How to avoid the Low Making Charges Trap in jewellery

In an earlier post I had mentioned how much I disliked the idea of making charges in jewellery taking precedence over everything else. Especially my rant on how radio is being used to dish the "oh-so low making charges" tune.
Jewellers tend to gain from such 'positioning' as they can now "distract" shoppers from other real issues like Hallmarking.

The Trap: Jeweller advertises a low making charge of say Rs. 60/gm and sometimes even lower.

Gullible Shopper: Sees a deal at hand and goes happy hopping and cannot contain his/her glee.

Wise Shopper : Goes to check out what the heck is this deal about. Finds the jeweller is selling non hallmark jewellery, leaves the "deal" on the table.

What did the Wise Shopper know that the Gullible didn't?

Besides the common sensical thing that something that looks too good to be true is usually that. There's a rationale behind this.

Assuming the price of 22K gold is Rs. 9700.

Non Hallmark Jeweller:
Price of 22K gold is : Rs. 9,700.
Price per gram : Rs. 970.
Making charges : Rs. 60.
Total price per gram : Rs. 1030.

Actual purity from such jewellers comes to about 16-18K( Our first hand experience). Averaging it to 17K.
Value of gold of 17K is Rs 7083 per10 grams.
Value of gold of 17K is Rs 708 per gram.

Jeweller's margin a whooping Rs 262 per gram + ( Rs.60 - actual karigar charges).

Hallmark Jeweller:

Price of 22K gold is : Rs. 9700.
Price per gram : Rs. 970.
Making charges : Rs. 150.
Total price per gram : Rs. 1090.

Actual purity from such jewellers should come to 22K. Your value is retained even though you feel you are paying more. You are actually getting more.

Since Jewellers' margins are under threat as hallmarking leaves no scope for manipulation in the purity of gold, they will charge more Making Charges. Be prepared for that.

Jewellers Margin = ( 150 - actual karigar charges)

So my little piece of advice next time you go jewellery shopping: Turn off your radios and look for the blue triangle.

Marketing Lessons Offline Stores Can Learn From The Internet

Internet stores realized the advantages of low operational costs, an unlimited audience and catering to their niches( yeah I am vaguely refering to the long tail). In this wake they also shed some old marketing techniques and developed new ones.

Since being entrusted with marketing for Kathana Jewellers ( and a pittance budget) I have often looked online for inspiration. Not just getting inspired but also borrowing from the online world and applying them offline.

Some of these out-of-the-box techniques were fairly easy to implement while others needed a whole new way of doing things.

The interesting lessons are:

• Customer testimonials : Websites love to put customer testimonials online we did the same at our offline store.

• Customized Jewellery : We borrowed techniques of Dell.com and Bluenile.com, to allow our customers to design and order Custom Engagement Rings. By custom making, customers save on the shelving cost and get a product of their liking and within their budget.
  

• Contextual Ads : These days Google and the likes allow you to serve ads contextually. So, a person living in India would see a different ad of the same product versus a person living in US. We are doing that offline as we serve different ads to different neighbourhoods based on the customers testimonials.

• Conversational Copy: We haven't tried this but this occurred to me recently. Isn't the web2.0 all about conversations? Make the copy of your marketing material a conversation.

Can you think of similar marketing/business lessons one can learn online and apply offline?

Hallmark Mandatory From Jan 2008...Really?

Any gold jewellery sold after Jan1, 2008 should be Hallmarked hence forth, says the Bureau of Indian standards. On the surface this looks like a good deal for the shoppers of gold jewellery but hold on there's a caveat.

This rule applies to Jewellers in the metros of Delhi, Mumbai, Chennai and Calcutta for now which means people living in the rest of India will still have to hunt for the Hallmark jewellers.

Within the metros too I bet it will be a while before BIS can really implement it. It is largely because the BIS is severly understaffed to enforce this. Also the industry grapevine doesn't seem to prove me wrong. So the aforementioned metro shoppers: You need to be on your toes too.

I will update on this blog as and when I find more on this front.

Thank You ....Tolmolbol

Tolmolbol came up with Diwali Dhamaka as the feature for its first newsletter for all its users who have subscribed to it. Tolmolbol.com is a platform for user generated reviews on local businesses.

We were pleasantly surprised(no wonder its being written so many days after diwali) to see our name for the places to try during the festive season in the New Delhi edition.

This is how they said it:

The fashion-conscious Delhi-wallahs have a superb choice of both fashion and food!

Whether you want to dress up ethnic with Biba and Biba or casual; the options range from the good, the bad, and the ugly. Spykar Jeans, Pepe Jeans, Pantaloons, Unistyle Image, and more. You’ll find classic women’s wear at Bizarre and if you’re looking for something more unique try People Tree. And while you’re shopping for Diwali, why don’t you just pop in to Kathana Jewellers and tell us what you think about it?

No festival is complete without sweets, and the very traditional sounding Gulab Rewari Gajjak Sweets-Rohtak Wala is a great place to stopover for sweets.

Have a great Festive Season!

Thank You! TolMolBol

P.S. BTW Gulab Sweets is bang across the road from us.

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Thank You ....Trendylicious!

New Pics On The Blog

Monday has been rewarding even though the shutters of our store was down. Finally we managed to add some pictures of the products we have in our store.
We have been working very hard with getting the photographs right and have kept the touch ups to bare minimum. This was just a trial shoot and the results were much better than what we were getting from professional photographers who were charging us a fortune. We hope that you enjoy the pics.

Posted above is the "pendant part of" a diamond necklace. A mix of baguettes and round shaped diamonds have been used to create this necklace. The necklace has an appeal which is expected to strike a chord with modern women. Very classy and elegant.

The picture below (left) shows a craftsmen working on a diamond bangle. Every diamond is manually embedded inside its setting. This particular piece involved over 50 hours of labour from start to finish and has over 7 carats of baguette shaped diamonds. The finished product is presented along.



Next we shot antique-looking bangles(below), which have been quite popular in the market for the last few years. Going by the buying trend looks like its going to find its fair amount of takers this season as well. The bangle in the picture below is one of the classic example of the patterns women in India are fascinated about.

Rubies, polki diamonds (uncut real diamonds), emeralds and other semi precious stone find their home in this bangle . Weighing over a 70 grams of gold, each of these bangle demand almost 60 hours of labor to be done and had to be outsourced to craftsmen in Calcutta.



If you are wanting to get a better view of the products, please click on the pictures. I am sure you would appreciate the detailing of each of these products.

How is Gold Price related to US Dollar?

Note: If you are looking for gold rate please look in the right column under the heading Today's Gold Price.

With gold prices touching the sky and putting a dampener on gold sales. See the poll results on the right. A lot of you must be wondering how the heck in the world is a weakening dollar affecting the price of gold.

Let me come to this in a simple grandmom explanation.

Its all about the hedge against inflation. People invest in assets where they can gain more than inflation.

Consider the dollar starts weakening due to various reasons. Which means the dollar cannot buy as much anymore. People start moving their money to other assets like stocks, land, gold etc. This spurt in gold purchases with supply remaining constant, pushes the gold price up.

I think I got that right. Whoops this does look like a jalebi.

Diamond trade: An Indian perspective.

Trawling the ocean of weblogs I stumbled upon a few "pearls" today. One of the blog post caught my particular attention because of the simplified and yet insightful narration of the Diamond trade with respect to India.

The post by Ajay Shah ( looks like an economist by his other writings) is a little long for the average reader who has limited attention span. The narrative keeps you pinned to your seat though.

In his post Ajay talks about the origins of diamond trade in India and its value add through the process.

Then you get to fly to De Beers in London (or to the market in Antwerp) every five weeks, where you get shown a pile of diamonds sitting on a brightly lit table. The price of the consignment is non-negotiable. The quality of rough diamonds in the pile is heterogeneous. The prospective buyer gets around 15 minutes to make a decision: to take it or leave it.

And finally explains why this business has been a family feifdom.

Second, the need for globally dispersed elements of the family. One brother sits in London, visits De Beers, buys a batch of rough diamonds (which requires making a judgment about whether the batch is a good deal). One brother sits in India and does the polishing (which requires making judgments about optimality of cuts, and handling issues of theft). One brother sits in Antwerp and sells the polished diamonds (which is pure bargaining).

If this has got you curious indeed go visit his blog post here.

Kathana Finds A Home In Facebook Pages

This weekend was busy gorging Diwali Mithais and meeting near and dear one. But I did find some time to work on the blog a little bit more.

SO now you would notice that the Feeds are up. You can spot the orange button somewhere down the right column. And so is subscribing to the blog through mails.

Another interesting feature I came across was Facebook's introduction of Facebook Pages. Although there has been talks about how social networks allow businesses to reach potential customers. Unless I am really ignorant about the current Web2.0 scene it looks to me that Facebook has cracked it right.

Excited I have now opened a store front for Kathana Jewellers. It is still in the process of being updated. And I am actually waiting to look at some more examples of people doing it right.

Exceptional Customer Service: Every Business Can Implement It.

One of the most indelible memories of US has been its customer service at department stores big and small alike, restaurants, coffeeshops and everywhere else. So naturally when I came back after a 4 year stint there I tried to imbibe this culture at our jewelry store.

I am fortunate to have a family which supported me all along when I wanted to implement ideas I learnt from the west to the jewelry store. But there were voices of dissent among relatives, customers who wished us good and friends who thought Indian customers are too untrustworthy to place the trust on.

The customer service I am talking about ranged from 30-Day Money BAck at Targets,Nordstorm etc, free dessert because we made you wait for it a little too long at Applebees in Salem, Oregon, or dont worry about the wallet you forgot you can pay us next time at Starbucks, Wilsonville, Oregon. I was bound to get infected and bound to give this a try in its own flavor back in India.

Besides Customer satisfaction, there is a business case for it:

Joel Spolsky puts that in words what we had all along known and I quote from his blog

The no-questions-asked 90-day money back guarantee was one of the best decisions we ever made at Fog Creek. Try this: use Fog Creek Copilot for a full 24 hours, call up three months later and say, “hey guys, I need $5 for a cup of coffee. Give me back my money from that Copilot day pass,” and we’ll give it back to you. Try calling on the 91st or 92nd or 203rd day. You’ll still get it back. We really don’t want your money if you’re not satisfied. I’m pretty sure we’re running the only job listing service around that will refund your money just because your ad didn’t work. This is unheard of, but it means we get a lot more ad listings, because there’s nothing to lose.

Over the last six years or so, letting people return software has cost us 2%.

2%.

Similarly, Over the last 11 months since we implemented a '30-Day 100% Money back' in our store we haven't had a single return. And I am not kidding.

Wishing You a Happy Diwali

Wishing all the readers of this blog, A very HAPPY DIWALI.

May this joyous occasion bring peace, prosperity and purity to your family and loved ones.

Making Charges In Gold : A Classic Overhyped Marketing Gimmick!

Seth Godin would have loved to point this in his book All marketers are liars. The case in point is the making charges in jewellery of any kind be it gold, diamond or semi-precious stones.

Making charges are what a consumer pays above the price of gold(on a certain day) for crafting the gold into jewellery. This varies from item(viz. bangles) to item(viz. chains) and from one jeweller to another. Usually the going rate starts upwards of Rs.60/gram.

Somehow for some marketers this parameter is the most important thing to consider when buying/evaluating gold from a retailer. You cant miss this fact especially on different radio channels where every other jeweller is trying to beat the competitor on just this parameter.

Infact so intense is the competition and so unmeasurable the delight of consumers that I recently came across a customer who boasted of Rs.10/gram of making charges from another jeweller.

Why has this parameter stolen the limelight when there are parameters more worthy to consider or highlight?

This stems from the basic instinct in humans: To get a good bargain for the deal at hand.

So whats wrong with that?
This takes me back to what said earlier. There are more than just one parameter to consider when buying gold. FInd out the return policy on your jewellery. You should ideally get a trial period of atleast a month beyond which expect to lose only making charges when you return your jewellery. The diamonds should be certified by reputed houses like GIA,EGL and IGI. The jewellery should be BIS hallmarked. It should indicate all the 5 signs BIS recommends.

On prompting more the customer pointed that his low making charges were on unhallmarked gold jewellery. Here rests my case.

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How to avoid the Low Making Charges Trap in Jewellery