Ratan Tata-backed online jewellery start-up BlueStone.com, which had notched up 50 per cent market share in 2015 and since then slipped into the red, is planning a comeback with an IPO lined up in two-three years and a $50-million pre-IPO fund-raise next year.

In the last two quarters, BlueStone has posted good profits and is on track to exit the fiscal with a ₹500-crore revenue run rate, posting ₹10-15 crore in profits, a top executive told BusinessLine .

The nine-year-old start-up is still far from achieving ₹1,000-crore revenue run rate, a target it had set for itself in FY16. It now faces stiff competition from CaratLane.com, a subsidiary of Titan Company Ltd, which posted ₹622-crore revenue last fiscal and has 104 stores pan-India. BlueStone offers 10,000 designs in 14-, 18- and 22-carat gold, at prices starting from ₹5,000-10 lakh, delivering in 5-7 days.

“In FY17, we were at a ₹200-250-crore revenue run rate. The cost of achieving that revenue was very high — the cost of the sales team, cost of marketing, especially, the ‘Try at Home’ service which we had rolled out to achieve that revenue, resulted in losses rising to an all-time high of ₹97 crore,” said Gaurav Singh Kushwaha, founder CEO, BlueStone.com.

“We were then forced to rationalise our workforce and lay off people at the top and middle management levels, review and revise some of the calls taken by the top management, cut costs drastically and shift our focus from topline to bottomline growth” he added. All these measures reduced its losses from ₹60 crore in FY18 to ₹40 crore in FY19 and ₹20 crore in FY20.

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Omnichannel strategy

Stating that the start-up also rationalised its growth strategy, Kushwaha said “Rather than trying to push for additional growth in online sales which required huge marketing spend to achieve, I clearly sensed a growth opportunity in adopting an omnichannel business model. Our customers were also asking for it. After browsing through thousands of designs, they wanted to touch and feel it, before buying.”

“For every one customer who was buying online on BlueStone, our survey revealed that there were five others who would have bought from the comfort of a store. Customers buy from BlueStone for our unique designs and not for the convenience or price,” he added.

BlueStone opened its first store in Pacific Mall in Delhi in 2018 followed by five more across Mumbai, Hyderabad and Chandigarh. Sales boomed, and so the start-up aggressively started opening 1,000-1,500 sq ft stores on high streets and 600-800 sq ft stores in malls, all franchisee-owned and company-operated stores with no capex.

“Every store that we open is adding ₹1 crore to our bottomline per annum. Wherever I open new stores I see revenue from that catchment go up five-six times. We had 19 stores in March, are now at 30 stores in 8 cities and will exit this fiscal with 40 stores” said Kushwaha.

The average selling price in stores is ₹42,000 compared to ₹35,000 from online sales.

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Pre-IPO fund-raise

The start-up plans to file for an IPO two-three years down the line and is planning a $50-million pre-IPO fund raise next year, said Kushwaha. Its last major fund raise of ₹200 crore in Series D led by IIFL and Accel Partners along with Kalaari Capital, RB Investments and IvyCap Ventures was closed in July 2016.

In the last two years, the start-up raised ₹70 crore from existing and new investors for its offline expansion, taking the total amount raised to $70.1 million to date.