ETRetail Bureau: This is now an established fact that the 2014 festive season was pivotal in Indian retail history. We saw a clear shift in consumer behaviour. More and more buying decisions now start with clicking on the internet browser, swiping on the mobile, rather than stepping out of the house. 2014 is truly a harbinger of changes that are yet to come.
Like every other category, jewellery also saw tremendous growth this year. There was never a better time to enter this market. The audience is ready, the backend process is set up, logistic chains are established, and most importantly customers trust is established. In addition to this, the new millennial generation buys jewellery differently. They are not going to family jewellers any more; most of them are placed far away from home and would trust a global online brand more than an offline store in their current city.
Most of the precious online jewellery portal has claimed a growth of 100% every quarter. Even with this, online has captured only 1% of the total of 1.2 lakh crore. The growth potential is phenomenal in the current scenario. Next few years will definitely see hockey stick growth in the jewellery category. Currently, imitation leads this race, closely followed by precious. In current scenario also imitation has already captured 3% of the overall market and growing with CAGR of 32%.
While imitation jewellery is inventory led retail model, precious is a different ball game. Most portals work on MoD or made in-demand model. This reduces the upfront inventory cost, and also allows a fair amount of customization. Price calculation, in this case, becomes very transparent. Actual precious metal weight is listed in grams and prices are calculated based on real-time gold prices. Making charges, cost of stone, VAT everything is listed separately, providing all required information to the customer thereby empowering them to make an informed decision. Another factor that helps adds the trust factor certification that most sites provide from reputed independent international laboratories.
A significant factor that is contributing to the growth of precious jewellery, is India is a very big consumer of gold. In fact, till 2012 we were the largest consumer of gold in the world, and we just recently got toppled by China. Gold has always been seen as an investment and we are happy when gold prices go up, thinking about how much the jewellery sitting in our lockers is worth now and we are happier when gold prices go down, thinking how much and what can we add to our collection. Recent dips in the price of gold have also been a catalyst to the growth of the Indian online real jewellery market.
It becomes very interesting to see, kind of assortment that most online platforms carry with them. Most online portals shy away from the traditional assortment and only carry lightweight, modern designs. Most offline stores concentrate on heavy and ethnic assortment. This strategic focus on collection, not only attracts the young, high disposable income group but also help the online provide play in a niche area, where competition is not cutthroat. For sustained growth, there is a lot that online retailers need to accomplish relatively soon. Continuous investment in brand building is need of the hour to create awareness in the consumer base. A strong technical backend is required which can help with demand forecasting, merchandising, pricing and marketing. E-commerce in India in general, a long haul game and company that investment in a long term growth plan and strong backend will win the race.
(The article is contributed by Vishwas Shringi, CEO and Founder of Voylla.com)
The two-year-old company, which currently has three brick-and-mortar stores, including one in Bengaluru, is gearing up to launch 25 shop-in-shops across the country in tie-up with retail chains like Future Group’s Central over the next 18 months.
“Of these, six stores will come up in the southern states, including one in Hyderabad in the next three months and one in Chennai in three months from then. Each of these stores, with a carpet area of 100 ft, is expected to generate revenues of Rs 5 lakh per month,” Shringi said.
The company, which has so far raised $2 million (approximately Rs 12 crore) from angel investors, is looking at raising another $10 million (Rs 60 crore) from venture capital firms within a couple of months to fuel the expansion, he added.
Voylla.com is the latest to join the league of e-commerce players that are entering the offline retail business. While Flipkart has opened its first brick-and-mortar store ‘Fliptomania’ in Bengaluru and online jewellery store Bluestone.com launched outlets in Bangalore, Mumbai and New Delhi in 2014, online fashion retailer Myntra.com is gearing up to roll out offline stores in due course.
“Though the online business is growing at a fast clip, its contribution is a mere 2% while the rest is from offline sales. If we foresee the scenario five years down the line, 90% would still be offline. Hence, an offline channel cannot be ignored by any brand,” Shringi said.
Shringi estimates that the fashion imitation category is currently a $2-billion market in India and is expected to touch $6 billion by 2020.
Voylla.com, which offers more than 10,000 designs in imitation, silver and 14-18-karat gold jewellery, reported revenues of Rs 6 crore in the last financial year. Around 70% of Voylla.com’s revenues are derived from jewellery while accessories account for the rest.
“We expect to clock Rs 33 crore in revenues this fiscal on the back of its offline channel multiplication,” Shringi said.