Purchases at shops have plunged 30%
As more people are inclined to buy gold online, gold-shop owners in Bengaluru have seen their sales drop over the past 12 months. The shop owners say the trend increased during the pandemic.
Over the past five years, online gold purchases have increased by 50 per cent, Vikas Singh, MD & CEO, MMTC-PAMP, said in an interview.
Sampath Sunkara, owner of Laxmi Gold and Silver Ornaments, informed The Observer: “Our sales have dipped by 30 per cent since the pandemic and we are not able to reach our previous sales. Investing in online platforms for purchasing gold became popular among people. But what about the safety and quality of the gold? We can also provide gold in the quantity the customers want. We can give them the trust they need.”
Ningachar H, owner of MHN Jewellers and Works, shared: “We have been in the gold business for the past 15 years. People are now buying gold online which I’m not able to understand. Some of our customers ask numerous questions before purchasing gold but then they trust the online platforms more.”
According to data published by the World Gold Council (WGC), the online gold market in India is in its nascent stage, accounting for just 1 to 2 per cent of overall gold sales. In the third quarter of 2019, only 17 per cent of urban gold jewellery purchases and 3 per cent of such purchases were made online.
People say purchasing digital gold is simpler than purchasing gold from physical stores. It can be bought on PhonePe, Jar and other online platforms.
Dhanush S, a CA student, said: “Digital gold purchase is a lot easier compared to physical gold. We enjoy a lot of perks like no interest rates and no wastage charges. I can sell the gold at the price it costs that day.”
NVIDIA architect Athya Vinod Kumar said: “Online gold purchases give me more options than physical gold. I used to buy gold coins using the Reliance app. It’s easier for me to sell or to purchase by not stepping out.”
Online platforms have begun to adopt methods that will make it easier to buy gold.
Yashwant S, a product manager at a fintech startup, said: “General people are found mostly investing in digital gold. Digital technology has played a crucial role. Over the years, people who invested in digital gold have increased. We are thinking of launching a new product based on online gold platforms.”
Experts say digitalisation offers many advantages which is one of the reasons for the increase in digital gold purchases.
Nakula Reddy, a retired head of the department of economics at Osmania University, shared: “E-gold purchases definitely influence gold purchases in shops. It is something like purchasing goods from Amazon or Flipkart. Whatever the quantity or the number of units of goods we order and buy through Amazon, to that extent the purchases from shops (face-to- face bargain and purchases) will go down. The same logic applies to gold or any other commodity.
Sometimes in e-purchases, suppliers do not add taxes, particularly GST. Therefore, customers may get the commodity cheaper than at shops.
According to the World Gold Council, people in the 18-45 age group account for 70-80 per cent of online purchases for digital gold, while those over 45 account for 20-30 per cent. Industry discussions reveal that gold bars and coins are popular during the Akshaya Tritiya and Dhanteras festivals.