CaratLane Stories – The story of CaratLane’s B2B Business
The months after launch were a real struggle. We would get very few inquiries and orders. Closing every inquiry would become a challenge and a struggle.
One day, we got an inquiry for a solitaire that was listed on our website from a jeweller who was based in Delhi. We were quite intrigued by this inquiry. It was fairly large stone.Around 3 carat If I remember correctly. But of lower colour and clarity.
We negotiated on the price. There was a lot of detail he asked for.
Finally, we were able to close the order and get the money. We managed to sell a large stone without actually showing it physically.
We got super excited about this. We had never thought about this opportunity. But it seemed that the digital inventory and competitive pricing was a great proposition for small jewellers also. Not just consumers. So we started discussing whether we should go after this opportunity. Also thinking how we should do it.
We weren’t pivoting. Just looking at it as an additional revenue stream. Not worrying whether it was a distraction or not. We weren’t struggling for time or bandwidth. There wasn’t enough traction to keep us fully occupied.
We didn’t mind the money either. The initial capital wasn’t a lot and we weren’t pursuing any funding at that time. The growth. rate and the business model wouldn’t have excited too many VC’s anyways. We knew that building the customer business was going to be a long hard grind. Consequently cash flow would take time. So there was merit in pursuing the B2B opportunity.
B2B helped our solitaire supply chain also. We weren’t buying enough solitaires to get suppliers excited. In fact, many weren’t even entertaining us. Mithun’s family connections helped with some vendors. But we needed volumes before we could start getting real pricing advantage from them.
Building B2B seemed easier than building B2C, as long as there was a clear price advantage that we could provide. Building trust was easier. You didn’t have to wait for customers to come to you. You could go to customers and sell one on one.
We also needed it for morale. That one big sale had really lifted spirits including mine.
I clearly remember our monthly meeting where we discussed this. At the end of it, Gopal looked me in the eye and asked me whether I felt confident about it. I didn’t realise it then, but it wasn’t the most rational, well thought out decision that I have made in CaratLane.
I said yes.
We got to work.
We worked in two tracks. One solution for large retailers and one for smaller ones.
It was very manual to begin with. We built a website and started running ads and sending SMS’ on jeweller databases. People would call us and inquire and then we would send options, negotiate price and try and close.
We also did a bunch of B2B meets. We would send out invites to all the jewellers and call them to a hotel and pitch the solution we had. Also walk the jewellery markets and cold calls jewellers. Try all tactics basically. Once and for the only time in CaratLane, I even wore a tie. It didn’t help.
Slowly though it started to build. The revenue was soon higher than our B2C revenue. Albeit at a much lower margin. We soon got a sales guy to travel and meet more jewellers. We built a basic algorithm to find great deals and would send those to jewellers regularly. We also started buying a lot of international stones. There used to more than two shipments from New York every week. For a while, we broke our head trying to optimise shipping cost from the US.
We soon realised three problems though. One, the price advantage wasn’t so clear cut all the time. Many of these jewellers were in touch with suppliers in Mumbai directly. The second problem was quality. The jewellers were often selling uncertified solitaires. We weren’t offering that and our certified stone pricing couldnt compete with that of uncertified diamonds.
But most importantly, there wasn’t enough demand. Same reason why we decided to sell jewellery in addition to solitaires. And nobody was doing anything to educate and build demand. Most jewellers didn’t have a sales solution either. They had very little physical inventory or any other tools to create demand inside their stores.
We first decided to build a white labelled solitaire solution. It was similar to a jeweller building a CaratLane like solitaire website. In version one, they could just add their margin and show their customers a final price. Adding their brand template was planned for later. The solution was very buggy and didn’t find many takers. Also there was feedback to offer a full solution where the website showed the full solitaire – diamond and mount. Just the diamond wasn’t enough. We started work to figure out a proper plan to make this happen.
While this was still in the works, I left and then Tiger invested. Once they came in, the focus shifted completely to B2C and this plan got shelved. Slowly this business stopped completely.
The other track was the big retailers. The first prospect was Tanishq. Mithun had established contact and we made a pitch. Our pitch was to create a digital solitaires solution similar to the one we had created for small jewellers. With proper Tanishq branding and a better back end to fulfill orders. It wasn’t easy to convince them as they had a buying office and a reasonably large solitaire business.
After multiple meetings and back and forth, we convinced them for two things. We would first start supplying their buying team as a vendor. To show that we could provide competitive pricing. The second was to participate with their sales teams in their trunk shows and sell solitaires using our digital model.
We did well on both counts. Supplied a lot of diamonds. This established our supply and pricing credentials. This increased our buying significantly and helped us get better terms with suppliers. Direct tech integration started to happen as well
We did well in the exhibitions as well. The highlight was selling a single 50 lakh stone in the Delhi exhibition digitally. Without showing the physical piece. This kind of made the case for the solution we were proposing.
Finally, the solution was in the Tanishq stores and it did reasonably well.
The plan was to build on this solution and also take it to more retailers. But this priority also changed after the 2011 Tiger investment. We didn’t kill this business. It continued to be of reasonable size till about 2016. But we stopped putting energy into making it bigger and take it to more large retailers.
In the end, the B2B business achieved many of its planned objectives. It gave us top line and cash flow. benefits. Didn’t become as big as we had envisaged but it was satisfactory. It helped us build relationships with vendors and create a robust solitaire supply chain.
And then there was a big unintended benefit.
The Tanishq partnership.
Working with them for so many years helped build a great relationship with Tanishq and their leadership team. It played a role in the Titan investment in CaratLane. That in turn helped CaratLane’s success in a big way.
The B2B business was called TradersDiamonds.
Today this business is no more.
But it played a key role in the CaratLane journey and is a fond memory for all os who were involved with it.
