Mithun Sacheti, Chief Executive Officer, CaratLane Pvt. Ltd. (India’s largest online diamond and diamond jewellery portal), laid the foundation for his dream company, with a vision of changing the way diamonds and solitaires are bought in India. Hailing from a family who has been in the Solitaire business for 5 generations, Mithun has a profound understanding of the sparkling world of priceless jewels. He worked with Jaipur Gems for over 10 years, and with his strategic vision he successfully expanded the business to South India – Chennai and Coimbatore. Mithun could have inherited and continued serving his family business, but this young scion with his strong focus and in depth knowledge decided to bring about a new stir in Indian diamond industry with CaratLane, which he set up in the year 2008. As a testament to his excellent leadership and business acumen, CaratLane has marked 300 per cent growth, year on year under Mithun’s supervision. It has also been rated as one of the Top 20 ecommerce start-ups with the best user interface in India by a Data Quest Study done in January 2011. Mithun is a graduate Gemologist from GIA and an alumni of IIM Bangalore. He was The Director at Jaipur Gems from 2000 to 2010. Currently he is the Chief Executive Officer of CaratLane.
CaratLane is India’s first and largest online diamond and diamond jewellery portal. CaratLane offers wide range of solitaire diamonds, solitaire based jewellery, readymade diamond jewellery, gold and engraved jewellery. Caratlane has tied-up with more than 4000 vendors worldwide to offer a wide choice of solitaire diamonds. The site carries solitaire diamonds of all shapes, colour, cut and clarity grades which start from 30 cents going all the way up to 10+ carats. This limitless choice makes CaratLane the largest diamond store in India. Customers can either buy these as solitaire diamonds or get them made into solitaire based jewellery. CaratLane offers a wide range of ring, pendant and earring designs. Once customers select their diamond they can get it set on a design of their choice
Speaking with Anil Mascarenhas and Siddhi Bajaj of IIFL, Sucheti says, “Our biggest USP is the choice offered and our commitment to delivery. We also believe that the price is better than any online or offline model.”
In a country where people like to see the stuff, especially jewellery before buying how does your business operate.
Solitaire buying is really not the same as other type of jewellery buying. The way it works traditionally is that a customer makes the decision on the kind of stone that she wants based on her budget and after seeing a similar looking stone. The jeweler then calls various suppliers to get the diamond. The entire process involves several intermediaries and costs are added at every level. In reality customers do not necessarily get ‘touch and feel’ even when they are buying from their family jeweler. Online essentially delivers the same experience. Our website www.caratlane.com is about three years old while the business is roughly four-and-a-half-years old. We are an aggregator so we had to first get the backend in place. We are the largest player in this vertical online space by a distance and we operate in three categories namely solitaires, jewellery and coins. We started with solitaires and have the largest selection to choose from, nearly 100,000 options. They are all certified from the best labs in the world. Also, we compete to provide the lowest prices in the market and help consumers save up to 25% of retail prices. Since we are an aggregator, we do not depend on few suppliers. We work across six countries with several vendors and with over 100,000 stock keeping units (SKUs) for solitaires. So, depending on the arbitrage of currency on that day, the demand and supply in that country, the one with the lowest price has the option to sell first to the customer. We sell all of this under the CaratLane brand name. Also, when the customer buys the solitaire he can choose the pattern to mount it in the jewellery piece. We can customise the jewellery piece accordingly. There is a consultation centre for the customer and we can also provide a 3-D model of how the piece will look.
What about the certification?
CaratLane does not give a store certificate that is invalid elsewhere. CL sells only diamonds certified by the best International laboratories– GIA, AGS, IGI and HRD. Every Gold product of CaratLane is Hallmarked. In addition to the diamond certification, CL jewellery is also certified by a reputed independent diamond grading laboratory – an industry first innovation that offers greater protection to customer investment in Jewellery.
Where are diamond prices headed now?
Diamond prices of smaller diamonds are about 30% higher right now than what they were at the beginning of the year. In terms of solitaires, prices are actually 10% lower than where they were about a month ago. This may not be reflected in retail but is clearly seen in the online space on a daily basis. Retailers tend to increase prices at the same pace but reduce them at a lower pace as they get to know the information before the consumer.
On the other hand, everything online is driven by systems so the rise and fall in prices is automatically reflected every day. In terms of where they are headed, I think they will stagnate for now. But in the long run, I see prices going up. Until there is no discovery of new mines, there is going to be pressure on quantity.
Why is there a rise in prices of small diamonds but a fall in prices of solitaires?
It is a common known fact that nine out of ten diamonds are cut in India. Due to the economic downturn a couple of years ago, a lot of people from Surat shut down their factories and migrated to other businesses. This created a shortage of labour. Also, the design trends shifted in a way where more small diamonds were being used than before. So a combination of demand and stagnant supply put pressure on prices. Also, a lot of mines went into refurbishment, which goes on for a couple of years, as demand was low. So, this created a supply side pressure on pricing.
Considering the high prices of gold, has there been a shift in demand from gold to diamonds?
I am sure there has been a shift since we are noticing it on the retail level as well. Also, if you look at grammage consumption and advertising patterns, the combination of the two indicate that diamond consumption has gone up. If you look at material volume and not value, you can see that diamond consumption has gone up 30% while gold consumption has fallen. However, there is more bullion demand for gold, mainly the coins and the bars rather than jewellery demand, but price is acting as a prohibitory factor there.
Are you seeing good interest in the gifting section?
The coins and jewellery sections have benefitted greatly from the gifting option and we also do a lot of personalisation on that front. For example, we had a series of hearts launched for Valentine’s Day where the message to be engraved could be customised. We also had this application on Facebook where one could gift a virtual heart to someone on the site and it could also be made into a real one. Another gifting option was on Raksha Bandhan where we could make a 22K gold Rakhi for Rs 749 at those record-high prices of gold. The idea was to create the thinnest sheet of gold with the help of technology. So, even though the Rakhi cost you Rs 749, you still had a residual value of Rs 300 on the gold.
Where do you source the gold coins?
We have our own manufacturing facility in Chennai.
Are you looking at getting listed anytime soon?
Not at this point. Right now we are still into creating our market. We have been funded very recently by a hedge fund, Tiger Global. So, it might be a while before we consider that option as we have a lot to achieve with the money we already have.
Can you share your financials with us?
Last year we closed at about Rs 50 crore and we are expecting that number to at least double this year. Before this, we have been growing at 300% CAGR. We do about a thousand shipments a month and we could probably grow that substantially by the end of this year.
What is your ownership pattern of the company?
It is privately held and Tiger Global is the hedge fund that has invested in it. They have invested Rs 6 million in the business.
How do you manage the logistics for the business? Are the pieces insured?
We have partnered with several logistic partners who function in the high value space. A customer receives the piece; it could be a solitaire from any part of the world mounted on a piece of jewellery, within seven business days of placing the order. We are also setting up our offices in cities where volumes are good so we can have better control over our deliveries. We insure our goods till the time it reaches the doorstep of the customer. Till the time he opens the package, we take responsibility of the same. We have adequate check points at every level.
What is the breakup between gold, diamonds and engraved jewellery?
About 80% of our value comes from the solitaire business and 20% of our transactions come from the solitaire business.
Do you plan an offline model?
Yes, we have offline kiosks for high-end transactions where PAN card details are required. They are in Delhi, Chennai and Mumbai. These kiosks are mainly there to build that trust among people who do high value transactions and want to know about the seller. Customers can take an appointment and visit the kiosk where we take them through the process. They also have the option to transact online.
What would you say is your USP and an entry barrier in this business?
Aggregation is a big entry barrier we have built. No one has been able to match the number of solitaires we have. So, the number of vendors we have easily makes us the lowest price vendor. It would take a lot for somebody to compete with us on price. Overall, there is a first mover advantage we have as another company will take some time to reach the same level as ours. In terms of the consumer, I would say that our biggest USP is the choice offered and our commitment to delivery. We also believe that the price is better than any online or offline model.