Rocket Internet has been known for its aggressive go to the market strategies. However, there seems to have been a setback with one of its investments in India. While the German conglomerate continues to back its e-commerce company Jabong, it has decided to pull the plug on 21Diamonds – a Do It Yourself (DIY) online jewellery store, according to a report.
This development was reported by iamwire. To confirm the shutdown, NextBigWhat spoke to Richa Bansal, co-founder and CEO 21Diamonds, but she refused to confirm the development.
Currently, the Gurgaon headquartered company appears to have stopped facilitating payment process on its website. We tried to reach to the payment gateway page to complete the buying process but it wouldn’t complete. The customer support wouldn’t answer any calls.
Launched almost a year ago, 21Diamonds enables users to choose the design, stone and the metal.
The domestic gems and jewellery market is roughly Rs 1.2 lakh crore in size. Out of this, under 1% is sold online, according to a study by PwC. A major chunk of online sales comprises of imitation jewellery. Players in real (carved out of gold, diamond and silver) jewellery segment like Bluestone and Caratlane have been showing 100% growth year on year.
So Why would Rocket Internet Kill 21Diamonds?
We have written in the past on how all the ventures floated by the group in India don’t get same budget as Jabong. The lack of fresh funds from the group could be a driving force behind the shutdown. Given that many of the ecommerce companies in India are on life support and are struggling to raise new funds, the decision to shut down 21Diamonds could be a step to minimize the burn rate of Rocket Internet in India. However, it goes against the grain that the company is choosing to shut a category which promises significant opportunities.
Before launching Jabong, the group had floated Asasa.com, an online shoe store, but it had killed the webstore within three months, probably after sensing slim opportunities and crowded online shoe market. In addition, to consolidate its portfolio companies last year, the group merged Heavenandhome with Fabfurnish. Both companies dealt in the same category – home and furnishing.
If you look at shutdowns and consolidation in the Indian ecommerce sector for the last 10-20 months, until now, relatively small players such as SeventyMM and Koolkart have succumbed to the gloomy financing situation. This is a first in that sense.
Comparing existing players in the online jewellery space on Alexa suggest that 21Diamonds has been lagging behind, and its reach been dropping consistently over the past three months.
Are the ecommerce biggies feeling the heat?
These decisions appear to be well calculated as the ventures may not have justified investments. Earlier this month, Flipkart pulled out of the digital music business. Ecommerce space in India is getting tougher with every passing day, and big players are looking to consolidate their energy, $$s and focus on core business.
What are your thoughts?