Similar to other industries, online jewelry industry has started the race for bigger market share, albeit much later than their traditional counterparts but are indeed running much faster.
Global jewelry market is growing at a steady pace of 5% CAGR and is expected to reach USD 257 billion by 2017. Asia Pacific has emerged as the largest jewelry market fueled by surging demand growth in India and China, while USA still continues to be the single biggest jewelry market country. Currently, online jewelry market constitutes 4-5% of the total global jewelry sales but is growing at much faster rate and is expected to capture 10% of the total jewelry sales by 2020. Candace Cheung, senior manager at eBay says online shopping is the emerging trend in luxury goods, with jewelry and watches among the top three items with fastest growth in E-commerce. This is reflected by the fact that jewelry is the No. 2 category by sales for eBay.
Future predictions are also in favor of massive growth for online jewelry especially in India and China. E-commerce in China is expected to grow at 25%, much faster than the traditional retail, and US headquartered Blue Nile, the largest global online jewelry provider is capitalizing on this opportunity. China is company’s second biggest market after US and clocked 37% YoY growth with almost USD 30 million in sales.
After China, Blue Nile is eyeing Indian market and has tied up with New Delhi based PC jeweler to explore long term sales opportunity. According to CLSA Asia Pacific Markets, Indian E-commerce market is predicted to reach USD 22 billion by 2018. Mithun Sacheti, CEO of Carat Lane – largest Indian online jeweler, in a recent interview said “online sales of fashion and fine jewelry combined are expected to reach $150 million in 2015, while last year it was $125 million. In 2013 it was not even $2 million. This part of the jewelry market is exploding”.
BlueStone – India’s second largest jewelry e-retailer believes that the biggest obstacle so far has been building trust in the industry dominated by traditional players. Mithun Sacheti of Carat Lane agrees with his competitor in this regard. He says Carat Lane has taken number of steps to build trust like using certifications from internationally reputed labs, tamper proof packing, transit insurance and usage of trusted SSL technology for secure online transactions. Both BlueStone and Carat Lane are also offering “Try at Home” service across major cities in India to attract customers who need a touch-and-feel experience before purchase.
Apart from trust building, online jewelry players have been using lower prices as their unique selling point to attract customers from retail stores. Carat Lane ensures its customers savings of up to 25% over retail prices. While Blue Nile goes a step further and price its products 40% below those of traditional jewelry.
Growing dissatisfaction of traditional retail experience among consumers is another reason driving surge of online jewelry. The 2014 China Luxury Forecast report estimates that about 63% of consumers in Hong Kong are not satisfied with luxury shopping in retail stores. In contrast, Blue Nile was founded on a novel idea to simplify the jewelry shopping experience and proudly declares on its website that “choosing an engagement ring doesn’t have to be complicated”.
Technology and innovation have better equipped online jewelers in their battle against physical retail players. India-based Voylla, a fashion jewelry e-retailer plans on using analytics, virtual reality and even 3D printing to produce designs their customers want. Meanwhile BlueStone is employing data visualization techniques to make efficient use of data collected by their site in order to optimize its business operations and to respond customer demands in real time. Even Tiffany is in talks with Uber to enable rapid same day delivery for jewelry purchased through its website.
But it’s not only the greenfield online jewelry retailers who are gaining from the online boom. All major traditional retailers including Tiffany, Zales, Kay Jewelers etc. have already established their presence online. India’s biggest diamond and gold jeweler – Gitanjali Gems expects online sales to account for 20% of its total sales within next 2-3 years, from a meager 1% now.
However, the reverse is also happening currently in the industry. Pureplay online jewelry retailers are increasingly realizing the need of physical stores. With an existing 6 retail stores, Carat Lane’s plan is to roll out 30 stores within a year. Traditional brick-and-mortar stores help online jewelers get better visibility and cater to the segment of customers who are either not aware about the brand or are not so tech savvy.
Venturing into different sales channels like physical stores, Try-at-home etc. by online jewelry players, and online sales by traditional players indicate bigger integration within the jewelry retail industry. The experts view online and brick and mortar retailing not as competing but co-existing with one another in the future.