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Predicting the Immediate Future for Crafts Startups post Covid-19

Updated: Jan 4, 2023

Handicrafts and handlooms are the biggest source of employment in rural and semi-urban India after agriculture. The ongoing Covid-19 pandemic and the subsequent lockdown restrictions have significantly impacted livelihoods of artisans and craft communities, bringing them to a literal halt. Old payments are stuck, new orders aren’t coming in, unsold inventory is piled up, and in absence of specific financial aid / grants to artisans from the government, they are running for survival.

Even the craft enterprises and startups across the country, which form the necessary bridge between the craftspeople and the customers, are facing challenges to ensure their own survival. In the last 6–8 weeks, manufacturing has stopped in majority of clusters due to non-availability of raw materials and non-existent demand from domestic and international buyers. With limited cash reserves, and uncertainty in when the markets will reopen, they are staring into the unknown.

Current steps taken by craft startups

While some of the startups have temporarily ceased operations and are waiting for clarity on the future, fingers crossed, some are doing their best in their capacity to mitigate survival challenges for their artisans. Startups like Khanak Design Studio and Lal10 are already engaging weavers in supplying fabrics to masks’ producers. “We’re running projects to mobilize our artisan clusters to create masks out of raw material available in the cluster,” shares Maneet Gohil, Founder and CEO — Lal10. “During lockdown, we’ve sold handwoven masks, 3 Ply masks and even PPE kits, gloves, sanitizers etc. This has helped us oil our cash flows,” he says.

In addition to creating alternate production streams, startups are also pushing on the customer side. Umang Sridhar, Founder — KhadiGi, believes that this is high time customers are made aware of how their contribution can help artisans and their families. “Startups like ours have a huge range of beneficiaries that we have to benefit, that’s our priority. We are encouraging customers to buy our gift cards that can be utilized over the next six months, and simultaneously bringing the artisans’ products online. We will also show on the website how the money is going to each artisan family. That’s very important for us right now,” she explains.

Amit Jain, CEO, National Design Business Incubator (NDBI), believes that this is also an opportunity for startups to focus on industry relations and process evaluations. “We’re asking them (incubatees) to focus on processes — making their pitch better, in some cases connecting them with some of our alumni, and asking them to look at their processes internally.”

Predicting future scenarios

With restrictions on large gatherings, travel and even some movement of goods to stay for a few months, exhibitions will most likely be out of bounds. Being a major sales channel, halt on exhibitions will further impact livelihoods for a longer term. Siva Devireddy, Founder and CEO — GoCoop, believes that overall demand, which has been significantly offline so far, will shift online.

“Lockdown or no lockdown, I think it is going to take a couple of more months before people start visiting markets and start buying things like how it was before. It’s going to take at least a year before the demand and revenues get back to normal,” he says, while also adding that demand patterns will change to more essential products. Startup Oasis and CIIE.CO’s webinar on impact of Covid-19 on crafts also highlighted that international linkages will see a massive change right from the craft, the product, the logistics to even the buyer-seller agreements.

What should startups do to prepare?

Incubators supporting craft enterprises, such as Startup Oasis, Upaya Social Ventures and NDBI, have stepped up to work alongside their incubatees in quick time. “It’s primarily just helping the companies strategize that when the lockdown ends, how soon can they be up and running. Almost everybody is going to be starting from zero, and that should be seen as an opportunity. I think first movers will have a significant advantage,” Amit Antony Alex, Country Head India — Upaya, says.

Enterprises are also getting ready to pivot to different product lines if needed. Radhesh Agrahari, Co-founder — Khanak, suggests, “If you can pivot your business model through product innovation, then you should go for it. It may be the only way to sustain in the long run.” He also emphasises on having artisans manufacture products that can be sold immediately once the markets stabilize. “We typically see the majority of our sales in winters only, starting from October going up to February. For the rest of the year, even if we are not getting the orders from the market, we want to make the product ranges (sarees, quilts, comforters, jackets, etc) which would contribute towards our regular sales cycle.”

This is also an opportune time for enterprises to advocate crafts strongly to people who will be potential customers once the demand returns. Siva believes that startups need to communicate, through strong online presence, how crafts and handmade products are not only better for the environment but also for the communities. He also advocates scenario analysis of multiple outcomes possible.

“Most organizations in this sector should really start bracing for a slightly longer impact and immediately look at reducing their costs as much as they can by reducing their operating expenses,” he says. He also wants startups to make provisions for working capital, even if there is less demand, to have some runway.

Role of technology and innovation

Umang points out that current lockdown is the right time to introduce relevant technological interventions in artisan clusters. Craftspeople realize that leveraging technology is the only way to survive and prepare for the future. She shares, “We’re already receiving pictures from our artisans through WhatsApp. Their teenage children are creating Instagram pages and downloading payment apps on their phones. That way we’re also engaging the younger generation from these communities through technology.”

There is a huge opportunity for technology to play a role now at the consumer end too. Several founders agree that the experience of buying craft products needs to change — with more awareness, penetration and attractive purchase interfaces.

As the sector grapples with short term and long term challenges, it is imperative for the ecosystem to support the enterprises when they need it the most. Incubators need to work with their respective startups to plan for multiple scenarios, tighten the cash flows and working capital needs. At the same time, the governments need to introduce short term financial safeguards for enterprises at the earliest in addition to tax refunds. Timely hand holding and relevant reinforcements by incubators and governments can help the craft startups sail through the challenging times ahead.

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