Madatory Hallmark from Jan 2008: The Fallout

As I had promised earlier I am covering the story of the BIS mandate to make Hallmarking cumpulsory from Jan 2008. It was pretty evident (to us) that this implementation will have its fair share of hiccups. For a preview of what the issue is about read our earlier post.

On 14th Decemebr 2007, we received a notice from the Karol Bagh Jewellers' Association (which we are a member of) to observe a 'bandh' against the BIS mandate. I am quoting the notice verbatim:

As per the decision of All Delhi Sarafa Association and Delhi Bullion Association there is a call for "Jewellers Bundh" on Friday 14th Decemebr 2007, against the implementation of "Hall-Mark BIS". As the law is very tough and will bring Babu Raj in the industry. Jewellers had asked for lots of amendments for which BIS & GOvt. has not responded positively, so this bundh is being observed. Kindly co-operate and unite together.

Lets analyze some of the demands of the jewellers:

• The jewellers want the year markings viz 'A', 'B', 'C'... and so on be made optional or done away with. This years markings is 'H' and soon its going to be 'I' for the next year. In 2008 jewellery of last year and years before that, might not necessarily be attractive to a customer.
• The Assayists bill a minimum of Rs. 350 even though individual items only cost as low as Rs. 50 to get hallmarked. So if a jeweller went to get just 1 item hallmarked, they would be charged the minimum amount. This amount cannot be passed to the consumer as making charges for a small item for e.g a earring, top or ring.
  
• Jewellers in other parts of the country like Gujarat claim the lack of enough hallmarking centres around them to enable easy and frequent hallmarking.
  

This is an initial list and we are sure there are many more.

On the other hand the govt's move is clearly aimed at helping the consumers who have been a 'cheated' lot. And such a standardization would give some peace of mind for the consumers.

Its clearly a battle of profits vs purity.

Updated: 17/01/08

Solitaire International( a Jewellery trade magazine ) has an article covering the hurdles for countrywide adoption of Hallmarking at http://tinyurl.com/2s6q6f

Understanding the price of 22K gold,wastage and making charges.

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

Ok, back to the post.The question on 22k price, wastage and making charges often gets asked in jewelry forums and in "answers" forum across various portals. So here's our take:

An Example:Assuming the price of 24K gold is Rs.10,000/10 grams.(ah ! those were the days)

You will find the price for 22K gold = Rs.9,700( printed in newspapers as Abhushan jewellery).

Since the actual quantity of gold is 22 parts of the 24 parts. Actually the gold price should have been Rs. 10,000 X 22/24 = Rs. 9166.

So, how does one explain the difference. Lets see what happens at jewellers' end.

Wastage Charges:Once a jeweller commissions a Karigar(Craftsman) to manufacture a jewellery item. The karigar wastes some gold in manufacturing it. Yeah what you just read is true. The gold gets 'wasted' in the manufacture of a jewellery item. It depends on the jewellery item. For the pure gold items the wastage is around 6-8%, whereas for a diamond jewellery it goes upto 15%-25% of pure gold.

Now, ofcourse at a technical level it doesn't get wasted and the karigar meticulously collects it. But for all practical purposes the jeweller fraternity files that under wastage and passes that to the customer, albeit in a hidden manner.

Also remember that the karigar mixes alloys to gold to make it 22k pure. These alloys also adds up to the cost and is filed under wastage charges.

Hence, the price difference of actual 22K gold versus the 'Abhushan Jewellery' rate that you see in Newspapers.

Making Charges: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.

How we are bought and sold:

Dr.Robert Levine the author of 'The Power of Persuasion - How we're bought and sold' mentions in the chapter 'Learning to avoid stupid mental arithmetic' about a critical insight into the consumer psychology.

Consolidate the Losses and separate the Gains

He found that if a salesman clubbed the losses in a certain transaction and gave you a whole figure for the losses, while he separated the gains, A consumer would be more comfortable conducting the transaction than if it were the other way around.

Now look at it this way. For a 22K jewellery item you pay ( The price of 22K gold + Wastage Charges + Making Charges) . There are 2 losses, that of making charges and the wastage charges. So, by combining the wastage charges with the price of gold, a consumer now sees just
the making charges.

And my jeweller fraternity has taken heed to this very advice.

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.

Related Posts:
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.