BlueStone's CEO on Why the Marketplace Model Doesn't Work for Jewellery

"The jewellery industry never had the incentive to take technological steps because their model was always very different," says Gaurav Singh Kushwaha, founder-CEO of BlueStone, one of the oldest and biggest companies in the jewellery space in India. Gadgets 360 recently caught up with Kushwaha and Dinesh Rathi, the Chief Technology Officer of BlueStone, to talk about how the company works and to learn more about the online jewellery industry in India. Of course, that's still a very nascent industry

The Indian e-commerce market has grown to such a size that it feels like we've always been using these sites, but in reality, Flipkart is just 10 years old. There are people reading this who were in college before Flipkart even existed. Starting with books and then other commoditised products like electronics, Indian e-commerce grew to more personal categories like apparel and jewellery.

Unlike traditional jewellers who have large stocks of inventory that is sold to customers who visit the stores and browse the designs personally, BlueStone has a large catalogue of over 6,000 designs, but the products it sells are made to order.

"We don't sit on the inventory," says Kushwaha. "Inventorising everything would have cost millions of dollars. Instead, we turn it around in 3 - 5 days. In 2012 when we started off, the minimum time any jeweller would take to make products at scale was 3 - 4 weeks instead."

To get around this, BlueStone had to invest heavily in technology and logistics - not for its website like most e-commerce companies, but rather on manufacturing the products that it's selling. "We have set up our own manufacturing facility that is tightly integrated with the website, and through innovations across the stack, we can make the product in three to five days," says Kushwaha. In this way, BlueStone's operations are closer to a site like Lenskart, which produces glasses made to order, rather than to a marketplace like Flipkart or Amazon.

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"Each and every design has its specifications and design laid out very neatly, in terms of the exact amount of gold, the exact size and number of diamonds, and so on in extreme detail," Rathi explains, taking us through the way BlueStone works. "We create a master, casting is the first step in the manufacturing process. The negative that is required to cast the product is kept indexed in our factory. So it's not completely automated, but there are interventions at the right point which makes it very fast."

"It's a fully industrialised production process with the actual making taking only about half an hour to one hour, tracked from table to table - from the right product to the right craftsman, for something like setting a diamond, for example, with all the information passed on in real time," he adds.

Jewellery stores on the other hand never needed to invest in these kinds of processes, Kushwaha says, since the incumbent players were able to build large stocks which are prepared months in advance, and there is a heavy reliance on expert salesmen who will guide you to a purchase. On the other hand, BlueStone users spend much more time browsing products before they come to a decision - "people will spend weeks before buying," says Kushwaha, which makes sense considering the average selling price of items on the site is Rs. 25,000, which is a lot higher than a typical e-commerce sale.

However, although BlueStone is investing in technology to improve its production process, the company isn't fully moving away from traditional methods of creating jewellery. "Direct printing in gold is not something that is advised - it results in higher gold loss," says Rathi. "Where 3D printing technology is being used is to skip steps in the casting process, allowing for certain designs to be manufactured that weren't possible earlier. There are also different forms of 3D printing. CNC is one and it's being extensively used, forming is not, 3D printed resin is something that we extensively use."

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Another problem with jewellery, Kushwaha adds, is the heavy reliance on touch-and-feel, even today. To get around this, the company has rolled out a buy at home service, where you can shortlist products from a smaller catalogue of the company's top sellers, and browse through these in person with an at-home visit.

"Jewellery is a very difficult category, and while trying to crack this category, we've ended becoming a jewellery company as well as an e-commerce company," says Kushwaha, adding that the marketplace model doesn't work in this space. We pointed out that Flipkart and Amazon both have large jewellery sections, but he's dismissive.

"Flipkart and Amazon haven't really been able to crack this model," he says. "It's a very destination driven category. You're not just walking by and see something and pick it up. That's why we are first and foremost a product brand. Also, unlike other categories, with jewellery everything is unique so you can't piggyback on offline store for show rooming. You can physically handle the products Flipkart and Myntra offer at Croma and Shopper's Stop. In our case, that option isn't there."

For these reasons, Kushwaha believes that the marketplace model won't crack the jewellery space in India, though he adds that it's still early days for the industry as a whole, and that the more voices that are present, and getting the customers used to shopping online, the better it is for everyone involved.