How Artisangilt.com is taking on Craftsvilla & Craftshopindia in the online handicrafts segment

Mumbai-based online handicraft venture ArtisanGilt.com started off as an inventory-led player. But its promoters Rahul Garg, Priyesh Neema, Megha Agarwal and Anurag Neema quickly learned that this was not a viable business model, hence the startup converted into an online managed marketplace.

"The products are non-standard, non-branded designer and hence we have a consolidated supply chain with a managed marketplace model for quality control measures. There are about 50 suppliers and our representatives work from most of their (the suppliers) offices to manage inventory and fulfilment. In certain cases, our system is also integrated with the suppliers to ensure good service. We charge a commission of 35 per cent from them," said Garg.

ArtisanGilt claims to be offering 60,000 SKUs (adding around 12,000 new ones every month) across categories like home & living, saris, and accessories. It further claims to have completed 4,000 orders with a GMV of Rs 75 lakh till date. According to the company, its annualised run rate will be Rs 2 crore even as it clocked sales of Rs 14 lakh last month.

"The average size of transaction per order in India is Rs 1,800, while it's Rs 5,000 in the international market," said Garg. The company had recently started selling in the international market and claims to have served about 200 customers. It has integrated its system with FedEx to deliver products across the world.

Another leading player in the space Craftsvilla follows a pure marketplace model with over 3,000 suppliers and 1.8 lakh products. Craftshopindia.com also builds e-stores for suppliers & manufacturers of handicraft and the sellers are expected to take care of the logistics. The Ahmedabad-based startup claims that the site has about 30,000 products from 300 sellers.

While we could not ascertain the orders served by Craftsvilla, Craftshopindia has done about 350 orders since September last year.

ArtisanGilt was started with the idea to provide Indian artisans a real dynamic, new age market, while giving end customers a chance to purchase unique art forms that were otherwise not easily available. The co-founders started the site in 2013 with a seed capital of about $200,000.

"We often attended several exhibitions and realised that there were no consolidated price range for the products. The handicraft industry is worth Rs 10,000 crore in India and Rs 600,000 crore globally. The ethnic wear and fashion jewellery is worth Rs 100,000 crore in India, and Rs 300,000 crore globally," said Garg.

According to Ajeet Khurana, an angel investor and mentor to e-commerce startups, apart from providing specialised products (like handicraft in this case), the platform must be more suitable for selling these products through better presentation. Also, if any one of the horizontal players starts focusing on this category, the startup will need to work hard on creating differentiators to stand out.

"Handicraft is not a standardised good, so the element of experience of holding the product is more. Also, these are not branded goods that have very reputed manufacturers. So when they scale up there will always be issues of managing and maintaining quality," mentioned Khurana.

In the past, Khurana has experienced that a leading e-commerce player sold exotic handicraft from silk route but did not manage to do well. However, it managed to sell handsome goods through other horizontal players. But it is not possible to build a brand in this manner as it would mean that the seller itself has no selling power.

"The startup needs to come up with a way for creating deeper penetration in Indian market since Indians have demonstrated tendency to buy handicraft," said Khurana.

On the international customer's front, Khurana pointed out that handicraft is a novelty item for most foreigners. "However, if you are a small time online seller in India, with close to zero marketing budgets, you will find that with some social media effort you can get international orders. E-commerce is a great leveller; cross border e-commerce all the more so," he further added.