Indians buying gold for as little as 2 cents online

Buyers get physical delivery of the metal only after they have paid enough for 1g of gold, currently worth about 3,200 rupees.
Buyers get physical delivery of the metal only after they have paid enough for 1g of gold, currently worth about 3,200 rupees.PHOTO: REUTERS

NEW DELHI • Indians are buying gold for as little as one rupee (2 Singapore cents) as retailers offer online sales in bite-sized portions to prop up shrinking demand in the world's second-biggest consumer.

Demand for gold is falling, partly as a result of government measures, higher local prices and the metal's fading appeal among more youthful customers. That is forcing jewellers to adapt online purchases to appeal to a more Internet-savvy younger population.

"A lot of people have been buying at one rupee," according to Mr Gaurav Mathur, managing director of digital platform SafeGold, which has partnered payment apps such as Flipkart Online Services' PhonePe. "It's a low-risk way to try the product."

Buyers get physical delivery of the metal only after they have paid enough for 1g of gold, currently worth about 3,200 rupees.

The low barrier of entry, compared with a minimum purchase of 1g in the traditional market, and faster transactions, which can be done by phone in about 40 seconds, are the biggest lures for the product, Mr Mathur said.

Since its launch last year, about three million people have already transacted on the platform and the company, which counts the World Gold Council as one of its investors, is targeting to raise this to 15 million by next year, he added.

India's most popular digital payments service, Paytm, said it has sold more than 2,235kg of gold online to 19 million customers since introducing the service in April last year.

Demand for the yellow metal last year fell by about 23 per cent from a peak of 1 million kg in 2010. Meanwhile, benchmark gold futures in Mumbai are set to post a third year of annual gains this year aided by a weaker rupee, which fell to a record low earlier this year.

The market is still small compared with the country's overall consumption of gold, which stood at 532,384kg in the nine months ended September.

Demand for the yellow metal last year fell by about 23 per cent from a peak of 1 million kg in 2010. Meanwhile, benchmark gold futures in Mumbai are set to post a third year of annual gains this year aided by a weaker rupee, which fell to a record low earlier this year.

Platforms offered by SafeGold, Augmont Gold and Paytm, backed by China's Alibaba and Mr Warren Buffett's Berkshire Hathaway, are trying to make inroads into a market dominated by traditional retail stores and chains.

Young buyers now prefer shopping for gold on e-commerce sites and apps rather than going to the store, said Augmont.

"With the way the e-commerce market was shaping, we realised that digital technology will soon be the future of gold buying," said Mr Sachin Kothari, director at Augmont.

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A version of this article appeared in the print edition of The Straits Times on December 20, 2018, with the headline 'Indians buying gold for as little as 2 cents online'. Print Edition | Subscribe