Nov 22, 2008

Business - Where clicks cut carat costs

Sravanthi Challapalli

The site makes it sound all so swift and simple – select a diamond, the setting and place your order – and there are great savings to be had. But is it so easy, especially when you haven’t touched and felt the diamond first, and you don’t know what it might look like when it ultimately reaches you?

“It is easy,” aver Srinivasa Gopalan and Mithun Sacheti, Directors of the Chennai-based CaratLane, a Web site to sell certified and high-quality diamonds as well as readymade and custom-made diamond jewellery. “Even when you want to buy a solitaire, about 50-60 per cent of the solitaire-based jewellery is ordered by the jeweller after the customer confirms the transaction, so there is no touch-and-feel anyway,” says Srinivasa Gopalan.

CaratLane, which was soft-launched in August after being in the making for over a year, promises to provide high-quality diamonds, solitaires, in large part, at “incredible” cost savings for the Indian consumer. In the retail process, the diamonds are passed on from the manufacturer to the consumer with brokers and wholesalers in the chain contributing their bit to the ultimate cost, but in this venture, there’s only one intermediary – CaratLane – between the manufacturer and consumer, which shaves off as much as 5-7 per cent on jewellery that could otherwise cost over Rs 4 lakh (the savings are greater on smaller pieces of jewellery), say the administrators.

Usually, jewellery stores don’t have more than 5-50 solitaires in their inventory. A consumer would find it hard to get the right combination of factors – price, cut, colour, clarity, caratage – that she wants within that limited choice.

CaratLane, on the other hand, will have an inventory of nearly 40,000 diamonds of all shapes, colour, cut and clarity at prices starting from as low as Rs 15,000 and going up all the way to a few crores, claims Srinivasa Gopalan.

The suppliers, nearly 4,000 of them, are located in India, the US, Belgium and Hong Kong.

All the diamonds are certified by international agencies such as the Gemological Institute of America, American Gemological Society, International Gemological Institute, Belgium and Hoge Raad voor Diamont, Antwerp.

While the diamond is being sourced, the mount chosen by the consumer is prepared and the finished product shipped to the customer within 5-7 business days. CaratLane says this is another unique proposition it offers – most jewellers usually take twice that time to deliver.

“It’s a disruptive business model,” says Srinivasa Gopalan, “the choice is mind-boggling, the prices are lower. If you demystify the diamond part of it, it’s yet another product driven by specification.”

But what about all the superstition and sentiment associated with buying jewellery, especially precious stones? Won’t the idea of a family jeweller weeding out flawed and unsafe diamonds struggle with the temptation of savings in money?

“The jeweller is more emotional comfort than anything else. As for ‘dosham’ (flaws), we’ve addressed this typically South Indian sentiment by offering dosham-free diamonds too,” says Srinivasa Gopalan, adding that the savings in price will win over or convert quite a few.

The pricing is so attractive that even jewellers are eyeing it, bringing in a B2B angle to the business, says promoter Mithun Sacheti, whose family owns the Jaipur Gems jewellery business and stores.

Haggling over the price of the jewellery is a tradition, sometimes even a pleasurable ritual that customer and seller participate in. Where does that figure in a Web site such as CaratLane? Sacheti says haggling is on its way out, what with corporate jewellery stores selling their wares at fixed prices and people getting used to the idea.

Concerns of whether the diamond is genuinely that which was ordered are addressed by having the certifying laboratory testing the finished product and certifying it, as well as having it delivered to the customer in a tamper-proof box. As for returns, the Web site now offers the option of exchanging within 15 days what the customer has ordered, no questions asked. The solitaires can also be re-listed on CaratLane by the customer if she wants to dispose of it at a later stage.

There are various payment options – credit card, wire transfer, demand draft, cash deposits in various banks. The prices are more or less stable unless there’s a huge spike in gold prices.

Srinivasa Gopalan says CaratLane is a “market-defining portal which is redefining the way a traditional product will be bought in the future”. A call centre staffed by 15 people to educate and serve consumers works every day of the week. The jewellery is made at Jaipur Gems’ facilities.

In the US, online jewellery sales accounted for $4.5-5 billion or 7.4 per cent of all the jewellery bought in the US in 2007. In India, the e-commerce market is expected to reach a size of Rs 9,020 crore by the end of fiscal 2008, according to a survey conducted by the Internet and Mobile Association of India and IMRB.

Since the soft-launch in August, CaratLane has had 22 buyers from India and the neighbouring countries, the highest two spends being Rs 3.6 lakh and Rs 10.4 lakh. “The diamond jewellery market is estimated at Rs 20,000 crore. We don’t expect every customer to convert, but even if 5 per cent shop online, we’re looking at Rs 1,000 crore in the next few years,” says Srinivasa Gopalan.

It’s not just the diamonds but also the savings that can put the sparkle on your face.