In its first major investment in an e-commerce firm, Titan group has acquired majority stake in Tiger Global-backed online jewellery startup CaratLane. This is the first successful exit for Tiger. CaratLane Co-founder Mithun Sacheti told YourStory that the board approved the decision on Friday, and details are yet to be finalised. “Titan is getting into a partnership for long term stability. They will buy out our investors,” says Mithun.
The collaboration is sure to bring more credibility to CaratLane as Tata is among the most trusted brands in India. “Now we can scale large thanks to the backend, which is available with Titan. We have been planning omni-channel strategy for a long time; we want to leverage that. We will provide digital capabilities for Tanishq,” Mithun says about the complementary strategy.
Founded in 2008 by Mithun and Srinivasa Gopalan in Chennai, Caratlane has raised $52 million from Tiger Global.
Majority of Titan’s revenue comes from its jewellery arm Tanishq. But Tanishq - in number of stores- is limited even in major cities; they have not exploited the full potential. Arvind Singhal, Chairman of Technopak management consultancy firm, says that many customers are comfortable buying low-value jewellery without visiting the jewellers as it comes with a guarantee certificate. “Titan could have launched its own platform; but this acquisition makes sense since there are synergies between their operations. Caratlane can reach out to more customers,” he says.
Jewellery sector is largely unorganised in India as most jewellers are independent retailers, despite some chains like Kalyan from South India. Tata Group has actually been very slow in terms of adapting to e-commerce. Tata Unistore has been in the pipeline for a very long time.
Caratlane’s competitor Bluestone is backed by Chairman Emeritus of Tata Group Ratan Tata. Is there a clash of interest? No, says Arvind Singhal, COO of Bluestone. He takes this development as a proof of the potential in the segment. “Ours was an investment in individual capacity by Ratan Tata, as he liked our business model. He is very professional, so there is no conflict of interest,” Arvind added. Bluestone, founded by Vidya Nataraj and Gaurav Kushwaha in 2011, has raised $30.8 million from Accel Partners and Kalaari Capital among others.
Ratan Tata has made investments in about 40 startups so far, but that is aimed at promoting entrepreneurship, says Mithun. “I was keen to get the institution rather than the individual, because Tatas build institutions,” he adds. He believes that all those who provide differentiation can survive in this business. But Arvind of Technopak believes that in specific categories in e-commerce, there is room only for two or three players. “If somebody has already had a head start, it puts pressure on existing players,” he says.
The online jewellery sector is still at a nascent stage; tremendous changes are still to happen. Mithun says: “We will see category additions and action around virtual reality and O2O [online to offline and offline to online] strategy.” CaratLane has a try-on app which allows you to take a video of yourself, and on 3D lets you try out earrings. They have had almost three times growth annually and are closing at Rs 250 crore annualised turnover. Mithun adds,
With similar growth rate, by 2018, we are looking at Rs 1,000 crore turnover. We had doubled our business last year.