Ethic wear e-commerce company Craftsvilla up for acquisition

Key Highlights

Traditional wear e-commerce start-up Craftsvilla is reportedly looking for buyers. The company which is based in Mumbai is eyeing domestic physical retail giants for the same.

It was reported that the founders of Craftsvilla were in talks with Snapdeal for an acquisition but the e-commerce giant is not likely to be interested in the deal.

The reason for this lack of interest is the fundamental mechanism of the company which designs, delivers and trades all by itself.It will be difficult to accommodate this mechanism into wider e-commerce marketplaces.

Traditional wear e-commerce start-up Craftsvilla is reportedly looking for buyers. The company which is based in Mumbai is eyeing domestic physical retail giants for the same. This deal could be valued at $200 million.  The company has been swimming in troubling waters for a long time. There is no new funding incoming and the losses are mounting up as the days pass. Thus it makes perfect sense that the startup is looking for potential buyers.

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Manoj Gupta who is the founder of Craftsvilla said that the company’s co-retailing model and omni-channel stack might be of interest to large offline retailers and thus they are in talks with such firms. They hope to gain more customers by getting attached to a big offline retailer and thus increase their incoming profits.

So are there any takers for the e-commerce start-up? It was reported that the founders of Craftsvilla were in talks with Snapdeal for an acquisition but the e-commerce giant is not likely to be interested in the deal. The reason for this lack of interest is the fundamental mechanism of the company which designs, delivers and trades all by itself. It even has a few offline stores. It will be difficult to accommodate this mechanism into wider e-commerce marketplaces. For the integration into a large e-commerce company, a lot of changes will have to be made at a fundamental operating level. These changes will be difficult to incorporate and won’t yield many results as they will just make Craftsvilla just another vendor on the platform. Unless the company that acquires it is interested in starting offline stores, acquiring it won’t make much sense

Another reason why companies are hesitating to buy Craftsvilla is the limited nature of the supply chain of the company. It mainly sources its materials from Surat from where clothing material is easily acquired at a cheap rate. Hence the main selling point of the company that it sells art and craft from all over India becomes completely moot. Simply put, it doesn’t deliver what it promises.

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Craftsvilla was founded by Manoj Gupta and his wife, Monica in 2011 as a platform for selling ethnic goods. As of now, they have their presence online as well as the company owns 60 offline stores. However, this company has been in trouble since the beginning. They have had problems reaching out to the artisan community which lives all over India. Most of these artisans have no knowledge of the internet. The logistics and delivery of the products havealso been a problem faced by the company.  As a solution for these major problems, the company compromised its vision and centered its business in Surat.

Also, in the eight years since its inception, the company has made many changes in the business model. Currently, they operate on a model that allows them to sell their products both online and offline. It also faced other issues like the senior management quitting because of heavy losses in 2017. Another major issue faced by the company is stiff competition from e-commerce giants like Amazon and Flipkart.

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