This is a picture of a typical ad published in print. It came out in the middle week of February and is a perfect example to talk about the current state of affairs in jewellery retailing. I have deliberately blurred the name and contact of the jeweller because this isn't about finger pointing but more about education. To make it simple I have numbered the issues I will bring up in this post.
But first lets consider the advt. Its really straight out of a thriller and can set your pulse racing by the time you finish going through it.
1)Bombay Rate Showroom
Gold is inexpensive by almost Rs.150-200 per 10 grams in Bombay and if you can get the same price in a Delhi showroom then its clearly a Sone Pe Suhaga(if I may borrow the title from our blog).
2)Today's Gold Rate
The gold rate of Rs. 9590 per 10 grams advertised during the second week of February when the gold rate was hovering close to 12,000 is almost a 20% below market rate. You may rightly argue that you are being passed the benefits of "frozen gold prices". Gold purchased by the retailer when the prices weren't blood sucking.
3)Low, So Low Making Charges
Almost as important as the "frozen" price of gold is the oh-so-low-making charges. So low that its hard for even a seasoned bargain hunter to come up with any reason not to give it a second thought.
4)100% Buy Back Guarantee
Usually accompanied with " Hum hain Naa, Behenji". This guarantee will unarm a naive or seasoned customer alike. A 100% buy back guarantee is sure to convince you of the value you are getting.
5)Rs.4000 per Carat Diamonds
Diamonds so affordable. Now who wouldnt give in to that.
Now consider these simple questions YOU as a consumer can ask.
1) Is It HALLMARKED?
Just this question is enough to dilute the positioning, first 3 points in the ad had taken. I have done some back of the envelope calculation to show how this one critical question can make the gold look copper and low making charges look a big sham in disguise. The economics of selling below market price is questionable. I have raised this issue earlier(Check out the related articles).
2) Is Buy Back is equal to Cash Back and not Exchange Back?
It is a guarantee of taking back the jewellery but assuming its going to be a cash back offer can put you in soup. It might well be an exchange only offer. This brings to the next question. If exchanged, Do I lose 10% of the value or 20% 0r even 30%?
3) What color, shade are these diamonds for?
Knowing that you get what you pay for is especially true in case of diamonds. The diamonds at this price are usually brown in shade, which is not clearly evident because they are mounted.
Marketing can be cleverly used to disguise real issues like hallmarking, buy back etc. Hope this makes you a more informed buyer.
Related Articles:
Handling Volatile Gold Prices: A Jeweller's Perspective
Take a hard look at buy back policy
How to avoid the Low Making Charges trap when buying jewellery
2 comments:
Hi,
This is a great blog, and really informative.
I'm just curious- why is gold cheaper in Bombay than Delhi?
And, I heard that if you are brand new to Delhi, it's hard to buy jewelry at a 'local' price? Or did I hear wrong?
Thanks!
M.L.
HI M.L.,
Thanks for stopping by our blog and the kind words of support.
Gold rates are different in every part of the country owing to taxes.
Bombay is cheaper than Delhi and Ahmadabad is cheaper than Bombay.
And coming to your second part of the question. I am not sure if such rumors are doing the rounds. I dont see a reason why you shouldnt get gold at a 'local price'. Infact there is no such 'local price'. YOu should try out in 2-3 shops to get a fair idea of what the gold price for that day is.
Thanks for the questions and apologies for the late reply.
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