Last month, The Economist magazine reported that the big mining firm Anglo American Plc. had agreed to pay $5.1 billion for the Oppenheimer family’s 40% stake in De Beers, the world’s leading diamond miner. Anglo American already owns 45% of the company. The acquisition was cheered as the prospects for the diamond industry are said to be bright. Though the supply is tight and the output expected to fall, demand continues to grow.
And where do you think this demand is coming from? Well, the diamond market in the US continues to grow but the report said that “demand is roaring in China, India and the Gulf where the new rich love ostentatious adornments”. Ostentatious or not, the fact is that the diamond jewellery market in India is clearly on heat. As mentioned in an earlier column, heavy investment in advertising by diamond jewellery brands has pushed growth in the category.
If gold prices have surged, the cost of diamonds has also escalated by between 30% and 50% this year. The price rise doesn’t seem to have diminished the sparkle in demand. Little surprise then that India’s buzzing e-commerce industry has taken a shine to selling rocks online. Delhi-based entrepreneur Gaurav Issar, who launched e-commerce website JewelsNext.com two months ago, claims there are 8-10 jewellery portals in India. Issar probably knows the market given his decade-long experience in the diamond certification business.
JewelsNext is positioned as an online mall for jewels that offers its customers pieces from known and lesser known jewellers as well as from major brands. Several tie-ups are in place (Mehrasons, Cygnus Diamonds, et al) and he’s hurriedly expanding his range through new partnerships. Though the portal offers products in diamond, gold and silver—diamond rings, pendants and earrings with an average ticket value of Rs 20,000 are the bestsellers. Three years ago, middle-class India was not hung up on diamond rings for engagements. It is today, he says.
The retail environment for ornaments has kept pace with the changing needs of the customer: From family jewellers to branded chains to shop-in shops in premium malls to e-commerce platforms. CaratLane.com—you could not have missed the full page ads in leading national newspapers earlier this month—also took its diamond jewellery range online three years ago. It sells loose diamonds as well.
In a bid to tap consumers who may not be looking for ornaments online, the company ventured into print advertising for the first time since receiving some funding earlier this year. Unlike JewelsNext.com, CaratLane is not a reseller. It makes its own jewellery which is certified by the best labs in the world, it claims.
The easy-to-navigate website claims its prices are 25% lower than the market rate as they have no brick and mortar overheads to add to their price tags.
If a friend who lives in Delhi is eager to gift herself a feel-good diamond ring to celebrate 20 years of work life had spotted the CaratLane ad earlier, she may not have bought the ring from a branded store this month. Though she was drooling over a Rs 44,000 diamond studded piece, she opted for a cheaper ring encrusted with blink-and-miss diamonds. Why? The showroom did not extend an equated monthly instalment facility. CaratLane does and JewelsNext promises to launch it in January.
The other reasons for buying “ostentatious adornments” online are probably true for all other multi-commodity websites: 24-hour shopping window minus the crowds. True, the personalized service of a family jeweller may be missing in online purchase, but information on the specifications of what you are buying—type of gold and the four Cs (clarity, colour, cut and carat) of diamonds—are available at the click of a button.
By the way, in its survey 10 days prior to Christmas, online metrics firm ComScore Inc. noted a spike in jewellery and watches sales in the US. It became the second largest selling category online after digital content and subscriptions in the holiday season when it saw a strong resurgence.
In India, the jewellery websites may take a while to achieve the kind of volumes their counterparts in the US enjoy. However, it may be heartening for these specialist e-commerce sites to learn that online shoppers in India grew 18% over the previous year according to ComScore’s data on India. This means nearly three out of five Internet users in India shop online even though the maximum growth is seen among consumers hitting the deals sites.
The good news for Issar and his tribe is that 27.2 million online users accessed the retail category on the Web. And the number of people looking for jewellery and luxury goods on the Internet rose by 36% in November 2011 over the previous year.
Shuchi Bansal is marketing and media editor with Mint. Comment at firstname.lastname@example.org
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