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March 2008 - Vol. I, Issue 7
Polygon MonitorThe Gems and Jewelry Indicator
A DMCC initiative
Infocus
Online Jewelry Sales in USA
Holiday Season Sales up, despite concern over economy
Recessionary Fears in America
With a marginal growth of 0.6 percent in the last quarter of 2007, the US economy registered its worst year since 2002. The economy has been reeling under the housing market slump, credit squeeze, subprime crisis and stock price declines on Wall Street.
Despite successive interest rate slashes, consumer spending in the fourth quarter declined to 2 percent, down from 2.8 percent recorded in the previous quarter. The Holiday season was unable to bolster consumption, sales dropped by 0.4% at U.S. retailers in the month of December.
A consumption-driven US economy thrives on credit. Americans often spend more money than their expected income. The subprime losses have led to a credit squeeze and triggered a slump in the housing market.
US retailer’s JC penny witnessed a sales decline of 4.1% to $6.4 billion in the fourth quarter of 2007. Poor sales of fine jewelry were partly responsible for the decline. Zale, a jewelry retailer reported a 31% decline in profits for their second quarter ended Jan 31, 2008, following a significant fall in jewelry sales during the 2007 holiday season.
Growth in Online Shopping
However, a closer look at retail performance reveals a rather startling dichotomy. While retail stores have faced the brunt of an imminent recession, online retailing fared pretty well. In fact, certain online players have enjoyed record profits in the fourth quarter of 2007.
Diamond and Jewelry online retailer Blue Nile Inc experienced a 23.3% growth in sales to $111.9 million, compared to $90.7 million in the fourth quarter of 2006. For the full year (ended Dec 30, 2007), Blue Nile reported net sales of $319.3 million, an increase of 26.9 percent from fiscal year 2006.
However, Blue Nile does expect 2008 to be a
difficult year for the luxury retail sector and has lowered its profit expectations for current year.
Diamond sales on its jewelry and watches store at Amazon.com witnessed a 100 percent growth in the fourth quarter 2007, compared with the same quarter of 2006. The Seattle-based internet retailer said that everything
from pendants to stud earrings to create-your-own engagement rings were extremely popular amongst customers.
In addition to diamond jewelry, gemstones too did extremely well. 14k white gold coated Swiss blue topaz teardrop earrings, 14k white gold round blue topaz and 14k yellow gold channel set round coated blue topaz hoop earrings were top sellers in the gemstone category.
Strong Online Holiday Shopping Season
Online retailers enjoyed a wonderful holiday season with more than $28 billion spent online during the first 57 days (Nov 1 to Dec 27) of the holiday season, a 19 percent gain versus the corresponding days last year.
However, the 19 percent growth in the holiday season was lower than the 25 percent growth a year ago. A couple of factors can explain the relatively smaller increase. Firstly, the growth in the previous season was off a smaller base as compared to this year. Secondly, general recessionary fears that affected retail consumer spending affected online spending too.
“Green Monday” (Monday, December 10) was the heaviest individual spending day of the season with $881 million in sales. “Cyber M o n d ay ” ( M o n d ay, N o v e m b e r 2 6 ) , represented the first major spike in online spending activity during the season with sales
of $733 million.
Surprisingly, sales even after Christmas were strong. For instance, the day after Christmas saw online sales touch $545million, more than double the sales on the same date last year. This indicates that consumers were taking advantage of the attractive late-season
promotions and discounts offered by retailers to lure consumers at the end of the holiday season.
Outlook on 2008
Given the current economic outlook in US, 2008 will prove to be a challenging year for most business retailers. There exists tremendous uncertainty in the luxury retail sector. Jewelry purchases are often a causality of discretionary spending.
Jewelry and Watches sales in US are expected to touch US$ 65.9 in 2008, according to JIRI (Jewelry Industry Research Institute) a marginal growth of 2.9% from 2007.
Online Jewelry Websites have been cutting into the market share of store-based retailers. Discount promotions, low value segment jewelry and diversity in styles drove online jewelry sales in the fourth quarter of 2007. Despite concerns of recession, Online Jewelers are confident that they will enjoy a sizeable share of the expected watch and jewelry pie of US$ 65.9 this year.
Please call us for an appointment on 022 - 66291000
Polygon.net Pvt. Ltd. • 4th floor, Daulatram Mansion, St. Kittridge Road, Colaba, Mumbai - 400005. • www.polygon.net
• Extremely Satisfied
Neither Satisfied nor Dissatisfied
Extremely Dissatisfied
•
•
• Somewhat Satisfied
Somewhat Disstisfied•
65%26%
4%4%
1%
Source JCOC December, 2007
How Satisfied were you with your Purchase?
2% 2%
20%
7%
15%
5%
13%
6%
29%
Ashford BlueNile eBay Amazon Bidz Ice Overstock JewelryTelevision
Other
Source JCOC December, 2007
Which website did you purchase Jewelry from?
33280
40052
108174
22
Polygon IDCarat
2.01
0.71
0.83
0.507
Polygon Diamond Offers
To Buy
Call us at
(022) 66291000
US
US
IN
US
Price (USD)
332
203
890
1,880
Stock #
D-3
Ro3384
24340190
P12079
H
F
WH
G
ColourShap/Cut
Round
Round
Round
Round
13
SI1
12+
VS1
Clarity
Clarity
VVS
NA
VVS1 or IF
Si2
Polygon Diamond Demands
IN
US
US
IN
Carat Weight
0.50-2 cts & Above 2 cts
1.60 cts
Shap/Cut
Round
Heart
Rounds
To Sell
Call us at
(022) 66291000
20 cts
PAIR 2.5 cts
Round
H - I
H - I
D - G
Colour
Intense Yellow
Polygon ID
137275
3473
4798
137629
Remarks
NA
NA
NA
Eye Clean
THE SECOND POLYGON BUSINESS CONFIDENCE SURVEY (JAN-MAR’08)
Polygon India has recently concluded its Second Business Confidence. The survey revealed that the Indian Gems and Jewellery Industry had a disappointing Oct-Dec ‘07 quarter. Record level gold prices deterred Indian consumers from purchasing gold jewellery during the festive season, the sliding dollar adversely affected diamond companies. The Current Business Index (CBI) for the Oct-Dec quarter stood at 63.3 as
opposed to a CBI of 82.1 in the preceding quarter.
The Polygon Current Business Index assesses the Industry’s views on performance in the last quarter, Oct-Dec’07 with respect to their performance in the same quarter of the previous year Only 51% of the respondents performed better in the Oct-Dec’ 07 quarter as compared to the same quarter in the previous year.
The Industry is optimistic about business prospects in the next quarter and it reflected in a healthier Business Confidence Index. The Business Confidence Index (BCI) for Jan-Mar’08 stands at 75.5. However, it was substantially lower than the BCI of the preceding quarter. The Business Confidence Index for Oct-Dec ’07 stood at 94.64 as the industry was excited about business prospects in the festive season.
The Polygon Business Confidence Index is a barometer that senses the pulse of the Industry’s Business Prospects in the current Jan-Mar’08 quarter. About 65.3% of the respondents indicated that they expect to perform better in Jan-Mar’08 than the same quarter in the previous year.
Gross operating margins for Jewellers and Diamond Companies will be under pressure in the Jan-Mar’08 quarter. Gold prices are expected to remain strong through 2008. Uncertainty over supply of diamond rough
will expose Indian companies to price volatility of the open market.
Uncertainty over the US economy will alter the export landscape of Gems and Jewellery. Companies will look at emerging markets for export growth. About 29% of the Jewellers will export their jewellery to the Middle East. Asia, led by China has emerged as the most popular export destination for Diamond Companies.
Online jewellery shopping is gaining popularity amongst Indian consumers and sellers. Increasing number of companies are looking at selling online to reach a wider target audience. However, Jewellers are still concerned over malpractices prevalent in online jewellery shopping, like copying of designs.
Call us at (022) 6629 1110 to get a free copy of Polygon Business Confidence Report (Jan-Mar’08).
Industry Focus
March 2008 - Vol. I, Issue 7
About Polygon.net
Jewellers BCIBCI Oct - Dec’07
97.7
BCI Jewellers and Diamond Co’s
75.6
9080.5
BCI Jan - Mar’07BCI Oct - Dec’07 BCI Jan - Mar’07
CSI BCI BMEI
63.3
75.5
46.9
Business Indices Overall
We are pleased to introduce you to www.Polygon.net.
Polygon is the Jewelry Industry’s largest marketplace on the Internet, facilitating trade amongst wholesalers and direct to retailers. With over Rs.10,000 crore fresh inventories online, we are a subscription based e-marketplace and do not charge any transaction fee.
Founded in the United States 23 years ago, we have over 3,000 paid retailers onboard in the USA. Our Indian operation allows us to cater to the demand of all Indian retailers and help suppliers sell more efficiently. The tables below are current, live demands and offers from www.Polygon.net.
March 2008 - Vol. I, Issue 7
Polygon Online Price List - Price List as on 15th February 2008 [Prices in US$ per carat] US$1 = INR 39.66
Third Carat (0.30 - 0.49)
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
D
E
F
G
H
I
J
K
D
E
F
G
H
I
J
K
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
D
E
F
G
H
I
J
K
One Carat (1.00 - 1.49)
Two Carat (2.00 - 2.99)
D
E
F
G
H
I
J
K
Three-fourths Carat (0.70 - 0.89)
IF
IF
Third Carat (0.50 - 0.69)
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
D
E
F
G
H
I
J
K
D
E
F
G
H
I
J
K
IF VVS1 VVS2 VS1 VS2 SI1 I1SI2
One and One-half Carat (1.50 - 1.99)
D
E
F
G
H
I
J
K
D
E
F
G
H
I
J
K
Three Carat (3.00 - 3.99)
Nine-tenths Carat (0.90 - 0.99)
Polygon Price List Methodology***
*
The report is based on offer prices quoted on Polygon.net A detailed analysis is done every two weeks on Polygon.net to derive the Price List Each cell is the average price off all diamonds for a combination of the 3 following criteria’s:
• Color : D through K • Clarity : IF through I1 • Carat size spread : 0.30-0.49 | 0.50 -0 .69 | 0.70 -0.89 | 0.90 - 0.99 | 1.00 – 1.49 | 1.5 – 1.99 | 2.00 – 2.99 | 3.00 – 3.99
Lower quality color & clarity are not included because of non-significant quantities in database.
3610
2890
2719
2496
2265
1862
1733
1547
2866
2579
2535
2252
1989
1660
1594
1399
2476
2269
2141
1966
1759
1554
1410
1314
2164
2038
1880
1746
1560
1398
1279
1144
1965
1812
1688
1533
1415
1313
1209
1063
1550
1480
1458
1371
1304
1220
1093
918
1387
1336
1318
1251
1190
1134
976
854
1074
993
951
911
885
820
781
674
7694
5643
5189
4468
4134
3297
2671
2172
5694
5295
4848
4152
3637
3118
2552
2161
4946
4577
4328
3791
3311
2997
2444
1967
4349
4034
3846
3461
3130
2843
2317
1925
3928
3702
3490
3216
2981
2692
2264
1820
3347
3199
2997
2830
2641
2411
2134
1708
2950
2797
2624
2514
2416
2180
1991
1461
1882
1871
1775
1724
1656
1525
1424
1183
17417
12219
10492
8299
6684
5577
4859
4240
13349
11272
9935
7799
6415
5313
4511
3803
10829
9369
8778
7358
6057
4938
4201
3731
8185
7524
7187
6412
5253
4466
3994
3517
6647
6255
6175
5680
4878
4216
3641
3146
5169
4912
4747
4491
4349
3831
3375
2893
4296
4043
3967
3840
3731
3386
3153
2569
2979
2776
2614
2559
2445
2236
1985
1833
31430
22954
21188
15778
13366
10309
8098
6893
25221
22093
19878
15293
11833
9424
7900
6564
21034
18048
16949
13527
11222
9305
7419
5948
16911
15359
13920
12608
10152
8394
6766
5420
13314
12617
12583
11423
9457
7591
6256
5026
10035
9747
9559
9008
8156
7042
5820
4708
8213
7874
7750
7449
6944
6281
5461
4243
4286
3854
3713
3449
3317
3150
2956
2688
6159
4476
4126
3666
3191
2879
2376
1931
4752
4214
3951
3368
2996
2620
2080
1761
4000
3775
3560
3147
2709
2404
2002
1639
3270
3078
2945
2790
2477
2089
1768
1476
2977
2747
2623
2388
2182
1870
1682
1336
2496
2283
2109
1984
1898
1694
1513
1242
1972
1880
1744
1666
1581
1555
1367
1166
1522
1414
1337
1265
1204
1124
1057
899
10393
9528
8006
6361
5494
4592
3649
2960
8266
8177
7898
6005
4919
3935
3450
2937
7060
6212
5899
5031
4707
3872
3418
2656
5612
5284
5151
4463
4209
3564
3067
2432
4823
4782
4659
4278
4020
3361
2906
2317
4336
4143
3998
3761
3515
3092
2706
2180
3753
3610
3471
3269
3129
2758
2459
1971
2460
2401
2293
2263
2035
1990
1792
1269
23514
17310
14957
12040
8810
6946
6111
5061
17906
16287
14333
10763
8528
6605
5664
4645
15453
14019
12541
9892
7746
6536
5619
4444
11894
10865
10451
8929
7131
6257
5096
4256
9717
9201
9009
8157
6753
5793
4643
3815
7636
7340
7129
6446
6095
5326
4434
3589
6100
5850
5637
5283
5078
4581
3946
3334
3637
3373
3208
3159
2957
2808
2561
2210
60096
45733
40232
25927
22275
16264
12870
9476
47587
38140
37683
25133
19350
14505
10791
7077
38758
34615
28743
23746
17900
13119
10015
6911
32610
25420
24026
20202
15856
12186
9260
6539
24491
20884
20360
17013
13744
10575
9116
6167
15953
14688
14325
12654
10822
9301
8048
5878
11451
10588
10468
9933
9341
8097
7130
5755
5574
5275
4924
4701
4466
4354
4343
423
Polygon Members Speak
AD
VT.
March 2008 - Vol. I, Issue 7
Q1 -How were your Online Jewelry Sales/enquiries in International Markets in the last three months?Manisha: Demand for Jewelry from Europe, US and Australia is typically strong during November-December-January. We
received many queries, but sales were lower than the previous years.Vibrant: Our online portal was launched before a couple of months. We have received enquiries from Australia, Singapore,
China, US & Spain.
Q2 - What is the scope of Jewelry E-Retailing in India?Manisha: E Retailing will take its time to cast its spell in India; we still need to develop the trust and mindset to bring buyers to
the Internet to buy jewelry online. However, E-Retailing will makes its presence felt, with a lot of brands and sellers opting in to
go online with international and local portals.Vibrant: Our E-retailing website, vibrantfashion.com was launched just 4 months back, it is a B2C portal and is a fun site where
along with E-Retailing you can register and become a member of the group. E Retailing in India has tremendous scope.
Q3 - In your opinion, what are the benefits and challenges of selling Jewelry online?Manisha: You need to understand the online model, build trust and reach out to more potential customers. The benefits range
from the ease of sowing your inventory without having to carry it around to reaching customers across the globe.Vibrant: You reach a wider target audience. The consumer gets to view jewelry from the comfort of his house. However, the
disadvantages are that consumers like to feel the jewelry before they purchase it and they are not aware of ring sizes making it
difficult to shop online.
Sanjay Gulecha
Hemant Bhai Shah
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