1

September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

1) TheUSiscurrentlythegloballeaderofcraftimports—importing$87.3billionworthofcraftsin2015.

2) Amongcraftexportingcountries,Chinadominates—exporting$148.6billionworthofcraftsin2015.

3) Between2012and2015,antiques,paintings,interiordécorandtoyssawsomeofthestrongestexportgrowthratesfromChinaandIndiaamongthedifferentcraftcategories.

4) Duringthesameperiod,otherartsandcrafts(suchascandlesandartificialflowers),paintings,interiordécorandcarpetssawthestrongestgrowthinimportsintheUKandtheUS.

5) In2016,52.5%ofAmericanconsumersshoppedin-personforhandmadeproducts,around20%–25%shoppedthrougheBay,AmazonandEtsy,and10.1%shoppedfromindependentwebsitesforhandmadeproducts.

E-Commerce Platforms for Craft

Products from Emerging Markets

Deborah Weinswig

Managing Director

FGRT

deborahweinswig@fung1937.com

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

IntroductionMostcountrieshavetraditionsandcultureuniquetotheirregionsandsocieties,andthisculturalheritageisoftenmanifestedthrougheverydayphysicalgoodssuchasclothing,furniture,homewareandtoys.Whiletheseitemstendtobemass-producedfordomesticconsumers,theyareoftenhandmadeorproducedinsmallquantitiestocatertoanicheaudienceoutsidethehomecountryaswellastovisitingtourists.

Inourpreviousreport,OnlineMarketplacesforHandcraftedandVintageMerchandise,welookedatonlinecraftmarketplaces,andexaminedgloballeaderEtsy’spositioninginthissegment,aswellashowAmazonandeBaycomparetoit.

Inthisreport,weexploresomeregionalplatformscateringtoglobalmarkets:thesearee-commercesitesthatsellcraftsrepresentativeoftheculturalheritageofthecountriesfromwhichtheyoriginate.Wealsolookatsomeofthekeyonlineplatformsamongthedifferentcategories,themarketstheyserveandsomeofthechallengestheyfaceingettingtheirproducttocustomers.

Asmanyofthesecraftsneedtobeproducedinthehomecountryandexportedtobuyingcountries,welookatsomeofthecountriesthatleadthetradeincrafts.

GlobalLeadersinImportsandExportsofCraftsManyconsumersindevelopedeconomiesseekoutcraftproductstoaddatouchofuniquenesstotheirhome,wardrobeorpersonalityinawaythatmass-producedgoodscannot.TheUSiscurrentlythegloballeaderincraftimports.In2015(latestavailable),itimported$87.3billionworthofcraftproducts,accordingtotheUnitedNationsConferenceonTradeandDevelopment(UNCTAD).

Figure1.TopTenImportersofCrafts*,2015(USDBil.)

*Craftsinclude:carpets,celebrationmerchandise,paperware,wickerware,yarn,architecture,fashion,glassware,interiordécor,jewelry,toys,antiques,paintings,photographyandsculptures.Source:UNCTAD

87.3

36.4

26.9 25.218.5 16.9 14.9

9.4 9.1 7.2

US France HongKong UK Germany Switzerland Japan Italy Canada China

Inthisreport,weexploreseverale-commercesitesthatsellcraftsrepresentativeoftheculturalheritageofthecountriesfromwhichtheyoriginate.

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Amongexportersofcrafts,Chinadominatestheworldbyasignificantmargin.In2015,itexported$148.6billionworthofcrafts,accordingtoUNCTAD.Itsclosestcompetitor,France,exportedsome$31.2billionworthofcrafts,aboutonlyone-fifththatofChina.

Figure2.TopTenExportersofCrafts,2015(USDBil.)

Source:UNCTAD

WhatCategoriesHaveGainedtheMostTraction?Antiques:ChinaandIndiahavelongbeenknownassourcingdestinationsforvariousgoods.Wereviewedthecategoriesthathaveseenthehighestexportgrowthinthesecountries.Antiquesfeatureprominentlyforbothcountries—between2012and2015(thelatestperiodforwhichUNCTADprovidesdata),antiquesexportsgrew112%inChinaand45%inIndia.

Others:Othermajorexportcategoriesincludepaintings,interiordécor,wickerware,toys,celebrationproducts,yarn(suchashandmadelace,hand-wovenandneedleworkrugs,embroidery,bedlinenandmaterialsthataremanmade,printed,knittedorcrocheted)andotherartsandcrafts(suchascandles,tannedordressedfurskins,artificialflowersandwoodcrafts).

Source:iStockphoto

148.6

31.2 30.0 25.1 22.3 20.1 16.4 15.9 14.18.6

China France US Italy HongKong UK India Germany Switzerland Turkey

Chinadominatestheworldamongcraftexportingcountries,shipping$148.6billionworthofcraftsin2015,whileitsclosestcompetitor,France,shippedcraftsworth$31.2billion.

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

TheUSandtheUK,twoofthemajorimportersofcrafts,sawthestrongestgrowthinimportsofotherartsandcraftsandpaintings.Theotherkeycategoriesofimportsforboththesemarketsarecelebrationproducts,toys,antiques,carpets,interiordécor,sculpturesandyarn.

Figure3.ImportandExportGrowthRatesofCraftsinSelectMajorMarkets,2012–2015(%)

TopExports

China India

Antiques 112% Wickerware 47%

Paintings 16% Antiques 45%

InteriorDécor 14% Toys 28%

OtherArtsandCrafts 13% Celebration 23%

Celebration 8% Yarn 12%

TopImports

UK US

OtherArtsandCrafts 13% Paintings 15%

Celebration 8% Carpets 9%

Toys 7% InteriorDécor 9%

Antiques 7% Sculptures 8%

Carpets 7% Yarn 7%

Source:UNCTAD

WhileOnlinePlatformsArePopularforSellingCraftsandSharingIdeas,In-PersonBuyingStillDominatesThecraftmarketisnotjustaboutimportedgoods:itincludespeer-to-peersellingwithincountries.MakingandsellingcraftshasbecomeincreasinglypopularamongmillennialsintheUS.About45%ofoldermillennials(ages30–39)soldacraftprojecttheymadethroughanonlinestorein2015,comparedto18%ofAmericanconsumersoverall,accordingtoaMintelsurvey.Some55%ofoldermillennialsintheUSuseonlinevideotutorialstolearnacraftskillortechnique,comparedtoabout33%ofAmericanconsumersoverall,accordingtothesamesurvey.

Despitethepopularityofe-commerce,manyconsumersarebuyinghandmadeproductsin-person,atcraftfairs,storesandfleamarkets,accordingtoa2016surveyof1,000AmericanadultsbymarketresearchfirmAskYourTargetMarket.

About45%ofolderUSmillennials(ages30–39)soldacraftprojecttheymadethroughanonlinestorein2015,comparedto18%ofAmericanconsumersoverall.

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

In2016,52.5%ofAmericanconsumersshoppedin-personforhandmadeproducts,around20%–25%boughtthemthroughEbay,AmazonandEtsy,and10.1%boughtfromindependenthandmadeproductwebsites.

Figure4.US:PreferredPlacestoBuyHandmadeItems,2016

n=1,000AmericanadultssurveyedinAugust2016.Source:AskYourTargetMarket

While52.5%ofconsumerssaidtheyshoppedin-personforhandmadeproducts,some20%–25%indicatedthattheyboughtthemthroughlargee-commercesites—suchasEbayandAmazon—aswellasthroughhandmadeproductsmarketplaceEtsy.Only10.1%indicatedthattheyboughthandmadegoodsthroughindependentwebsitesand6.1%purchasedfromothermarketplacesites,therefore,theaudienceforindependentsitesisstillquitelimited.

Source:Etsy.com

However,thereishopeforindependentwebsites.Some48%ofrespondentsinthesamesurveyindicatedtheybelievedhandmadecraftsshoppinghasbecomemorepopularoverthepastfiveyears,and49%believethatitcouldgaininpopularityoverthenextfiveyears.Furthermore,while81%ofhandmadeproductbuyersindicatethatthey

5.4%

6.1%

10.1%

20.3%

24.7%

24.9%

26.6%

29.9%

39.3%

52.5%

Other

OtherMarketplaceSites

IndependentHandmade

Amazon

Etsy

Ebay

Farmers'Markets

LocalStores

FleaMarkets

CrajFairs

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

buyhandicraftsbecauseoftheuniquenessoftheproducts,51%indicatetheybuythemtosupportsmallbusinesses.Overall,58%ofconsumersfelthandmadeproductsareofbetterqualitythanmass-produceditems,and55%thoughthandmadeitemsaremorestylishthanfactory-made,bulk-producedmerchandise.

Thesebeliefshavelikelygivenmomentumtotheemergenceofindependentcraftwebsitesacrossseveralregions.Whilecraftmarketplaceshavebeenestablishedinmanydevelopedcountries,thesegmentisstillunderdevelopedintheemergingregions,particularlyinAsia.

WeprofiletwoplatformsfromIndiaandAfrica,JayporeandZuvaa,followingthetablebelow.

Figure5.SelectedCraftPlatformsfromIndiaandAfrica

Platform BusinessModel

LocationofPlatform BusinessDescription

IndianProducts

Tjori Curated India Fashion,homeware,jewelryandpersonalcareproducts.

Jaypore Own-brandandcurated

India Homedécor,accessories,jewelry,apparel,giftsandvintageitems.

UnravelIndia Own-brand India Homedécor,officeaccessories,kitchenanddiningware,andwomen’sfashionandaccessories.

Craftsvilla Marketplace India Fashion,homeware,accessoriesandfood.

Vedique Own-brandandcurated

UK SculpturesandartdécorfromIndia,Thailand,China,Pakistan,Nepal,Australia,SouthAmericaandAfrica.

Namaste Own-brand UK Homedécor,accessories,jewelry,apparel,gifts,furnitureandincensefromIndia.

AfricanProducts

Afrikrea Marketplace France Fashion,homeware,jewelry,bagsandart.

Zuvaa Marketplace US Women'sfashion,accessories,personalcareproductsandhomewares.Shopperscanshopbydesigners,too.

Kuwala Curated Canada African-inspiredwomen'sfashionandaccessories.

Luxoca Own-brandandcurated

Ghana Women'sfashion.

Sapelle Own-brandandcurated

UK Fashion,homeware,accessoriesandgifts.

SouthAmericanProducts

ThreadsofPeru Curated Peru Ponchos,accessories,homedécorandchildren’saccessoriesandtoys.

Caserita Own-brandandcurated

Bolivia Clothing,jewelry,accessories,bags,toys,homedécorandknittingwool.

TukuruTextiles Curated UK Fabric,clothing,accessories,jewelryandcarvedgourds,representingAndeanheritage.

Source:Companywebsites

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

CompanyProfiles

Jaypore

Source:Jaypore.com

Businessbrief:Jayporeisanonlinestorethatsellsown-brandandcuratedhomedécor,accessories,jewelry,apparel,giftsandvintageitems,inspiredbyIndianculture.

Competitiveadvantage:Jayporewaslaunchedin2012,initiallycateringexclusivelytoUSconsumers.Withinayear,ithadexpandedtoservetheglobalmarket.Itisanestablishedbrandinitssegmentwithawideproductassortment. Traction:Some25%ofJaypore’srevenuesarefrommarketsoutsideIndia,andwhiletheUSisitslargestmarketoutsideIndia,demandfromEuropeandMalaysiaisgrowing,accordingtoCEOPuneetChawla(source:DailyNews&Analysis,August2017).ChawlaplanstopushfurtherintooverseasmarketsbysponsoringIndianculturaleventsandpartneringwithIndianboutiquesabroad.

Between2013and2015,Jaypore’srevenuesgrewby5,000%,accordingtostartuptrackerYourStory.

Funding:Jayporeraised$5millioninseriesAfundinginFebruary2016.Includingseedfunding,todate,ithasraisedatotalof$5.38million.

Zuvaa

Source:Zuvaa.com

Some25%ofJaypore’srevenuesarefrommarketsoutsideIndia.

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Businessbrief:ZuvaaisamarketplacewherevendorsanddesignersofAfricanheritagesellwomen'sfashion,accessories,personalcareproductsandhomewares.

Competitiveadvantage:ZuvaahasanestablishedpresenceintheUS,andshowcasesvendorsanddesignersthathaveadaptedAfrica-inspiredfashiontocatertoboththeAmericanandtheglobalmarket.FounderandCEOKelechiAnyadiegwuwasfeaturedinForbes’s201630under30listintheretailande-commercecategory.

Traction:Sinceitslaunchin2014,Zuvaahasearnedover$200,000inrevenues,accordingtoitsprofileonwebsiteVentureCapitalforAfrica.Ithasover1,200customersgloballyandfeaturesmorethan40vendorsonitsplatformwhohave,onaverage,doubledtheirsalessincejoiningZuvaa,accordingtoitsprofile.

Funding:Zuvaahasnotdiscloseditsfundingandisactivelyseekingfurtherinvestment.

ChallengesintheArtsandCraftsTradeSomeofthechallengesfacedbyartsandcraftsmakersaresimilartoproducersthatmanufactureandexportinbulk,whileothersareuniquetothissegmentofmakers.

1.ExportFormalitiesandQualityControlExportregulationsandqualitybenchmarksvaryacrosscountries,andcomplyingwiththesemayberathertediousforasmallbusiness.Handmadeproductsmaynothavethesameuniformityandconsistencyinqualityasmass-producedgoods,andwhilethevariationsindesignmakethemunique,itmaybedifficulttocomplywiththeregulationsoftheimportingcountries,suchashealthandsafetystandardsforfurniture.

Source:iStockphoto

Sinceitslaunchin2014,Zuvaahasearnedover$200,000inrevenue.

9

September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

2.ShippingFeesAsmosthandmademerchandisetendstobemadebyartisansandcraftspeoplelocatedclosetotheoriginoftheproducts,shippingthemacrosscountriesaddstothecostoftheproduct.Whilecuratedandown-brandplatformsmaybeabletoprovideeconomiesofscalebycollatingandshipping,sellersonamarketplaceplatformmaybeatadisadvantage,asshippingcostscanvarydependingonlocationandthenumberofproductsboughtbyasinglecustomer.

Source:iStockphoto

3.PaymentToenablecustomerstotransactseamlessly,onlineplatformsneedtohaveglobally-recognizedpaymentgatewaysthatcanfacilitatepaymentsacrossmultiplecurrenciesandcountrieswithvaryinglevelsofInternetinfrastructure.Thesellersonthemarketplacesshouldalsobeequippedtoreceivethepaymentsmadethroughtheplatform.InsomeAfricancountries,forexample,limitationsexistregardingthetotalamountthatcanbetransferredinasinglepayment.InIndia,manytownsandvillageswherehandicraftmakerslivedonothavethenecessaryinfrastructuretoshipgoodsandreceivepayments,unlesstheyarepartofahandicraftcluster—aspecialeconomiczonedesignatedbythegovernmenttosupportsmallindustries.

MarketThemarketforhandcraftedgoodsisalsoniche,particularlyincountriesotherthanthatoforigin.Consumersmaybuyitemsasgiftsorfornostalgicreasonstoremindthemoftheirhomecountries.Maintainingaplatformwithhighcostsandfewshoppersmaybecomeachallengeinthelongterm.

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

WhatWeThinkWhilecraftplatformsmayappeartobeanicheproposition,thepotentialforfurthergrowthexists.Asmorepeopletravelacrosstheworldandsettleincountriesotherthantheirhomecountry,e-commercecraftplatformsaremakingproductsfromtheirhomecountriesmoreaccessible.However,inordertocatertoaglobalaudience,platformsneedtoadapttheirproductstosuitlocalconsumers’tastesandstyles.Forexample,manyoftheAfricanplatformshavecreatedwesternclothinginspiredbyAfricanculture,whereas,therearefewIndianplatformscreatingIndian-inspiredwesternwear.Forsmallandnichebusinessestocontinuetogrowinthelongterm,itisimportantthattheyadapttheirproductstosuitlocalconsumersandcatertoabroaderaudience.

Anotherwaycraftplatformscanreachmoreconsumersisbycreatingaphysicalpresencethroughstores,pop-upshopsandbyparticipatingintradefairs.Amajorityofhandicraftshopperslikeshoppingforsuchgoodsin-personanditgivesthesellersachancetosharehowtheproductiscrafted,whichraisesawarenessofthissegment.

Source:iStockphoto

Nevertheless,ase-commerceinfrastructurebecomesincreasinglyaccessible,webelieveitwillplayanimportantroleinhelpingmoreartisans,craftspeopleandsmallbusinessesreachconsumersacrossawiderrangeofcountries,inasustainablemanner.

Onewayindependentcraftplatformscanreachmoreconsumersisbycreatingaphysicalpresencethroughstores,pop-upshopsandbyparticipatingintradefairs.

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September5,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comSwaroopraniMuralidharResearchAssistant

HongKong:2ndFloor,HongKongSpinnersIndustrialBuildingPhase1&2800CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,18thFloorNewYork,NY10018Tel:6468397017

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