Jewellers jump online for $22bn e-commerce pie
In India, where buying gold traditionally means a trip to the trusted family jeweller, a growing e-commerce market forecast at $22 billion in three years is starting to challenge all conventional wisdom.
Gitanjali Gems Ltd, India’s biggest diamond and gold jewellery retailer, expects online sales to account for much as 20% of its sales in two to three years from about 1% now. The growth potential convinced Ratan Tata, former chairman of the Tata Group, to invest in the Bangalore-based online jewellery store BlueStone last year.
Jewellers are tying up with Amazon, Flipkart and eBay after the government last year eased import curbs on gold bars and coins. The total online retail market in India will be about $6 billion this year, driven by free delivery and heavy discounting, Gartner Inc estimates. That may grow to $22 billion by 2018, CLSA Asia Pacific Markets predicts.
“Indian consumers prefer to touch and feel the jewellery before buying, but the change in consumer behaviour will happen quite fast,” Gitanjali chairman Mehul Choksi said in a telephone interview. “We have tied up with all the major online platforms and we are always looking for more tie-ups.”
Gitanjali, which sells its diamond and gold jewellery through more than 4,000 points of sales spread across India, the United States, the Middle East and Europe, uses a battery of Bollywood actors including Shah Rukh Khan and Katrina Kaif as brand ambassadors.
The Mumbai-based company, whose sales declined 24% to 124.36 billion rupees ($2 billion) in the year through March 2014 because of import restrictions, now retails through platforms including Amazon.com, Flipkart.com, eBay and Jewelsouk, Choksi said.
Established retailers are looking at online stores already selling jewellery, besides promoting their own, according to Gaurav Singh Kushwaha, the founder and CEO of BlueStone, which sells everything from solitaires, rings, earrings, pendants, bangles and bracelets.
“Online retailing offers convenience from the comforts of an individual’s home and moreover allows other incentives such as giving them time to decide, not make it obligatory for customers to purchase at their very first visit,” Kushwaha said. “Offline jewellers realise the potential and the need for being present online.”
The online jewellery market may be worth as much as $2.5 billion in the next five to 10 years, BlueStone estimates. Currently it accounts for less than 0.1% of the $55-billion jewellery market, it says.
Indians bought 662 tonnes of gold jewellery valued at $26.9 billion in 2014, the most since 1995, the World Gold Council said last month. Total demand including for gold bars and coins was 842.7 tonnes, helping India surpass China as the world’s largest consumer last year, the council said.
Bullion demand is seen expanding this year to between 900 and 1,000 tonnes, the council says. Bullion is bought in India during festivals and marriages as part of the bridal trousseau or gifted in the form of jewellery by relatives.
Shares of some Indian jewellers have advanced after the government relaxed most restrictions on imports. Titan Co, the biggest by market value, has rallied 60% in the past year, compared with a 32% gain in the benchmark S&P BSE Sensex. PC Jeweller Ltd more than tripled in the same period, while Gitanjali declined 22%.
The online market allows companies to offer customers a wider choice of designs without actually keeping physical stocks, said Rajeev Sheth, chairman of Tara Jewels Ltd, which began selling through Amazon starting in December.
“The major driver for getting jewellery online is changing consumer behaviour, especially of young Indian women, who are exposed to global trends and are increasingly shopping online,” Sheth said.
Earlier this month, New Delhi-based PC Jeweller tied up with the US-based online jeweller Blue Nile to evaluate the Indian market for potential sales in the long term. The jeweller plans to develop its own website to replicate the comfort and convenience associated with shopping at its luxury showrooms, it said.
Titan may buy a stake in the Chennai-based online jewellery retailer Caratlane, which counts Tiger Global Management LLC as its investor, the Economic Times reported last month. The jeweller said the report was “speculative in nature”.
Titan, founded by the Tata Group, currently sells its jewellery on its website besides its nationwide network of retail outlets.
Kushwaha, who started BlueStone in 2011, says building trust in an industry dominated by traditional retailers has been the biggest challenge so far.
Along with Caratlane, BlueStone offers customers jewellery of their choice delivered at home for trial at no cost.
“We understand the concerns of a first-time online jewellery shopper and our ‘Home Tryon’ service is designed to help address them,” he said.