Can India's jewellery market ever thrive online?

Trust, touch and feel play a very important role in purchase of jewellery in India, which is hard to replicate online.
Can India's jewellery market ever thrive online?
Can India's jewellery market ever thrive online?

Investor appetite is ripe for the online jewellery market in India. Take for example some of the larger players such as Bluestone and Caratlane. They count prominent venture capital firms such as Accel Partners, Kalaari Capital and Tiger as their investors. Ratan Tata too has invested in Bluestone in his personal capacity. Titan also acquired a majority stake in Caratlane.

But why are these investors betting big on online jewellery? While it currently accounts for less than 1% of the total e-tailing market in India, the $135-million online jewellery sector in India has been growing rapidly in recent years and is projected to become a $2 billion market by 2022.

“The modern shopper wants more in terms of the latest trends and contemporary designs. Not necessarily heavy jewellery that is used only for one or two occasions in a year, but jewellery that can be flaunted more often. This changing trend has enabled BlueStone to attract new customers and showcase its 5000+ designs,” says Gaurav Singh Kushwaha, Founder and CEO of BlueStone.

Bluestone says that is registering 100% year-on-year growth and expects to touch the Rs 1,000 crore mark by 2019. Caratlane told YourStory in May 2016 that it is looking to touch Rs 1,000 crore turnover by 2018.

Players like PC Jewellers, Titan and Gitanjali jewellers have tied up with e-tailing players like Flipkart and Amazon, to sell their jewellery on these platforms.

Apart from convenience and variety, people buy online because there is always a price difference, which works in favour of online jewellery players, as they are able to pass on better prices to consumers. And for an educated buyer, with highly comparable prices, assured quality, grammage information, buying jewellery online makes sense.

“Online does well only at low to mid ticket size items, which are highly standardised. Anything up to around Rs 25,000, that segment will run. Purchasing jewellery online makes sense for a buyer who has very high clarity and who knows precisely what they're looking for. However, the experience of buying jewellery offline is very hard to replicate online,” says Rajinder Balaraman of Matrix Partners.

That is because jewellery buying has always been a tradition in India where families visit a jeweller to purchase anything from a ring to heavy jewellery for occasions. And when a consumer is spending anything more than Rs 5,000, touch and feel also become important. 

Vishwas Shringi, Founder and CEO, Voylla, which sells fashion jewellery, says that precious jewellery has more challenges than fashion jewellery. “Price points need to be in affordable range for people to be comfortable shopping online. There is a trust factor required for gold and so it is still not established much in the online segment. For people to spend more than Rs 5,000, they would want to touch and feel the product even though you might have the option of returning it after purchase,” he adds.

This is the reason why players such as Bluestone and Caratlane have a ‘try and buy’ option where a customer can ask to try the product before deciding to buy.

“Since jewellery is a tactile category, customers generally prefer to look and try them on, before making a purchase. Hence, we introduced the ‘Try At Home’ Service, where customers can try our jewellery in the comfort of their home. Our highly experienced jewellery consultants come with knowledge of various available designs and are able to make valuable recommendations,” Gaurav says.

Moreover, the importance of touch and feel has been seen across categories, and not just in online jewellery. For example, LensKart and Pepperfry also realised the importance of customers trying and looking at the product in person and set up stores. Caratlane has followed suit as well.

Caratlane has 21 retail stores across eight cities in India. In an India Retailing report, Atul Sinha, Senior Vice President, Offline Marketing of CaratLane, says that there is an opportunity for online and offline stores to leverage each other’s strengths. The stores allow its customers to touch, feel and experience the brand, which further helps its business. Voylla too, has 230 offline touch points and is looking to double that over the next few years.

“It has also been proved that a purely online model will not work. That’s why online players are setting up stores. You need to have a touch point for touch and feel. That’s how the market will be for the next couple of years,” Shubham says.

Ramesh Kalyanaraman, ED (Marketing and HR) at Kalyan jewelers also echoes the same opinion that buying jewellery is still a touch-and-feel experience. But it still wants to tap into the online demand. Kalyan recently bought out an online jewellery store Candere. “We don’t think jewellery will ever be sold majorly online, but we need visibility there,” Ramesh says. 

Trust is also a very important factor when it comes to purchasing precious jewellery, especially online. “We expect our local jeweller to give us the right value, grammage and not cheat us, which we don’t have a control over while buying online,” says Shubham Anand of Red Seer Consulting.

And given the trust factor, Shubham says that it is much tougher for players like Bluestone and Caratlane to build a brand from scratch. What will work better is, if traditional jewellers, well known in each city, build their online presence. The online players are trying to build a brand through low ticket size jewellery.

“This category is dominated by local players. If you really want to see demand in higher ticket size items, it is important for local jewellery players such as PC jewellers, TBZ, Joy Alukkas, to come online on a marketplace. It’s better than building a brand from scratch,” he adds.

There is significant scope for growth in the Indian online jewellery market and the sector could account for close to 2% of the overall jewellery market in India in five years. But the opportunity is much larger for fashion jewellery than precious jewellery.

A Mckinsey report states that bulk of these sales will come from affordable branded jewellery, a somewhat standardised product segment in which consumers know exactly what they’re getting.

But online jewellery startups will always see demand only for small ticket size items. “CaratLane, Bluestone and such players will remain small vertical players. This market cannot be too big,” Shubham says.

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