Kela's changes aim to make a sparkle

Kela has taken the important step this year of moving its headquarters from Beijing to Shenzhen, placing itself closer to its major investor Tencent Holding Ltd, one of China's three leading Internet companies.

Two hundred of Kela's 800 employees have moved to Shenzhen. The other employees are mostly sales representatives working in the brick-and-mortar stores all over the country.

Cao described Tencent as a "gold mine". In 2011, Kela was awarded strategic investment of more than $50 million from Tencent. Kela used this capital to develop China's most advanced express supply chain and embarked on the international purchase of diamond reserves.

Kela also benefits from Tencent's popular social media service WeChat, which targets professional users with a high level of purchasing power.

"The three leading Internet companies, search engine provider Baidu Inc, e-commerce company Alibaba Group and Tencent, are definitely dominating the Chinese Internet world that it is impossible for smaller companies to evade them," said Cao. "A few years ago, smaller Internet companies might have chances to work as an individual B2C company. But now, there is little chance for such company to live on its own."

Founded in 2007, Kela won the first round of $3 million investment in 2008, and in May last year, it set up 43 brick-and-mortar stores in 34 Chinese cities, as well as becoming China's largest online jewelry retailer.

"The combination of online and offline sales naturally suits the jewelry industry," said Cao, who spent the previous six years at global e-commerce company Amazon Inc.

The price of a single piece of jewelry is quite high, Cao said. An individual can only pay a daily limit of 500 yuan to 2,000 yuan by credit card at present. In this sense, the payment of jewelries cannot be completed online, he added.

"More important, customers can really experience the services and see the products in stores. Offline sales will also increase the orders and even the customers' budget as sales representatives have the skills to raise customers' expectations," said Cao.

Online sales contribute 20 percent to Kela's annual sales, which is in line with the company's plan. But the Internet plays a more important role in winning customers. "We hope that up to 65 percent of the customers are from the Internet and even 80 percent in the future," said Cao.

He acknowledged the effect the Internet has had on the marketing of jewelry. In the past, jewelry companies worked more with wedding gown shops but now they put more effort into the Internet, he said.

When entered China, it chose products such as books and videos that can be easily stored and delivered. But as e-commerce has developed, the product portfolio has been expanded and even cars are sold online.

"But that does not necessarily mean the decline of brick-and-mortar stores," Cao said. "With more service products sold online nowadays, we have also seen the rise of O2O (online to offline)."

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