Craftsvilla, an ethnic wear e-commerce startup-turned omni-channel retailer, is up for sale. The Mumbai-based company is in talks with large domestic physical retailers for the deal at a valuation of $200 million, according to the company founder.

Manoj Gupta, Founder, Craftsvilla told BusinessLine , “We are talking primarily to big offline retailers since our omni-channel stack and co-retailing model will be of interest to them. We are doing this because we believe we can become profitable if we use synergies on customer acquisition with a big retailer.”

Gupta, along with his wife Monica, had started Craftsvilla in 2011 as an online seller of ethnic goods. The company, however, in the last eight years has been through multiple changes in business model and currently operates a model where it sells Indian ethnic apparel both online and through more than 60 physical stores.

Competing against giants

The Indian e-commerce sector is witnessing another round of consolidation as smaller companies are finding it challenging to compete against giants such as Amazon and Flipkart, which together control over 80 per cent of the e-commerce market in India.

In 2018, global retail giant Walmart acquired Flipkart for $16 billion, making it the largest deal in the segment so far. It was followed by Amazon and Samara Capital’s acquistion of Aditya Birla-promoted supermarket chain ‘More’ for about ₹4,200 crore or ($600 million).

This year, however, will be about many smaller deals in the range of $200-$300 million. Experts said the companies want to consolidate operations in a market where e-commerce fundings are drying up. Gupta, in an earlier interview, had told BusinessLine he plans to open about 1,000 outlets at an investment of ₹100 crore in 2019. However, the plan seems to have taken a back seat as the company is now scouting for a deal. Acquiring Craftsvilla can benefit players in the ethnic wear segment or even retailers who have been expanding their private label business.

Craftsvilla’s move comes at a time when the funding cycles for some of the niche players are drying out and the companies are unable to invest in marketing spends. In FY18, Craftsvilla’s revenues grew marginally at ₹31 crore from ₹30 crore in FY17, as per Tofler. However, the company could contain the losses drastically at ₹27 crore in FY18 compared to ₹86 crore in FY17 largely on account of cost-cutting measures, including the marketing spends.

This comes even as e-commerce market place Snapdeal is looking at acquiring its smaller rival ShopClues at a valuation of $200-$250 million as per reports. According to sources, PWC is involved in the due-diligence of the acquisition, which is likely to be an all stock deal.

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