Indian company Vaibhav Global dresses up middle-class Americans

It is now being spoken of as one of the world's few profitable online discount jewellery and lifestyle accessory retailers

Jaipur-based Vaibhav Global Ltd (VGL), an electronic retailer of affordable fashion jewellery, watches, bags, homedecor etc, in the US, Canada, UK and Ireland, is eyeing to grow 20 per cent year on year for the next three years, banking on the demand from the middle class consumers in these countries. The company claims that it maintains an average price point of $18-20 per piece for its products, thus generating volumes.

VGL is listed in India with a current turnover of Rs 1,376 crore and a profit after tax of about Rs 103 crore in FY15. According to Hemant Sultania, the group chief financial officer, VGL, the company enjoys a gross margin of 60 per cent. It has a manufacturing unit in Jaipur, which makes 300,000 pieces of jewellery per month, and the company is investing about $3 million to expand capacity up to 500,000 units per month.

While Jaipur accounts for nearly 50 per cent of its production, the remaining is sourced from south Asian destinations like China, Bali and Bangkok. Sultania said, "Nearly 75 per cent of our goods are sold through television channels, while the remaining is through the internet. In the US, the fashion jewellery and fashion accessories market is estimated to be around $2 billion, and we have only scratched the surface. We currently sell products worth $250-260 million, roughly one per cent of the market," he explained.

 

VGL, which was incorporated in 1982 and went public around 1995, decided to rework its strategy around 2010 and decided to bring down the price points of its products to an average of $18-20 per piece as compared to an average price of $100 per piece, after the 2008-09 global meltdown which eroded the buying power of its consumers in the US significantly.

Currently, nearly 70 per cent of its revenues come from the US, and the remaining from UK. It covers around 100 million households in the US and around 23 million households in the UK. VGL is also evaluating entry into a market like Korea, Japan or Germany in another four years time. Sultania says, “These are mature markets for television sales, and we are evaluating options. As for India, there are no immediate plans as the market is not yet mature for television sales model. We will review it after another four to five years.”