Handicraft e-store bags $18M to help global audience discover Indian ethnicity

India is known for its community of artisans who make lovely traditional art and handicraft items. Craftsvilla, an online marketplace that connects these local artisans with the world, today announced it raised US$18 million in series B funding led by Sequoia Capital. The company earlier raised an undisclosed amount from Nexus Venture Partners, Lightspeed Venture Partners, and GFC, who also participated in this round.

Like Etsy, which is now looking to go public and raise roughly US$300 million, Craftsvilla users can buy handmade items directly on its website. Apart from directly selling to consumers, Craftsvilla also uses an online wholesale model where products are sold in bulk at retail discounts.

The fresh infusion of funds will be used for marketing and scaling the platform as it aims to become a destination for ethnic products globally. The four-year-old startup claims to have 2 million products across categories like clothing, handicrafts, jewellery, and art from 12,000 artisans. It facilitates 100,000 transactions per month.

“We are aspiring to be 10-times our current size by the end of this year, with 20 million products on our platform,” says Monica Gupta, co-founder of Craftsvilla. She did not reveal Craftsvilla’s gross merchandise volume but claims to be profitable, which is rare among Indian ecommerce firms. In fact, even Etsy hasn’t turned a profit to date, recording a loss of US$15 million last year.

Though the company is now growing rapidly, initial adoption was slow. Handicraft products are not branded goods that have reputed manufacturers, and so scaling up means challenges in managing and maintaining quality. The startup did not see much early investor interest, either.

“Craftsvilla has been growing rapidly below the radar, and has now become the leading ecommerce marketplace for ethnic products in India. However, the founding team bootstrapped the company for several years after facing a prolonged period of slow adoption of ethnic products in e-commerce in the early years,” says Shailendra Singh, managing director of Sequoia Capital.

Tapping unorganized market

“Craftsvilla has brought the traditionally disorganized ethnic craft industry on to a structured platform and has enabled micro-entrepreneurship at a scale heresofar not seen in this sector,” says Sandeep Singhal, managing director, Nexus Capital. “With companies like Craftsvilla, customers gain access to well designed, high quality products at reasonable prices and craftspeople get fair prices by removing intermediaries.”

With increasing global travel, cultural integration, and the desire for bespoke design, many such platforms have emerged across the country. ArtisanGilt is another player in the space which initially had an inventory-led model and later converted into a managed marketplace. Craftshopindia has built a similar e-store but sources its products mostly from suppliers and not indpendent artisans. Unlike other players, Craftshopindia does not take the onus of logistics.

Horizontal ecommerce players like Flipkart, Amazon, and Snapdeal also sell ethnic products, but none of them have gone so far as to create a separate category for them.

Indians have demonstrated a tendency to buy handicraft (thanks to soap operas) while foreigners buy them as novelty items. For companies like Craftsvilla, which have global delivery capability, ecommerce is a great leveler.