Market Update

Online gold market in India

July 2020 www.gold.org

India has embraced online retailing across

different categories. Digital and social
Evolution of the online
activity plays an increasingly important gold market
part in the purchase journey for gold. In The online gold market in India is in its nascent stage,
urban India, consumers browse accounting for just ~1-2% of overall gold sales by value. 2
online/mobile apps before making As of Q3 2019, only 17% of urban gold jewellery purchases
and 3% of rural gold jewellery purchases are made online
purchases; they use online blogs and
(Chart 1). 3
social media for ideas and inspiration. And
mobile wallets/apps have played a key role Chart 1: Place of purchase of gold jewellery*
in the growth of Internet Investment Gold %
95
100
(IIG) in India. 1 90 83
80
The COVID-19 pandemic has disrupted the 70
brick and mortar business model of Indian 60
50
gold retailers and has become a catalyst for 40
online channels to boost sales. 30
17
20
In this report, we explore: 10 3 1 2
0
• the growth of IIG In store/ In person Online/mobile app TV shopping
Urban Rural
• the barriers to online gold purchase and *As of Q3 2019
opportunities to grow the online market Source: Hall & Partners, World Gold Council

• how retailers are adopting a digital

strategy post COVID-19.

1 Internet Investment Gold - informally referred to as digital gold in India -
allows investors to buy physical gold online, have it stored in professional
vaults and take possession of it should the need arise. For more details
please refer to www.gold.org/what-we-do/investing-gold/how-buy-
gold/internet-gold
2 Online gold sales include online gold jewellery/gold bullion and internet
investment gold sales.
3 retailinsights.gold/regional-spotlights/india/india.html

01
India’s journey towards online started more than a decade
back with CaratLane – which was founded in 2008 to give
women access to modern, fine gold jewellery for daily
wear. In 2011, another online gold jewellery portal –
Bluestone – was launched, and in the same year CaratLane
launched its first physical store as part of its omni-channel
strategy to drive growth. This strategy seamlessly
integrates different B2C communication channels (radio,
TV, print, website, mobile, email, chatbots) to give
customers a unified and cohesive experience.
The online marketplace gathered momentum over
subsequent years with the launch of Candere, the
introduction of jewellery by e-tail giants, Amazon and
Flipkart, and the launch of marketplace eJohri, with its
omni-channel business model and focus on on-boarding
family jewellers. The e-commerce platform from eJohri
provides consumers with an option to purchase gold
jewellery online or go to a store and see the item before
Growth of Internet
Investment Gold
IIG can be a cost-effective and convenient way of
purchasing gold using platforms such as mobile apps
and/or internet banking. The first such option for Indian
investors became available with the launch of Reliance My
Gold Plan in 2012. The real thrust in IIG began in 2016 to
2017 with the launch of digital gold platforms by new age
mobile wallet companies like Paytm and PhonePe. IIG has
since gained momentum with various digital gold platforms
have been launched (Figure 1).
IIG can provide numerous advantages: anytime purchase,
easy delivery, security and transparent pricing (Figure 2).
Figure 1: Timeline for launch of IIG platforms
G

making a purchase.
To enhance its e-commerce capabilities, in May 2016 Titan
acquired a majority stake (62%) in CaratLane. Titan, using
its subsidiary, CaratLane, has expanded the number of
physical stores to 92 across 36 cities – as at end March 2012 2014 2016 2017 2018 2019

2020. 4 In April 2018, another e-commerce platform, Tata

CLiq, introduced jewellery as a category under Tata Cliq
Luxury.
Besides the digital platforms from India’s top three online
jewellers and marketplaces such as Amazon/Flipkart/Tata
Cliq/eJohri, India’s top retailers, such as Titan, GRT
Source: Company websites, World Gold Council
Jewellers, Joyallukas and Kalyan Jewellers, have their own
e-commerce platform for selling gold jewellery and bullion
(bar and coin). Figure 2: Typical features of IIG
18- to 45-year-olds are driving online gold sales.
Industry discussions suggest that consumers aged 18 to 45 Buy anytime Easy delivery Secure Transparent
account for 70-80% of online sales while those over 45 pricing

account for 20-30%. The average ticket size of online gold

jewellery purchase is Rs 25000-30000. Gold is purchased
for daily wear (50%) and festivals/gifting (50%). Industry  Vaulting with
 Buy 995/999/9999  Delivery in gold  Live
professional
discussions also reveal that gold bars and coins are popular certified gold for as bar/coin/ jewellery
custodian with safety transparent
low as Rs 1 (minimum 1 gram) pricing
during Akshaya Tritiya/Dhanteras festivals. of insurance

Digital and social activity already plays an important part  Online easy access  Delivery at
 Independent  Free storage
trusteeship to protect charges upto 5
in the purchase journey. In urban India 30% of 24*7 doorstep
investor interest* years*
consumers say that they browsed online/mobile apps pre-
purchase for fashion and lifestyle items. And 30% of * Offered by select players
those used online posts for ideas and inspiration. 5 Source: Company websites, World Gold Council
Mobile apps/wallets also play a key role in the growth of
IIG.

4 Titan Company Limited, Earnings Presentation – Q4 FY’ 2020, 8 June 2020. 5 retailinsights.gold/regional-spotlights/india/india.html

Market Update | Online gold market in India 02

Industry estimates show that total trading volumes of
digital gold in 2019 were ~4-5t (equivalent to just ~3% of Barriers to online gold
annual gold retail investment) with an estimated 2.5mn
active investors with repeat transactions on various
purchase
platforms. 6 IIG is becoming a popular choice for gifting and Despite online gold sales growth and an increasing desire
festival purchases (Akshaya Tritiya, Dhanteras). 7 among certain sections of the population to access gold
A proliferation of mobile apps and banks’ digital platforms – through online channels, digital accounts form a relatively
together with the increasing penetration of smartphones – small proportion of total sales. Barriers that prevent
has allowed gold investment to grow via digital channels potential buyers from completing the online purchase
(Chart 2). journey include:
• desire to hold/touch the product
Chart 2: Place of purchase of gold investment*
• desire to have the product right away
%
• returns policy worries
60
50
• price concerns
40 • lack of awareness and understanding about IIG
30
Online gold retailers are aware of these barriers. The desire
20
to hold/touch the item pre-purchase can be overcome if
10
0
retailers offer the option to buy online, collect in-store and
In person – In person – In person Online – Online – exchange/return if the product is not as expected. Online
in a bank or with a with a gold mobile app fund/ retailers such as CarataLane and Candere already do this
other financial retailer, investmen
financial advisor or dealer or platform
for consumers using their omni-channel strategy:
institution investment mint consumers purchase online and collect the piece at a
specialist physical store. The concern around refund/replacement is
Urban India (2016) Urban India (2019) addressed by e-tailers such as Amazon and Flipkart who
Rural India (2016) Rural India (2019) have a 30-day refund/replacement policy. To provide
* Gold Investment includes bar and coin, Gold ETFs/Sovereign Gold Bond transparency into online pricing, Amazon provides a
and Internet Investment Gold
breakdown of the gold price by fine gold content, making
Note: 2019 data based on field survey of 1005 rural and 1280 urban
investors, 2016 data based on 1000 rural and 1000 urban investors. charges and taxes. Internet Investment Gold allows
Source: Hall & Partners, Taylor Nelson Sofres, World Gold Council investors to purchase physical bar and coin online with
storage in vaults. Awareness of IIG will help the category to
grow, and the participation of banks would further bolster
Financial inclusion and smartphone penetration will the market. Online gold platforms are trying to enhance the
drive growth of Internet Investment Gold. According to shopping experience through digital innovation, technology
the World Bank Globex Findex survey, the number of and personalised service. CaratLane, Bluestone and
Indian adults with a bank account more than doubled Candere have introduced a ‘try-at-home’ feature where
between 2011 and 2017: 80% had a bank account in 2017 consumers can book an appointment to try jewellery pieces
compared with 35% in 2011 (and just 53% as recently as at home/work with no obligation to purchase. 10 Similarly,
2014). 8 Smartphone user numbers grew to over 500mn in Candere has introduced size guides for rings and bangles
2019 – an increase of 15% over 2018 – and this is on its website to overcome what has been a barrier to
expected to exceed 800mn by 2022. 9 Smartphone online purchase. 11 Online gold players have also adopted
penetration and increasing financial inclusion will give a vast augmented reality (AR) technology and introduced a real
swathe of Indian investors the ability to invest in IIG with time ‘virtual try on’ application. Innovations and such
the swipe of a finger, using mobile wallets/apps or a bank’s personalised service will not only overcome barriers in
digital platform. online purchase but also help the online gold market to
grow (Focus 1).

6 9 techarc.net/techinsight-at-502-2-million-smartphone-users-its-time-for-
Total trading volumes include both buy and sell volumes.
7 smartphone-brands-to-turn-towards-services-in-2020/#page-content
www.gold.org/goldhub/gold-focus/2020/05/covid-19-steals-sheen-gold-
demand-akshaya-tritiya 10 www.caratlane.com/try-at-home

8 globalfindex.worldbank.org/ 11 www.candere.com/downloadable-ring-and-bangle-size-chart.html

Market Update | Online gold market in India 03

 Focus 1: Opportunities to grow the online
jewellery sales
Improving the end-to-end gold jewellery purchase
journey (from initial consideration through to purchase
and beyond, thus establishing the ‘loyalty loop’)
represents a large and relevant opportunity for the
growth of India’s online gold market.
In 2018, McKinsey reported that nearly 80% of luxury
sales were digitally influenced, yet the use of
technology and digital engagement in the gold
jewellery category still lags that of other high-end
fashion and lifestyle categories. 12 Online channels,
including social media, play a role in the early stages
of the journey, with urban consumers in particular
using brand websites, social media and blogs as
sources of inspiration. But much of this is a reactive
response from consumers who are already
considering gold jewellery. To drive market growth,
the industry needs digital strategies that encourage
consumers to stay with the category because they
get value from the journey itself.
Simple and easy to navigate e-commerce sites can
drive category growth if they help consumers to
become comfortable with purchasing high ticket
items online. Leading retailers like Titan, GRT
Jewellers and Joyalukkas have created dedicated e-
commerce sites that make online gold purchase easy.
For retailers who don’t want to develop a dedicated e-
commerce website, marketplaces such as Amazon,
Flipkart, and Tata Cliq offer an online shop window.
Urban young women (aged 18 to 24) identify with and
respond to modern celebrity ambassadors and social
media influencers. Retailers can use social media
platforms such as Facebook and Instagram to
endorse a jewellery product through a brand
ambassador or a social media influencer and drive
sales on their e-commerce platforms. Targeting
influencers and understanding the buyer’s purchase
journey will help drive online gold jewellery sales in
India.
12 www.mckinsey.com/industries/retail/our-insights/luxury-in-the-age-of-digital-
darwinism
13 www.titancompany.in/sites/default/files/Investor%20Presentation%20-
%20June%202020_0.pdf
Market Update | Online gold market in India
Digital strategy post
COVID-19
The outbreak of COVID-19 and consequent closure of
stores from mid-March caused jewellery sales to collapse.
India’s top retailer, Titan, recorded a 74% decline in retail
sales in the period 16 to 31 March compared to a growth of
12% in the period 1 January to 15 March. 13 With stores
closed, retailers such as Titan, Senco Gold and Diamonds
and Kalyan Jewellers rolled out various incentives and
offers in April, such as providing opportunities to lock in
prices, discounts on the gold rate, gold ownership
certificates or gold vouchers, and exchange of gold coins
for jewellery via their e-commerce websites during
Akshaya Tritiya. Even so, online sales volumes were
nowhere near the same period in 2019. COVID-19 has
forced jewellery retailers to reconsider their brick and
mortar business model and implement digital as a core
strategy.
This focus on digital will be key to successful growth post
COVID-19, but more importantly the seamless integration
of offline and online channels will play a crucial role in
driving sales. Titan has devised a six-pillar strategy to boost
sales, and this includes implementing an omni-channel
through which various initiatives, such as video call,
Try@Home, Augmented Reality/Virtual Reality and Endless
Aisle, have already been launched. 14 Similarly, other
retailers are using digital media to reach out to customers
post COVID-19. They are focusing on improving the
customer experience through personalised services, such
as store visits by appointments made online (via app,
WhatsApp or email) and product selection via video.
Retailers are enhancing this focus on omni-channel with
lower price points and product lines designed to boost
online sales.
Online gold jewellers, such as Candere, are embracing
technology and innovation to boost online sales post
COVID-19. They are using customer relationship
management (CRM) software, Salesforce, and data
analytics tools (Google Script, Google Tag Manager) to help
understand consumer behaviour and achieve higher
retention and conversion through their e-commerce
website.
14 ‘Endless aisle’ refers to the concept of enabling customers in retail stores to
virtually browse or order a wide range of products that are either out of
stock or not sold in-store and have them shipped to the store or to their
home.
04
Conclusion
Although the online gold market is still in its nascent stage
in India, digital and social activity plays a key role in the
purchase journey. In urban India, consumers browse
online/mobile apps pre-purchase and use online blogs
and social media for ideas and inspiration. Mobile
apps/wallets are playing a key role in the growth of
Internet Investment Gold.
COVID-19 has caused retailers in India to re-evaluate
their brick and mortar business model and implement an
enhanced digital strategy. Today, successful retailers
embrace an omni-channel strategy to boost online sales.
There is a real opportunity for growth in India’s online gold
market if it can improve the end-to-end gold jewellery
purchase journey and thus establish the ‘loyalty loop’. To
drive market growth post COVID-19 the industry needs
digital strategies that will ensure gold jewellery reaches
more consumers at the consideration stage of their
purchase journey… and reaches them more often.

Market Update | Online gold market in India 05

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Market Update | Online gold market in India 06