Companies & Markets

Etsy Rival

Crafting a Path to Success

Dawanda had gross merchandise volume of €140 million in 2015. Source: Fotolia

Source: image

Her business started one vodka-soaked night in Russia eleven years ago. Two colleagues working in Moscow, Claudia Helming and Michael Pütz, painted matryoshkas as Christmas presents for friends. In the end, the wooden dolls were too funky to give away to family.

They launched Dawanda one year later, a platform for makers to sell homemade items that is Germany’s answer to Etsy.

“I thought, why not create something where people who are actually good at making crafts can show their products and people like us who are looking for something special can find them,” Ms. Helming said.

That was back in 2006. Since then Ms. Helming has become the sole owner of a site offering 6 million home made products. Its headquarters is a former factory building in Berlin, in offices that house many of the company’s 200 employees and a host of stuffed toys, prints and calendars.

Dawanda is an African girl’s name, Ms. Helming explained, meaning happy and fun-loving.

Despite enjoying handicrafts, Ms. Helming said she hadn’t improved her craft skills and doesn’t plan to make gifts for people this Christmas.

Instead during the past decade she has driven growth on the site, starting with early attempts casting about Berlin for artists using Google and blogs to assemble a database of the first 200 knitters and designers.

At first, Dawanda sold more traditional handicrafts; now, sellers range from mother and daughter teams to traditional crafters, amateurs and young designers.

Handcrafting has become much more established in the last ten years, Ms. Helming said. Dawanda now has 380,000 sellers who upload 15,000 new products each day. Every minute, a bag is sold; every 30 seconds, someone buys a baby product – and every 20 seconds, an item of jewelry. The site had a gross merchandise volume of €140 million in 2015.

It's a wrap: a cosy fan scarf for Germany's football team. Source: Dawanda

Source: image

While goods range from sausage dog shaped draft excluders to unicorn sleep masks, one memorable item over the last decade is a 100-meter soccer scarf for Germany’s football team to celebrate the 2010 World Cup tournament.

Whatever they create, makers pay a 5 percent commission fee. As the site grows, many struggle to attract the attention – and the shoppers – they need. To draw buyers to their online stores, sellers can advertise in the company magazine or pay extra to become more prominent on the website.

Ms. Helming, who has been nicknamed the grand dame of Berlin’s startup scene, said the situation had improved on ten years ago.

Dawanda almost didn’t make it. In the early days, Ms. Helming said, it was hard to persuade investors to put large sums of cash into a model that wasn’t data-driven but emotional, design-dominated, its buyers and sellers 90 percent women. “It was often difficult to explain that to men, whether they were investors, press or partners,” she said.

The first three years were the toughest. “We needed capital and at the same time we had to prove that people could trust handmade goods – people imagined they were ugly, grandmother-style products,” Ms. Helming said.

Though she had worked at startups before launching Dawanda, and had experience of fundraising, Ms. Helming said her plans hadn’t worked out exactly as she expected. “I think making a business succeed is never a walk in the park, whether for men or women,” she said.

Three years in, when the company first became profitable, and had 25 employees, investors saw the model was working and the business was growing. “Craft is still a niche product though not as niche as it was before,” Ms. Helming said.

The handcrafting market is more crowded with rivals including Etsy and Amazon which this year launched its Homemade site. Rather than being intimidated by the high-powered competition, Ms. Helming is upbeat. “It shows that handcrafting is not a passing trend,” she told Handelsblatt Global.

Now, makers can sell online and also at design fairs, and can also rent shelves in stores to display their goods.

If you buy a book or a computer or a flight, you know what to expect but a handmade product, it’s always a surprise. You need more trust than for other products.

Since starting out, Ms. Helming has launched sites in English, French, Polish, Spanish, Dutch and Italian and has attracted sellers from as far afield as Japan, Iceland and Ukraine.

There are big differences between Europe’s handcraft markets, said Ms. Helming. While some are cultural – crafting really defines a culture, she said – legislation also greatly influences how many people make goods for a living.

“In Germany, young mothers really drove our business, the women who had babies and stayed home for a year and really started to get into crafting,” Ms. Helming said. The longer maternity leave available in Germany meant that many women, after getting good feedback from their families and friends, decided to start a business. In France, where women go back to work a few months after having babies, Dawanda found fewer crafters and sellers.

Ten years ago, it was also harder for people in Italy and France to set up businesses online, a fact that is changing now, though later than in Germany, Ms. Helming pointed out.

What people make and seek also differs widely across Europe. In France, scrap-booking and knitting are more popular. In Poland, most of the people selling homemade goods are professional designers.

The level of interaction between the countries differs too. “Germans tend to buy from everywhere. Polish sellers sell to everywhere whereas in Spain and Italy, it’s mostly within those countries,” she said.

Infrastructure differences also shape the market. “In Spain and Italy, you really see that e-commerce isn’t as developed as it is in Germany,” Ms. Helming said. Factors include the availability of high-speed internet in rural areas and the reliability of the postal service.

How far online shopping is developed also shapes the way people offer their products. “Ten years ago, sellers here didn’t know how to take good pictures, write good descriptions, add the right keywords and price correctly. This all adds up,” she said.

Selling homemade products made it even harder to launch the business Ms. Helming pointed out. When Dawanda started, people had less experience buying anything online. “The kinds of products we offer are quite different. If you buy a book or a computer or a flight, you know what to expect but a handmade product, it’s always a surprise. You need more trust than for other products.”

One struggle for many sites from Dawanda to Etsy is that people sell mass-produced goods in their online stores. Ms. Helming said this year the team at Dawanda had gone through and deleted 300,000 products that weren’t homemade.

Looking ahead, one area of focus will be IT. Makers this year struggled when new systems didn’t work, hampering the search function, for example.

Dawanda will keep supporting sellers in other areas including support and help them with legal questions, marketing and other guidance.

The site is also offering more tutorials, putting makers onscreen to show buyers how to create the goods they are searching for, Ms. Helming said.

Alongside making the site more entertaining and engaging, it “means people aren’t just consumers but makers too.”

 

Allison Williams is deputy editor in chief of Handelsblatt Global. To contact the author: williams@handelsblatt.com

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