Hi, I’m Saurabh.👋 I write in-depth analyses on the growth of popular companies. I cover their early-growth strategies, current growth levers, and the business-building lessons we can learn from them.

Hello hello 🙋‍♂️

Good to see you all again!

I love writing and going down to all sorts of business-building rabbit holes. This newsletter is my way of pursuing both my interests while learning from the best companies in parallel.

Let’s get to it.

In the late 90s, my family had an annual ritual. Once a year, I, along with my parents and my brother would walk to the bus stop, catch a bus to the Tambaram train station, and take the Chennai local to reach the bustling streets of T Nagar. We'd all be excited—especially my mom, who'd get to browse and nitpick through countless designs, while my brother and I enjoy the free coffee and cold drinks. 

I’m talking about going jewellery shopping.

It’s an experience, isn’t it?

So, this week, I bring you several takeaways from the Indian startup that flipped the Indian jewellery shopping behavior - finding an extreme value gap in the $85 billion jewellery market. The startup that makes me and the people who invested in Titan Group very happy, every week. Today, we are going deep into CaratLane.

How CaratLane Grows

Alright, here’s what to expect:

How CaratLane started: Where did the idea come from?

CaratLane’s early growth: Brass-tacks lessons from CaratLane’s growth journey

How CaratLane drives their growth today: Diving into what’s helped them grow 73% YoY today

For a second, I’m going to sound like that part of the YouTube videos you always want to skip. If you learn at least one thing in this post, please consider subscribing and/or sharing it with your friends.

With that out of the way, let’s get to it. 😼

How they started

Back in 2007, e-commerce was sprouting in India. A little online bookstore, called Flipkart, had just started. Another online apparel store called Myntra had begun and a new online payment system, called Paytm, was on its way to being discovered. Despite all this progress, no e-commerce company was focussing on something essential to all Indian households - jewellery.

Mithun Sancheti came from a history of jewellery business. His family owned Jaipur Gems, an Indian jewellery business started in 1974 by his father. He grew up in the business, went to California to study Gemology, and came back to India in 2000 to join the family business. Soon, he left for Chennai, to start the South India operations for Jaipur Gems. In 7 years, he took the business to $10 million in revenue and had made $1 million in profit.

However, Mithun was unimpressed with the progress. 7 years to build a $1 million profit felt too long to him. During his time in the US, he had seen Blue Nile flipping the diamond business at scale with the internet. People bought diamonds just by looking at the specifications which means there was a semblance to ecommerce businesses. To set more context, diamonds are a standard product having defined features such as cut, carat, color, and clarity. Blue Nile was showing inventory stocked at the top of the value chain on their website with specifications and offering the diamonds at a lower price. (We’ll discuss this in detail in the next section)

Mithun took 74 lakhs ($88k) from his father and went on to build an online jewellery business. He needed a tech cofounder to build an e-commerce business and convinced his long-time friend Srinivasa Gopalan, running Lister Technologies at that time, to join his venture.

Together, they founded CaratLane in 2008. 

CaratLane’s early growth and GTM strategy

We’ll start by looking at CaratLane’s early go-to-market strategy, covering important concepts that cover almost every consumer app’s early growth. The tactics we discuss next, bring some pretty strong lessons for the marketplace and D2C business builders.

Acquiring early users

When Mithun and Gopalan launched their e-commerce website, they had 40,000 solitaires in place, and a medium to small retailer had 200-300.

Yet, initially, the diamond website was turning out to be a lump of coal. For 15 days, nothing happened. Not enough visitors. Not a single diamond sold. A top Chennai businessman told Mithun- “It’s a terrible idea. Band kar do [shut it down],” 

They were facing a challenge that every startup faces: How to acquire early users.

Lenny Rachitsky found that there are just 7 strategies that account for every consumer app’s early growth:

1. Go to your users, offline: Find out where your users are hanging out in real life and meet them there. Lyft and Uber went to startup offices. Snapchat went to malls and Tinder went to college campuses

2. Go to your users, online: Find online communities and forums where users are interacting and meet them there. Facebook went to the Harvard mailing list. Tiktok went to the App store

3. Invite friends: If the target audience is similar to you, ask your friends to join in. Yelp founders invited their coworkers (from Paypal). LinkedIn sent invites to their professional contacts on Day 1

4. Create FOMO: This is powerful when you have a product that has an intrinsic DNA of social sharing. Spotify is the best example of a company that used FOMO with its waitlist

5. Leverage influencers: Find influencers in your industry and get them to talk about the product. Examples are Twitter and Producthunt

6. Get press: This is ideal for founders with a unique, compelling story to tell. Airbnb used NBC and CBS. Superhuman had pieces in Wired and Techcrunch

7. Build Community: This takes more time, but building a community early gives great advantages later. Stackoverflow had large founder communities of existing followers whom they invited for their private beta

Lenny also found that most startup founders found their early users from one or at max two of the above strategies.

Coming back to CaratLane, they had a remarkable story to tell. After all, for the first time, people could buy diamonds online. 

They relied heavily on the press in the initial 3-4 months. This got the initial traction and soon, they started getting 150,000 visitors/day. They started seeing traction by Dec 2008 and the business started pulling a couple of transactions/day.

CaratLane ended Mar 2009 just shy of $1 million in revenue.

If you are a startup looking to start your journey with PR, I found this great article on how to do PR in a pocket-friendly way. 

Going up the value chain across the border

To make sense of this disruption, let’s first understand the typical mining value chain running at that time. The mining value chain refers to the entire process from extracting the raw materials to customer delivery.

The raw material supplier would usually charge on a payment upfront basis. This means, the cutters would have to open a large line of credit and mark up the price to cover the interest cost. Over and above, their wholesalers would also work on ~90 days credit including the time it will take to get the certifications (the 90-day period was often delayed due to slow movement of the product and cash flow crunches). The wholesalers would work on another credit line with their retail jewellers and again, mark up the prices to cover interests and profits. Finally, the retailer would mark up the price for rent, inventory, and profit and sell it to the customer.

To add context, stocking 100 loose diamonds for customers to choose from (which is not a lot, considering different shapes, sizes, cuts, and clarities) could cost $500,000 to $1,000,000. Generally in the jewellery market, retailers do a markup of ~100% on the wholesale price.

On the other hand, customers look for variety when choosing their diamonds. This creates a Catch-22: You need more designs to attract customers but more designs mean higher prices which turns to lower sales. It’s a vicious cycle.

By design, e-commerce can bring efficiency to the value chain by removing middle players(wholesalers and retailers). It offers diamonds online that are sitting safely in vaults and lockers of the cutters/dealers - creating significant price and assortment advantages. Hence, Mithun invested heavily in building the diamond pipeline. He made strategic partnerships with cutters and dealers across all major diamond hubs such as Hong Kong, Israel, New York, Antwerp, Bombay, and Surat.

To summarize, CaratLane did not have to lock in enormous amounts of money upfront to hold inventory. Once an order was placed, they placed a just-in-time order to their respective supplier and fulfilled the order.  While this practice is common across all e-commerce businesses today, CaratLane had the first movers advantage in the Indian jewellery market to build and execute it. 

Building a lifestyle brand - Winning loyalty and repeat

Alright, quick question. Where does a nice, flawless necklace spend most of its time?

In Lockers. (Solitaire-y confinement 😁)

Funny, but there are 2 reasons behind it - Safety(of course!) and Fashion cycles. You might have bought your favorite design at the time of purchase but by the time it was your 5th occasion, the design has gone out of style. Now, you couldn’t go and buy every time either - the product-price range didn’t make sense. (poor necklace is doomed!)

Also, since the 2000s, there has been a rise in women in the workforce who want to wear their wins more often.

Acting on this insight, Mithun positioned his brand around bite-sized, affordable, and forever wearable jewellery. CaratLane strived to become a lifestyle brand, not a once in a 5-year brand. This meant, building for Modern India - people who buy jewellery for small occasions like birthdays, promotions, and Karva Chauth.

Weaving into the customer lifecycle

Over the years, CaratLane weaved itself into the customer lifecycle tightly - starting from engagement to 15-year anniversaries. In Mithun’s words. They partnered with different brands and launched special collections such as Peppa Pig, Doraemon, and Harry Potter which made sense for different parts of the customer's life cycle.

Sealing with Trust

Jewellery purchases are different. Unlike groceries, apparel, or electronics, it requires high amounts of trust in the brand, has high emotional value, and is very touch-and-feel driven.

Given these nuances, I’m going to divide this section into 3 sections: Building trust online, offline store expansion, and the Tata rebranding. 

How CaratLane built trust online

Convincing people to buy jewellery online is tough. In fact, lack of trust in why many marketplaces and D2C brands struggled to survive and why some who cracked it, do exceptionally well (think Airbnb). Let’s look at 3 tactics CaratLane used to build trust online.

Tactic 1: Reviews

Reviews, as expected, are the most common strategy for building trust. Today, they are table stakes for online shopping. Here’s Joe Gebbia(co-founder of Airbnb) talking about the power of reviews for Airbnb’s early success

Let’s look at reviews on CaratLane:

Reviews are the center stage of their app. Unlike other e-commerce apps, you could jump directly to reviews from the category navigation page. Once you are on a review, you see photos and videos of the product customers bought and which category the product is rated highly on such as design quality, fitment, and so on. 

CaratLane has a large ticket size and trust goes a long way in building. Therefore, they also nudge their shoppers to post their shopping images on their app and win points. (something I haven’t seen on other e-commerce companies in India)

Tactic 2: Providing a safety net

When it comes to jewellery shopping, the number one fear in Indian families is getting counterfeit products (that’s why there’s a trend of buying from family jewellers in India). This means it is an uphill battle for CaratLane to make people even try. 

CaratLane addressed this by providing two unique features on their website and app: 

a. Try at home: Pick your 5 favorite designs and try them out physically from your home. CaratLane was the first e-commerce website to build a try-at-home feature.

b. Live video calls: Take a closer look at your favorite designs over a video call with CaratLane consultants. 

Image of try at home and live view calls

Along with the above two, they also built confidence in their shoppers by offering free shipping,  lifetime exchange, a one-year warranty and 15-days money back guarantee.

Tactic 3: Creating a perception of quality

CaratLane builds a perception of quality by building a neat website and compelling product detail pages.

Let’s understand this with two visuals

Every product page has a variety of visuals comprising high-quality images, carousels, graphics, and videos. The Product descriptions include bullet points that highlight main features and offer easily digestible product specs like size and color. This is further augmented with social proof through customer reviews, including user-generated content (UGC).

Let’s look at their product page strategy detail below. I’m summarizing the broad takeaways in bullet points that you can use in your product pages also. 

1. Use high-quality feature images: Customers should be able to see the product from different angles to visualize the product. You would see this done really well (along with a video) on CaratLane

2. Create a descriptive product title: The product title is the first feature a user sees on the page. CaratLane keeps it clear and concise. For example: Ally cluster diamond ring and Halo medallion solitaire pendant

3. Use clear and prominent calls to action: CTA’s prioritize clarity and reduce the buying friction. CaratLane has bold, contrasting CTA’s well placed above the fold.

4. Provide accessible customer service: Every page is supported with Whatsapp, live or call support

5. Display clear return and shipping policies: A straightforward return policy demonstrates your confidence in the quality of your product. CaratLane clearly calls it out on their product pages. 

6. Provide product recommendations: Personalized product trends enhance discovery. CaratLane shows similar designs, and related products on its product page

7. Allow for easy comparison and customization: Easy customization features reduce friction. CaratLane’s customized feature allows you to choose the metal, diamond specification, and size with a side panel.

8. Highlight discounts and promotions: CaratLane highlights the discount by standard slashing the MRP along with a discount card. There’s also a discount pop-up that comes if you stay on a product page for long.

Okay, so we’ve seen how they're building trust online. Let’s go to the other two channels now.

Offline store expansion

Jewellery is a touch-and-feel category. Hence, CaratLane had been bullish on opening stores from the very beginning. 

CaratLane opened its first store in the posh locality of GK1, New Delhi. However, it failed terribly. Why? - because they made a digital store. You could see products on a screen but no real jewellery and diamonds at the store. This had put off its customers. Women wanted to touch and feel their jewellery.

So, before going on to the second store, they understood their customers more deeply. Mithun mirrored Uber’s city-capturing strategy, where you look at every city as clusters and gain insights into the demographics and psychographics of each area. 

Two of the core insights were to keep real products in the store and given the lower AOV, open stores where the footfall was high (not ultra posh localities like GK1). This is the reason CaratLane does not have a store in South Bombay even today. 

By 2012, CaratLane had 12 stores and was doing $16 million in revenue.

Tata Rebranding

Reflecting on CaratLane’s mission, Mithun said “Two years back, I put out a dream saying that I think we have the opportunity to be the world's largest direct-to-consumer jewellery business. And India has a birthright to win in jewellery. In the same way, India had the birthright in software services. Because everything we cut here, everything we do here, we merchandise from here as well also. But we don't capture the gross margin here because the brand is not with us. The brand is not with us; it goes outside.”

In 2016, Titan, a joint venture between the Tata Group and the Tamilnadu Industrial Development Corporation (TIDCO), first invested in CaratLane. Mithun’s ambitious dream got its turbo boost with Titan’s backing and patronage. CaratLane rebranded their company logo with the additional text “a Tanishq partnership”. Tanishq is known for the trust they ensued in the gold market in India (a story for another time) and the partnership echoed the trust in people for CaratLane.

9 years later, CaratLane became a 2 billion dollar company. How? 👇

How CaratLane grows today

While Titan gained a majority stake in CaratLane in 2016, buying out Tiger Global’s existing stake, they bought out Mithun’s remaining shares too in 2023.

CaratLane reported a total income of INR 754 Cr in the first quarter of the financial year 2024-25 (FY25), up nearly 18% from INR 639 Cr in the year-ago period. Their earnings before interest and tax (EBIT) jumped 8.5% year-on-year (YoY) to INR 38 Cr in the quarter ended June 2024. Their store count went to 275 spreading over 112 cities across India.

That’s impressive!

In this section, I’ll cover four ways CaratLane is fueling its growth today. Starting with product innovation where we take an example to discuss their product design thinking, we will move forward to omnichannel marketing strategy, exploring new demographics, and expanding to a different metal line, silver. We will go slightly deep on the first two and lightly touch the last two.

Strategy 1: Finding the niche with Karigari aka Craftsmanship

The language of jewellery is different for different people. Let’s take Mangalsutra, a product widely known across Indian communities, and see how CaratLane stands out on this.

The Mangalsutra is a very traditional necklace that a groom ties to the bride's neck and it typically has an old-fashioned design. Most young women don't like to wear it.

Since Mangalsutra has been an integral part of Indian communities, on traditional designs, top brands like Tanishq and Malabar Diamonds have a stronghold in Mangalsutras and it’s difficult for new brands like CaratLane to make its mark. So, what do they do?

They make modern Mangalsutras. Modern? What do you mean by that? 

Well, the tension between the bride and mother-in-law is all about the number of black beads in the mangalsutra (black beads are associated with repelling negative energies and evil spirits). CaratLane lowers the size of the beads so that technically there is still the same number of beads but now the jewellery is modern and lightweight - something the daughter-in-law would want to wear. 

Finding new niches where you can be competitive changes the game. This, coupled with innovation in jewellery designs and manufacturing, makes CaratLane a go-to store for both mother and daughter-in-law.

CaratLane launched 416 new designs in the last 1 year.

Strategy 2: Omnichannel marketing experience

86% of the shoppers today, regularly channel-hop across two channels before making a purchase. Combining desktop, mobile, or brick-and-mortar experience, CaratLane pursues a holistic approach - an omnichannel experience strategy to reach its customers.

Well, what is an omnichannel marketing strategy?

Omnichannel marketing is about connecting with customers on their terms, empowering them to engage with your brand seamlessly across all channels.

Omnichannel is a lead-nurturing and user engagement approach where users engage with products, offers, and the support services of a company on all channels, platforms, and devices. How does this help? -  It improves reach, customer experience, and loyalty. 

For example, Google is a champion for omni-channel experiences especially its browser — Google Chrome. When users are logged into their Google accounts, their history and activity are automatically synced into every device. Users can even access tabs on their phone app that they left open on their laptop.

Alright, so an omnichannel retail marketing strategy has three key ingredients: Convenience, Consistency, and Relevance. Let’s look at how CaratLane excels at these three.

1. Convenience

CaratLane pairs its online experience with an immersive in-person experience. Customers can browse online, shortlist what they like, find the nearest physical store where the design is available, and look at the products for real. If they are not sure about buying during the visit, they can return home, discuss it internally, and place the order online. 

What does this actually do?  It reduces friction between customers and salespeople since there is no pressure to make an in-store purchase. 

2. Consistency

Starting with the basics, CaratLane chooses its battle. Instead of doing everything everywhere, CaratLane selects social media channels where they post consistently and engage with their customers. If there’s a campaign, it is promoted across all channels: push notifications website, In-app, social media, and sms with similar yet channel-relevant visuals and design.

If you walk into a CaratLane store, you’ll see sales associates armed with tablets that give you real-time, up-to-date information. This not only aids them in showing you additional designs but also in making calls, connecting on Whatsapp, collecting payments, and placing online orders delivered directly to your home.

3. Relevance

The modern customers expect their experience to be highly localized and tailored to their preferences. CaratLane uses data analytics to recommend products based on a customer’s past purchases or browsing behavior. They also implement triggers that respond to specific customer actions. For example, when you browse through the webpages of the CaratLane website, the visitors who spend more time on product pages are shown the CTA of connecting with CaratLane’s customer service to enhance their shopping experience.

In short, both online and offline experiences mixed together, create a cohesive experience for customers, wherever they prefer to interact with the brand.

CaratLane also has an amazing scan feature which makes your gifts extraordinary. You can record personal video messages which open up when you scan the ring on the CaratLane app. So cool!

New demographics

CaratLane is extending its reach both geographically and demographically today.

On the geographic front, CaratLane has primarily focussed on larger towns so far but they are quickly expanding into smaller towns also. They have launched international shipping, for everyone to experience a little, beautiful piece of India, no matter their location. CaratLane is also eyeing to launch its jewellery line in the US this year.

On the demography front, they have largely operated in the 28-45 space. But now, they are exploring the early 20s and after the 60s also. As we covered in the omnichannel strategy above, these new demographics have their own nuances. For example, a grandmother would want to talk to someone in their native language (say Telugu). CaratLane is building its sales team with diversity to cater to these localization needs. 

Shining the silver

Since 2018, CaratLane has made its inroads into the silver market with a different business line called ‘Shaya’

India’s silver jewellery market is estimated to grow by 5.7% CAGR for the next 3 to 5 years. ‘Shaya’ offers jewellery handcrafted by artisans in Jaipur combining Indian heritage with modern aesthetics.

Shaya is positioned around affordable silver jewellery with a product range starting from as low as INR 1200 ($14). While the AOV is smaller, the larger goal here is to win the trust of this customer segment. There’s always the umbrella of CaratLane where they could upsell to these customers in the future.

With that, we wrap our dive on CaratLane. If you’re finding this newsletter valuable, feel free to share it with friends, and consider subscribing if you haven’t already.

PS: Other random, interesting highlights of my last week:

1. An ad I laughed a lot on: here

2. A thought I thoroughly discussed with my wife and office colleagues: What are the things we’re thankful we don’t have and don’t want?

3. A post that made me think twice: here

See you next time!