The FINANCIAL — Two young Georgians launched an online jewellery shop – geojewellery.com, investing just 1,000 GEL initially which has reached 60,000 GEL turnover in eight months.
The FINANCIAL — Two young Georgians launched an online jewellery shop – geojewellery.com, investing just 1,000 GEL initially which has reached 60,000 GEL turnover in eight months.
“At first it was simple to start up, as we were already experienced in this field,” George Abuladze, one of the founders of Geojewellery says.
Natalia was working in the plastic cards division at Cartu Bank and I was creating websites. We managed to complete all the preparation works for the internet shop in one week. We ordered products from abroad and invested the main part of our money in buying products. At the beginning when we were discussing which other businesses to potentially start up, we found that all others needed a larger sum of investments. An online shop was the most favourable option for us,” Abuladze says.
“At first George thought of selling only enamel jewellery products but then we decided to import and sell a range of various sorts of jewellery. In Georgia online shopping is not a very common or well-known practise. Accordingly we tried to create a website that could be navigated by the simplest means possible,” Natalia Khizanishvili says.
“When we made our first international jewellery order, we were still being cautious and waiting to see how successful our venture would turn out to be, but from the very beginning we saw high demand for our service. We are distributing products with the help of DHL. We do not want to occupy the segment of online customers only, that is why we have decided to open an actual shop. Most of our orders are for gifts, and are made by the segment of the working population that is too busy to go out shopping during the week and so is ordering straight from the office.
Males occupy about 70% of our customers. Several months ago, there was a competition – Racha My Love – and we had an order for the special prize for the winner, a handmade key out of enamel. Therefore we have managed to attract not only individuals but also corporate customers. We prepare about 20 items a week in general,” Abuladze says.
Abuladze notes that registering the company cost 250 GEL. The sum included all relevant juridical processes.
“Creating a website does not require a serious education in programming, and thus does not require a great deal of money. It takes about 300-400 GEL. We paid a solid sum for the logo and now we are thinking of rebranding. It is 8 months that we have been operating on the market and we are now thinking of offering something different, perhaps a jewellery line by a professional designer,” he says.
“We were mostly oriented on females and are now thinking of focusing on males. We are thinking of offering different accessories. We also want to add silver products to our range. We are currently offering customers jewellery lines that are not widespread in Georgia. Most of the jewellery available to Georgians on the local market is of standard style and design. We are offering something different; more modern products,” Khizanishvili declares.
“People should not have the illusion that a business like ours is considerably lucrative. We were overwhelmed by the first stage of our work and have only just started to really benefit from our business. We are still not putting all the money in to our pockets. We have instead reinvested the money earned back into our business. My advice to other people starting their own business is to continue to reinvest their money throughout the first year, that will help them to get more profit in the future,” Abuladze states.
“On New Year’s Eve we received lots of corporate orders for arranging presents for various companies. We can say that this business has proved successful. The corporate orders that we received recently seriously increased our profit. Usually when a person starts a business other fields appear which can be incorporated to bring additional benefit to the company. We are constantly thinking of new services to offer our customers,” Khizanishvili says.
Khizanishvili notes that the main advantage of geojewelry is its cheaper prices. The average price in their shop is 20-30 GEL for an item of bijoux. As for enamel, the price is higher because of the individual work put in to each piece. The price varies around 70-80 GEL.
“By offering low prices we want to encourage those naturally-cautious buyers that are afraid to make an online transaction, and risk losing their money. After their first transaction came through alright they would be more likely to make a second, more expensive purchase. Many Georgians are used to online shopping from international websites. The most popular among them being Victoria’s Secret (VS). Actually, I would say that VS has done a good job of further popularizing online shopping in Georgia. VS is a high-class international brand with a positive image, which is why customers were not afraid to order from them. We have competitive prices, even compared with international online shops,” Abuladze says.
Geojewelry has its own page on facebook.
“We are mostly doing online advertising. However after we increase our market share we plan to launch a more active advertising campaign,” Khizanishvili notes. She adds that in this field online ads are more productive, as online users are considered their main potential customers.
The entrepreneurs plan to open a shop and occupy not only online customers. However in their online shop they state lower prices, even up to 5% in order to encourage online customers. “An online shop generally costs less,” Abuladze notes.
“In my view, further development of online shopping in Georgia will take time. In 2009 the number of internet users doubled. We are optimistic that in 2010 this number will increase again. The problem with online shopping is that a lot of customers are not used to paying by card. Perhaps up to 60-70% of Georgians have plastic cards but prefer to withdraw their cash as soon as possible. The main segment of our customers varies from 18-40 year olds. In our prognoses, the number of online customers will sharply rise in 1 to 1.5 years time,” Abuladze says.
Abuladze advises small business starters to choose products for online shops that are as unproblematic as possible.
“Selling perfume is a good idea. Most customers know which perfume they want so it would not be difficult to sell it to them online especially if the prices are competitive,” he declares.
Khizanishvili sees a free niche in online shops delivering national souvenirs abroad. “You can find souvenir shops in Tbilisi but they do not have any online service,” she says.
“There is currently a big problem connected with product delivery services. I was negotiating with the Georgian Post and they are offering competitive tariffs, but the service is not well established. Foreign buyers tend to be capricious and can easily return a transaction if they don’t receive it in time,” Khizanishvili says.
“Our advice for starters is to get business experience from the local market and only after that start thinking about occupying foreign markets,” Abuladze suggests.
“When planning to create an online shop the main issue is to offer customers such a service that is not widely available on the streets. For example consumer electronics shops that are available on the internet are not very popular as it is not difficult for customers to find them in actual shops throughout the city. Furthermore until their decision to actually buy a product of significant cost (like, say, a washing machine) they prefer to browse and become acquainted with the details of the product,” says David Zgudadze, Head of the e-Commerce Division of Cartu Bank.
Zgudadze underlines the website usa2georgia, which offers the delivery of parcels from the USA and other services, as being the most popular among Georgians. He says that this website is well-suited to the particular segment which frequently orders products from abroad.
“There also already exists an online shop – marketi.ge. One organization was dealing with one of the largest supermarkets in Georgia, Megalain, and launched an online version of the shop. This is very handy as customers can order any type of product without leaving their offices,” Zgudadze states.
Zgudadze believes that customers can easily start up a business with just small investments. “For example they they can simply deal with an organization or company and become the online representatives of their service. They can make software solutions with minimal expenses, for example 1,000 GEL. Such shops offer discounts when buying goods in wholesale and can get some benefit from that,” he says.
“Good business planning and presentation in order to attract the representatives of huge companies is most important for beginners,” Zgudadze claims. “They might not get much profit from the very beginning of their business but an unemployed person will have the chance to at least make something and receive a certain level of income,” he says.
“Most online customers are looking for a product that is not easily accessible elsewhere. The main issue is to offer products for cheaper prices, compared to their store counterparts. To encourage customers to order a product from your online shop, you should offer them something attractive, either by price or exclusive service,” Zgudadze states.
“If we discuss the example of online flower shops, they have become popular and in demand as the main niche of its customers are foreigners. People can easily arrange a gift bouquet for a relative or friend, even from abroad, and so ordering them online is the best solution. For that reason this is the main direction that we advise beginners to choose. Especially since entering the market is so simple,” he says.
Zgudadze notes that the main risk for entrepreneurs in online business is not reaching their potential customers. “We are informing our partners about normative activities connected with plastic cards payment. For this we plan to arrange a workshop and explain in more detail the specifications of online business.”
“The main mistake made by already existing online businesses is that entrepreneurs do not know that they can start a business with fewer finances. For example they can rent a shop and not buy it, whilst they try their hand at actually running the business. There is no need to invest several thousand in an online shop. At first it is better to wait until the business shows some success. Another issue is that like in any other business entrepreneurs should foresee the risks. If a customer has more finances he/she can make a diversified portfolio and try different businesses. But if you have a limited sum of investments it would be better to get consultations and plan everything out carefully,” Zgudadze says.
“Currently the most popular online shops are flower and other gift shops. It should be taken into account that Georgian customers are not buying foreign products from Georgian websites. It is easy to compare prices and no one is going to pay for the difference.”
“If a business starter wants to succeed in online business, they should first of all offer lower prices. The products should be considered affordable by customers from the middle classes. It is also advisable to reinvest their first lump of profit in the business. All you have to do is compete with others’ prices or offer a unique service,” Zgudadze declares.
Nino Margania started importing toys from Dubai – 5 years ago. She started her business with 15,000 USD. Currently her annual turnover reaches 300,000 USD.
“I was a journalist and never imagined that I would be involved in business one day. Initially, I was unfamiliar with many things in business, but presently I am satisfied with the results I have achieved. I am supplying shops and different markets with imported products. I would say that this business is profitable. When starting any type of business you are never sure if it will work. From my own experience I would say that to succeed in any business it is important to be a hard worker and to plan everything well. I still remember the sleepless nights I spent worrying about my business. When I was taking risky steps in my business, I was always keeping some resources back to be able to start a new business if that one failed,” Margania says.
Margania notes that the competition in this business is strong. However she managed to gain her partners’ trust and they are therefore loyal to her. “I keep very close relations even with my foreign partners,” she says.
“Previously I had to leave for Dubai frequently but now I do not need to, as the relations between my partners and I have become trustful enough for me to order the goods online and complete transactions from here.”
Margania was 24 when she first started her business. She has been working since she was 16. In her own words, she is a person that cannot rest without work for even a day.
“Before starting my own business, I was working as a newspaper journalist 7 days a week, then on TV. I published my own magazine when I was 17, but could not continue its publishing as I got married at the time. Later I worked at construction company Libo, as PR Manager,” Margania recalls.
Margania says that the recession has not affected her business. “I just had to stop for a while during the Russo-Georgian war when everything was paralyzed. If it were not for the war, the recession would not have affected me at all. At the very time when Poti was being bombed, I was actually expecting the arrival of two containers there. My foreign partners offered to return the ordered goods but I insisted the order continue. I remained optimistic that everything would be over soon,” she recalls.
“I stopped my cargo in Romania. I had to pay a fine but I got it and that was most important for me. Everyone called me mad. In the middle of September when everything else was paralyzed I received my cargo. So even the war did not manage to stop me. I was not importing toys in the same volume as previously, but the reduction in sales was soon reversed.”
Margania received a credit line in the volume of 50,000 USD from ProCredit Bank during the war. “It was at a time when almost everything was frozen. And I got a loan for the purpose of enhancing my capital. For three years before that I had been with another bank but they refused to finance me,” she reveals.
“During the conflict with Russia, ProCredit Bank continued normal business conduct and the financing of all stable businesses. Margania’s business had no direct risks as this client had business relations with foreign suppliers who were not affected by the conflict. Moreover, the target of the loan, as well as her business objectives, were very clear,” Nugzar Ramishvili, Corporate Banker of ProCredit Bank, told The FINANCIAL.
As of December 31, 2009, the volume of the credit portfolio of ProCredit Bank was 531,411,847 GEL.
Margania says that in any business field, it is necessary to be a hard worker and to love your job. “Later on when you have gained experience in the field you can listen to your intuition on how to act,” she says.
“Actually toys are something that remain in demand despite recession or wartime. Parents might not be buying such expensive toys as they did previously, but they are still buying them.”
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