ornaments made of precious metals such as gold and silver. However, of late, the appetite for expensive metals has been dipping with the soaring prices of metals such as gold. This has fueled demand for imitation jewellery, a market which is pegged at Rs 8000 cr out of which about 2% is sold online. “Unlike two years back, now I prefer to buy imitation jewellery more frequently online as it offers wide range of options with affordable price tags,” said Neha Bhasin, an investment banker based out of Gurgaon.
Accessibility: Besides metros and tier one cities – accessibility of standardized imitation jewellery is a big issue, and this under-served consumer segment will steer the future growth of this category. “Consumers in tier 2 and 3 cities are opening up to the online purchase of jewellery if the component of trust and choice is there,” said Chaitanya Aggarwal, Founder & CEO, Juvalia & You.
Affordability and contemporary fashion/style: Etailers offer better pricing, greater variety, international patterns or designs, third-party lab certification of all their products and easy payment schemes (like EMI) to gain a larger customer base. Moreover, etailers extend lucrative discounts and coupons to consumers as the operational cost is low when compared to brick and mortar model.
While imitation segment comprises major chunk of overall jewellery sale, real jewellery (carved out of gold, platinum and silver) is also catching up gradually amongst indigenous consumers. With features like 30 day no questions asked return policy and home try on service by etailers such as Bangalore based Bluestone have been attracting more consumers to involve in big ticket size transactions.Similar to online insurance buying, real jewellery buying process involves series of pre-sales conversation with consumers over phone, mail and live chat. “When a consumer decides to buy a particular jewellery worth Rs 30,000 from us, she/he has bound to have concerns. To address concerns such as quality, carat fragmentation – we assist pre-sales queries via customer care wing , and then send dummy rings for size verification to tab post sale hassles (return rates),” said Shipra Jain, Chief Merchandising Officer, Bluestone.
Growth in business and trends
The overall domestic gems and jewellery market is estimated to be around Rs 1.2 lakh crore, according to a study by PwC. Though, the online jewellery market is less than 1% of it but the size of opportunity is big.
In imitation jewellery segment almost all major ecommerce players have their presence (such as Jabong, Yebhi, Tradus, Flipkart etc) with some business models vertically focused on jewellery and accessory – Juvalia & You, Jewelskart, Voylla including others (UK’s online retailer Geraldonline recently launched an online store in India).
Gurgaon based Juvalia & You claims to have grown more than 50% via online arm in terms of transaction since its exception. “Currently we are doing transaction in four digits with average ticket size of Rs.900 – 1200,” said Aggarwal. Though, the 80% of company’s overall business comes from offline channel spanning across 13 states.
When it comes to real jewellery segment the average ticket size shoots up to Rs.12000-14000. Major online players operating in this space includes Bluestone, Caratlane and Tanishq. Founded in mid 2011 by Vidya Nataraj and Gaurav Singh Kushwaha – Bluestone does a little over 3500 transactions in a month with earrings contribute maximum for Bangalore based company. We are growing at a rate of 100-110% quarter on quarter in terms of revenue and the average ticket size for us is Rs. 10,0000-12,000,” said Shipra Jain, Chief Merchandising Officer, Bluestone.
Imitation jewellery is a high growth margin business and etailers typically snaps up 40-60% on every transaction while real jewellery segment offers around 15-20%. Top 7 cities comprise 40-45% of overall online sale for Juvalia & You, and rest comes from tier 2 and 3 cities.
“We have been growing around 80% quarter and quarter when it comes to artificial (imitation jewellery), it is most sought category after lingerie at our platform,” said Rahul Sethi, co-founder & CEO, LadyBlush. The women focused ecommerce marketplace outlines interesting trend – demand across tier 2 & 3 cities is prone towards heavy jewellery pieces as opposed to metro and tier 1 cities where women go for delicate and lighter pieces.
VC Investment in Online Jewellery Stores in India
- Chennai based online jewellery retailer Caratlane had raised total of $27 million from Tiger Global in three rounds. Last month, the US based VC firm pumped $15 million in Series C, earlier Tiger Global invested $12 million in two series.
- Bangalore based online jewellery store Bluestone secured $5 million funding from Accel Partners and Meena Ganesh, CEO & MD of Pearson Education Services.
- Designer jewellery and accessories online store, Voylla.com raised INR 2.5 crores from Pune-based Snow Leopard Technology Ventures.
- Gurgaon based Youshine, had raised $1.5 million in two rounds of angel funding in February and November 2012 from two angel investors based out of Switzerland.
Online Jewellery : The Road Ahead
Currently, the online jewellery segment is in nascent stage, however it is poised to register fast growth with increasing number of online buyers in India. IAMAI study reported that jewellery had attracted more clicks than any other categories during month of March this year, implying growing consumer interest.
The imitation jewellery segment, which is less than 1% of overall market presently, is set to grow quickly in tier 2 and 3 cities where accessibility has been a big issue. Fad for fashion and contemporary jewellery (generally motivated from Bollywood and daily soap operas) will add more demand in coming years.
In real jewellery segment, the existing players have been showing around 100% growth quarter on quarter, and to some extent its surprising as this category has highest average selling price, and buying precious metal typically involves multiple consultations (with friends and family). However, to add offline experience some etailers like caratlane opened offline experience lounges in Delhi and Hyderabad, on similar line Bluestone also plans to create offline outlets at least in two cities in the next three-four months.
Currently, India has one of the lowest Internet penetration for women across emerging nations. Only 8.4 % of the female population is online, however the figure is poised to grow in coming years. The women centric categories like jewellery will witness real growth in India with gradual erosion of gender gap in Internet penetration.