"As jewellery involves big ticket transactions, easy EMI facilities are one of the attractions that has aided sales growth. But with this facility gone, the business is likely to drop by about 50 percent," JewelsNext.com chief executive Gaurav Issar said. (Agencies)
The established or multiple product players might be able to sustain, but the move will badly hit the small and new portals, especially those which deal exclusively in jewellery, he added.
To discourage gold demand and control imports, the government and Reserve Bank have been tightening the screws. Prodded by the RBI recently, the credit card issuing banks have informed their trade partners, especially the ecommerce portals, the decision to discontinue the easy EMI (equated monthly instalment) facility for jewellery.
"Last year JewelsNext.com had 20 percent credit card transactions....After the ban, we have not had any credit card purchases till now. However, we are sure that this ban will have unfavourable impact on our sales," Issar said.
Nishant Nayak, Vice-President for eCommerce at Gitanjali group, said as the average ticket size of jewelleries are very high, the easy EMI facility was a convenient option.
"Banks withdrawing this facility for jewellery will have a negative impact....there is likely to be a 10-15 percent drop in transactions," he said, adding that the smaller players will suffer more.
With a piece of jewellery being sold every four minutes in the country, online purchase of jewellery is a trend that is fast growing amongst the younger crowd. The easy EMI option was a big plus, Kama Jewellery Vice-President for sales Sandeep Jain said, adding that withdrawal of the facility will "hit online sales in a big way".
EMI payments option accounts for about 40 percent of the company's sales online, he said. "As an immediate measure, we are looking at pumping up the entry point stocks to make sure that there is something for everyone," Jain added.
The government and the Reserve Bank have been taking steps to curb the gold imports, which averaged 152 tonnes in April and May, resulting in foreign exchange outgo of about USD 15 billion. The steps have yielded results with the imports of gold and silver dipping significantly to USD 2.45 billion in June, lowest during the calendar year. India is the largest importer of gold, which is mainly utilized in jewellery industry in the country. The imports stood at around 830 tonnes in 2012-13.
"As jewellery involves big ticket transactions, easy EMI facilities are one of the attractions that has aided sales growth. But with this facility gone, the business is likely to drop by about 50 percent," JewelsNext.com chief executive Gaurav Issar said.