Want to Excel in Diamond Jewellery? How to Find your niche

Diamond jewellery is a dominating segment but we also know Gold jewellery is the main product most Indians focus on purchasing. Co-founder Avnish Anand has provided us with a few insights on how large the Diamond jewellery market is in India, how it is evolving and how CaratLane chose Diamond jewellery as its niche.

Avnish Anand, Co-founder of CaratLane:
See, if you think about it or look at the Genesis of CaratLane, the original idea to build an online business came from solitaires which were fairly commoditised, right? And there were businesses like Blue Nile in the US, so it was always about solitaires because that could be sold online because it was very specification cover. The second thing was that, In Mithun’s mind, he saw that there was a clear opportunity to build something which was differentiated design at an affordable price point.

The way the gold jewellery market was at that point in time. It had two challenges one was, that it was very hard to create a differentiated design and the gold you require is also more traditional in that sense. So it was harder to get them to even consider an online purchase. What happened is that he did an extensive research before we were going to launch and then we realized that India was not fully ready for solitaires also. And that was the point we realized that we should get into jewellery as well. We realized that it had to be studded jewellery or gemstone jewellery because that gave us a large enough canvas to create great designs which was not possible in plain Gold. Plain Gold jewellery also is very mass-manufactured, and you have to operate at a different kind of scale right? It was very hard to compete then with all the jewellers who were already there and the question was what was the different thing which you were offering?

In a way, it also builds the urban consumer, who possibly was more willing to look at diamond jewellery and the kind of design language created. So that was how the whole studded thing started and why we wanted to gain studded jewellery. Also because you know we are not like a super funded startup, right to just throw money around and no offence to anybody because I've learned a lot from them.

In classical Marwari style, right, you have to be value-conscious from the beginning, and the business has to make sense. Studded jewellery also gave you more margin, which was good for the business because the plain gold business is very cutthroat, right? It's all a volume giver game. And for somebody who was starting to build something from scratch where we could not get high volume from day one, right? So it was hard to build a business on a low margin category also, so that was how the whole studded thing started, and I think it's been a great and the right decision in that sense. And over the years, we have fine-tuned further. There are two things which are very important for us.

In every sub-category which you want to operate in, it should have scope for design differentiation. If there is no design differentiation possible or if we do not have the ability to create differentiated designs, we don't want to operate in that category.

And second, if the margin profile is also not right, if it's a very low margin category and you can't really do anything about it again, We don't want to operate in that because it does not make sense for us. We don't want to just get revenue debt in cost. It has to be a healthy business. And the only way to do that is to have a design offering, which is superior and to have a margin profile which allows you, you know, invest in the business, invest in design, only if you make money most people are, most customers don't realize that a lot of money is also being spent to get great designs outright, and that is a cost to it. So all of that only happens if you have a healthy margin profiling as far as the size of the diamond jewellery market is concerned.

Bhavik Chinai, Group CEO of BVC: Quite interesting I might say but will Diamond jewellery as a percentage of sales only keep shrinking worldwide?

Avnish Anand, Co-founder of CaratLane:
No no. It has started to grow because the market also has been growing. See the way I see it is that there are so many macro-levers also which are right in this country because the people who buy Diamond jewellery, are that more urban customers and thereby they are also growing in terms of population growth as well as the buying propensity also the consumer consumption. So that is anyways great. And you know if you think about it, the number of people in this country who have never bought diamond jewellery but have bought gold jewellery is so high that there is enough headroom. I don't worry about the fact that these people are not diamond buyers because that spot has been available in this country for the longest time. And because you make beautiful jewellery and you make it easy for them to try and to buy it and to get delivery. Slowly, people are migrating. Like never before I actually got into CaratLane and my parents had never got any diamond jewellery and slowly they started buying. You know you only used to buy gold jewellery for a wedding, right? And people also used to only buy jewellery during weddings.

Even that has changed, so in fact, most of our business comes for gifting and birthdays and anniversaries and so on and so forth. People in India, 15 years back, were not buying jewellery for it right, but because you now have beautiful jewellery available for 30,000, many Indians can easily spend 30,000 for such occasions. That they're buying more of it right? And that's the same thing which is driving a lot of other consumer categories also.

So actually, we are not worried about the fact that this category is limited in that sense. And again, as I said, my sense of the overall market sizes also not try poses very little organized information available. But if I just look at the number of people in this country, you can buy diamond jewellery at our price points, that number is in crores. Even our lifetime customer base also, it is such a tiny percentage of that, that I can see that there is a huge opportunity which is there.

The diamond market is ever flourishing according to CaratLane’s Co-Founder Avnish Anand. Quite an interesting bit of information given by our eCommerce brands leader, right? Are we at the end of advice from our Industry leaders?

Think again. We have brilliant minds in this industry passing their years’ worth of experience with us.

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