The handmade's tale: Etsy crafts strategy to fortify presence in India

Etsy, the Nasdaq-listed e-commerce company that deals primarily in art and handicraft, is reinforcing its presence in India.

The online crafts marketplace is here to strengthen an outward-looking seller base. It is finding sellers to sell art and handicraft to international buyers.

“We see an opportunity to mobilise (a) large number of micro-entrepreneurs who can offer unique products to the Etsy community,” said Himanshu Wardhan, managing director, Etsy India. 

He said the company planned to tap into “creative entrepreneurs in India”. 

The online retailer is exploring small home-based sellers as well one- or two-person studios.

In concept this works. But working with smaller sellers means establishing prices, unlike machine-manufacturing, which has a supply chain cost, and shipping and profit margins.

Art is valued according to the seller when it isn’t auctioned. Add to that the problem of fakes that almost all e-commerce companies in India have to work very hard to battle.

“We have a very strong trust and integrity team that monitors all the shops being created. This team is centralised and based in the US. They have enough checks in place to assess if a shop is genuine or not,” Wardhan said.

But he did not say how that prevented an obscure artist from copying another, especially in India, where traditional art is based primarily around themes and visualisations of historical and mythological texts.

Etsy is vague on this. It also leaves pricing to market demand, a potential stumbling block when it comes to India. Another challenge that faces Etsy is shipping. 

“In the past, sellers have worked with the likes of India Post, DHL, FedEx, and others. We offer recommendations to sellers on partners that they could work with,” said Wardhan. 

It is important to compare Etsy to eBay. When eBay first came to India, apart from shipping fakes, sellers used to cut corners on shipping. 

It meant the product would reach the customer damaged. Etsy hasn’t solved that problem yet. Returns will create further complications because it is extremely expensive for sellers, especially when you factor in the cost of shipping a damaged product back from overseas.

Not unlike eBay, once a strong seller base is established, Etsy plans to open India-facing operations as well. 

The company doesn’t give details on when they will launch here. But Wardhan said the country was a unique market and planned to adapt itself to Indian conditions when it came to payment and shipping.

Wardhan did not give details as to how it would solve shipping problems. Over the past six years, Indian customers have been trained by the likes of Amazon and Flipkart to expect a level of service and swiftness in terms of delivery. For Etsy, customer satisfaction is going to be the biggest challenge. Wardhan said when it came to art, its customers would be ready to wait.  What Etsy hopes will fall into place is that unlike eBay, it will not have trouble attracting customers. 

E-commerce is made easier by the big online majors in India, which have created a habit. Etsy has to tap into the top 10 per cent of the online shopping audience, which is ready to spend thousands on buying art or handicraft that may be difficult to find. But it also brings with it its own challenge. 

Indians still not do not buy anything except phones and TVs without looking at them. To battle it, online furniture retailers have been forced to open physical stores. Even the Nexus Venture Partners-backed Craftsvilla, which is as close to Etsy’s model as possible, had to open a store, though it struggled with that as well. 

Etsy, however, won’t go down that path. “The core global marketplace model will remain the same,” said Wardhan.

The handmade's tale

Market capitalisation: $8 bn

Total operating expenses: $114 mn

 Revenue: $200 mn

Adjusted earnings before interest, tax, depreciation, and amortisation: $51 mn

All numbers are for Q4 2018

Source: Nasdaq