Online jewellery retailer Bluestone Jewellery and Lifestyle Pvt. Ltd has been ramping up operations of late. The firm, backed by marquee investors such as Accel Partners and Kalaari Capital, reported a 72% rise in revenue to Rs 100.4 crore for 2015-16. This helped it shrink the gap with main rival Caratlane, which posted a 9.5% increase in revenue to Rs 131.8 crore. In an interaction with VCCircle, BlueStone founder and CEO Gaurav Singh Kushwaha shares the company’s targets for revenue and market share, plan to open its first offline store and how it will take on competition. Excerpts:
How is jewellery e-tailing different from the offline model? How do you ensure product quality?
The jewellery business operates in such a way that the role of the retailer is insignificant and most brands are also retailers. In that sense, the rules of the game are the same for everyone. However, for e-tailers, the primary channel of operation is online. We operate on an asset-light model but store raw material inventory for seven to 10 days. We start work only after an order is placed and follow a just-in-time approach to deliver the product fast to the user.
We have an in-house design team that takes care of the creative process. We have two manufacturing facilities—we own one and the other is dedicated to us. We have seven levels of quality checks—from the factory to the dispatch centre. A customer can return the product and get the money back within 30 days of purchase.
How are you using the funds that you have raised so far?
Our focus is on brand building. We have allocated a significant budget for marketing efforts and have decided to use television as the primary marketing channel, besides digital advertising. We are also planning to rope in a celebrity as our brand ambassador.
Are you looking to enter the offline segment?
We will set up our first offline store in Bangalore by the end of this year. We have visualised it more as an experience centre than a retail store. However, if this makes an impact on consumer behaviour, we will try to get it validated and evolve our offline strategy based on the learning derived from the first offline store.
Using artificial intelligence and machine learning for designing seems to be a fad. How do you plan to ramp up technology?
Technology has always been an integral part of our operations and we constantly try to ramp up our tech capabilities. We have been using machine learning and data science as part of our back-end operations. We will ramp up our technology capabilities in-house and may go for inorganic means only if the need arises.
Could you talk about your offerings, key markets and order rate?
We receive about 7,000 orders in a month and hope to achieve a 50-70% year-on-year growth. Delhi-NCR, Bangalore, Mumbai, Hyderabad and Chennai are our top markets. We get about 65-70% of our orders from the top nine tier-1 cities. We also see a good traction from tier-2 cities including Jaipur, Lucknow and Chandigarh.
We have about 6,000 designs in close to 20 categories including earrings, rings, pendants, bangles and bracelets. Earrings and rings perform well as categories. But we are focusing on necklaces, which are costlier and offer higher margins. We release 250-300 new designs every month. Mobile drives around 70% of our traffic, with a 40-45% conversion rate. We have an encouraging customer repeat rate of 50%.
What is your market share? What are your revenue and profit targets?
We are eyeing Rs 1,000 crore revenue and profitability by March 2019. We have a 40-45% market share in the online jewellery segment. In five years’ time, we hope to achieve a 50% share. The total market size of the jewellery sector is estimated to be $110 billion in five years’ time and we expect online jewellers to cater to 1.5-2% of the total market.
Why have you set a conservative target of 50% market share when you already have a 40-45% share?
We expect competition to heat up in the segment with a lot of new players entering the space. In five years, we expect more entrants in the segment, including offline jewellery brands. However, we are confident of holding the lion’s share.
Do you think the March 2019 revenue target is realistic?
Our annualised revenue is Rs 300 crore. The number of orders is rising, as is the average order value. Our order value is around Rs 27,000, up from Rs 15,000 last year. This, combined with the growing potential of smaller cities and towns, will help us achieve our targets.
Your cash burn seems to be higher than that of Caratlane. Any comments? Could you also share your month-on-month growth figures?
We do not comment on a competitor’s data. We are working towards making our business model more effective, thereby bringing down our burn rate. We do not look at monthly growth figures.
What is your inorganic growth strategy?
Being the market leader in the online jewellery space and looking at strong growth potential, we are in a comfortable position. As of now, we have no plans to pursue inorganic growth.
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