Just days after banks withdrew EMI (equated monthly instalment) schemes on credit card purchases for gold, online sales of the yellow metal fell 20 per cent, the first time since e-tailers started operations.
“In just four days, our sales have dropped 20 per cent. It was first HDFC, now ICICI, HSBC and Standard Chartered Bank have all stopped their EMI option. We have been getting calls from customers about failures in payment processing,” said Gaurav Khuswaha, founder of Bangalore-based Bluestone.com.
He said the RBI guidelines were for the purchase of gold coins and bars and not for jewellery.
“The move will impact our jewellery sales, though we don’t sell gold coins. We are planning to take up this matter with the banks directly and also with the Gems and Jewellery Federation of India,” he added.
A gold rush of sorts is being witnessed not just in the brick-n-mortar jewellery stores, but also with online players, including Snapdeal, eBay and Indiatimes, ever since gold prices plummeted in the last two months.
Customers who buy gold jewellery online have not been able to click on the credit card option to convert their jewellery-buy into an easy EMI. Acting on a recent RBI guideline, most banks have stopped the EMI options in a bid to discourage consumers from buying gold in any form. The regulator’s move was to curb demand for gold and its import, in an attempt to reduce the current account deficit (CAD).
While the move has impacted brick-n-mortar retailers, it is likely to pinch virtual jewellers more, as about 20-25 per cent of their sales are through the online route. Easy access to the Internet, high disposable income, easy payment options, range of designs and convenience of home delivery offered by e-stores had encouraged many consumers to buy online.
Kama Jewellery, a gold retailer, that runs an online portal Kama Schachter, said with one piece of jewellery being sold every four minutes in India, online purchase of jewellery was a trend that had caught the fancy of the younger crowd. Most of these consumers look for easy EMI options that come with zero per cent interest.
“Recent announcement by financial institutions prohibiting the use of credit cards for easy EMI on jewellery purchases has hit online jewellery sales in big way. EMI accounts for about 40 per cent of our sales,” said Sandeep Jain, V-P (Sales), Kama Jewellery.
The e-tailer, as an immediate measure, is pumping up the entry point stocks to make sure that there is something for everyone, said Jain. Several banks, when contacted, declined to comment.