One piece of jewellery is sold every three minutes online on eBay India. Just three months ago, it was one every four minutes.

This rising velocity of transaction, as Deepa Thomas, Head (Pop Culture), eBay India, puts it, has set the Net all aglitter. E-commerce players say the jewellery category is the most buoyant online.

In value terms too, gems and jewellery sales are sparkling - it's not just cheap beads and baubles selling, but even the occasional solitaire worth Rs 50 lakh is going at the click of a mouse.

At Chennai-based Caratlane, a Web site which sells certified diamonds as well as readymade and custom-made diamond jewellery, transactions average Rs 15,000. But according to Kalaivani Sadagopan, Senior Vice-President, there have been instances of bangles ranging around Rs 3 lakh-4lakh selling online.

Not surprisingly, big offline jewellery merchants such as Gitanjali and Tribhovandas Bhimji Zhaveri (TBZ) are polishing up their Web act. If TBZ has run huge banner ads online and is active on Facebook, then Gitanjali Gems began hiring more people in October 2011 to get serious about its online business.

Sales at Gitanjaligifts.com are much higher than all other Web sites hosted for Gitanjali's brands such as Nakshatra and Asmi, says Deepak Tulsyan, Head (e-commerce). With some intense advertising online and in print, sales are 30 times what they were six months ago, he says.

Virtual malls

The sparkling sales online have also seen a slew of standalone jewellery portals set up shop online. Take Bluestone.com, which started operations just a few weeks ago. Last festive season, there was Jewelsnext.com that went online with a flurry of discounts.

Gaurav Issar, Co-founder and CEO, Jewelsnext.com, says he chose to deal in jewellery because it's among the most expensive products sold in India, “rather than flowers and chocolates”. Bolstered by his 10-year-experience as the founder of IDT, a chain of diamond certification labs in India, he designed the portal as a virtual mall where jewellers from all over the country could sell their wares. “The brand value of the jewellers who have been in the business for the past four or five decades is our credibility,” he says. Some of the big names on his portal include Jetha Bhai Zaveri and Mehrasons of Delhi.

Average transaction prices are Rs 25,000-40,000, he says, and the best-sellers are small diamond pieces, earrings, rings, pendants and bracelets. “Our 360-degree e-commerce model which offers various payment modes including cheque-on-delivery has had a tremendous response,” he claims.

Vidya Nataraj, Co-founder and CEO of Bluestone.com, is also very optimistic about the potential online. As she says, branded jewellery, which accounts for less than 6 per cent of the Rs 1 lakh crore jewellery market, is estimated to grow at 40 per cent CAGR over the next four years according to industry estimates.

Also, there's a huge gifting market but not enough supply to slake the demand. And, she feels Tier 2 and 3 city customers with money to spend but no place to do so will gravitate online. Finally, she cites the cost factor: it's relatively cheaper there as there are no physical overheads and more transparent as well.

For a player like Gitanjali, which has over 4,000 stores including around 200 worldwide, an online interaction can benefit the offline business, says Tulsyan. In some cases, the company is even willing to ship the products seen online to one of its stores so that the consumer can see it for herself.

Getting the dough

Nataraj of Bluestone says the fact that these portals are being funded by venture capitalists is another sign of their potential. Accel India invested $5 million in Bluestone. Prashanth Prakash, Partner, says it's as much about discovering an opportunity as what the consumer wants. “Early-stage funds like us will have to cash in on these trends early and even test waters. Unless consumers are offered some products that they didn't know they wanted – like the iPad – we won't know.”

But what gives VCs optimism about e-commerce in jewellery? “Initially, people want to buy commodity-type items, but as confidence grows, they buy branded apparel, jewellery … that will be the next phase,” he says. Also, in branded products, unit economics are good and high gross margins are possible.

There are no published statistics on the size of the online jewellery business, though Gitanjali's Tulsyan estimates it may account for less than 0.2 per cent of the jewellery market.

How they buy

Fifty per cent of online customers are male (gifting or a joint decision). “For men, it's a very rational buy, there's a lot of comparison shopping,” she explains.

Also, gold is making way for diamonds. According to Deloitte, diamond jewellery sales are expected to go up by 25 per cent; they have shown a growth of 23 per cent over the last four years.

This could explain why Caratlane is focused on diamonds and sells very limited gold jewellery. But apart from solitaires and studded jewellery, it is also building up a business in hallmarked gold coins, both in 22 K and 24 K. Coins of Hindu deities Lakshmi, Venkateswara and Murugan do well, and since his death last year, those of Satya Sai Baba of Puttaparthi as well, says Caratlane's Sadagopan, who says there is a market for creating coins with newer designs.

The other interesting trend is sales from smaller towns. Thirty per cent of Caratlane's business comes in from towns tucked away in far corners, such as Kanyakumari, Asansol, Mehsana, Jammu, and quite a chunk of it from the North-East. The driver there is the wider choice, and the items of choice are jewellery and small solitaires.

Still a few rough edges

Ashwin Raj Vummidi, Partner at Chennai's Vummidi Bangaru Chetty & Sons, says he is not sceptical about online jewellery shopping, but adds it won't happen unless people are willing to give up on the touch-and-feel experience. People will not find it easy to trust unseen sellers – and litigating to resolve any problems that crop up is not easy, he says. Couriers he has spoken to for his store's Web site refuse to have anything to do with gold jewellery or such large amounts of money; one of them will not accept the cash-on-delivery option, he says.

Touch-and-feel is of no consequence, counters Sadagopan. Everything bought is sent out with a certificate. But yes, “there are lots of doubts in customers' heads”, and she hopes the better price, call centres, and the fair amount of convincing they attempt will play their role.

Tulsyan says the loss of the touch-and-feel factor cannot be discounted but points out that if it's a gift for someone, the buyer won't be too keen to touch and feel the product. In fact, 40-50 per cent of the orders on his portal are for gifting.

What about the size of the product? It's nice and clear on the Web site but how big or small is it in reality? Sadagopan says the measurements are given, and soon, they will add images of people wearing the jewellery and put the images next to a scale. Nataraj of Bluestone, which sells fine jewellery and accessories, says they will create a scale to show the real dimensions.

Fair and generous exchange and return policies, certification, strong investors as well as flexible payment options will go a long way in speeding sales further, say the e-com merchants. For instance, Caratlane sold a 6-carat solitaire for Rs 50 lakh with “some transaction assistance” – the payment was made by cheque. It now does 1,000 transactions per month compared to 7-8 three years ago, says Sadagopan, adding that the average transaction for a solitaire is Rs 1 lakh.

Jewellery is a religion in India, says Jewelsnext's Issar. The e-jewellers are for sure fervently hoping their prayers will pay off.

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