Three years ago, Peruvian weaver Cerapio Vallejo had no idea what the Internet was. He sure does now. Last year, he tripled sales of his brightly colored tapestries thanks to the Net--and a Los Angeles-based e-bazaar called Novica.com.
While investors are beating a rapid retreat from tech stocks, Vallejo, 37, has firmly embraced the Net. His modest home in Lima is filled with the clatter of wooden looms, where his wife and other relatives turn out gorgeous geometric tapestries. Vallejo earned $34,000 last year from sales through Novica's Web site, with choice pieces fetching upwards of $700--more than double what they would command locally. The extra income paid for a phone line and a computer, luxuries that most Peruvians cannot afford. It also covers English classes for Vallejo's teenage daughter, Rosario, and computer training for his eldest son, Robert. With their help, he jokes, he might be able to navigate Novica's site.
Novica is one of a host of Internet startups competing for a slice of the global market for traditional handicrafts, which the World Bank estimates at $280 million a year. Launched in May, 1999, the site has attracted more than $15 million in funding so far. Backers include Chris Burns, the founder of Island Records; Rust Capital; and Scripps Ventures. Yet in the eyes of its parent and president, Roberto Milk, a 27-year-old Peruvian American, Novica is not just a business: It's a mission. "You see how hard it is for people to make a living with dignity from their art," says the former investment banker. "That's the root of what we're doing."
Novica has yet to go public, so Milk will not divulge any figures. He claims sales grew tenfold in 2000, and that the company is on course to break even by yearend. The National Geographic Society signed on as a strategic partner in December. The alliance gives Novica a "substantial advantage" over competitors, says Heather Dougherty, an analyst at Jupiter Media Metrix in New York: "It matches the target audience they are going after." According to Jupiter, the site logged 568,000 unique visitors in February--more than double what eZiba.com Inc., a rival based in North Adams, Mass., pulled in.
HOT SELLERS FROM BALI. Hatched in the basement of the Santa Monica (Calif.) townhouse Milk shares with his wife, Brazilian-born film actress Milena Nercessian, Novica now boasts 12 offices scattered across countries such as Peru, Mexico, Indonesia, and Zimbabwe, and has 1,800 artisans on its roster. Craftspeople, all of whom are screened by Novica's staff, pay nothing to list their work on the site, and they are allowed to set their own prices. The e-tailer adds a standard markup depending on the type of product being sold. Items from Bali are the site's best sellers, followed closely by goods from Peru and Mexico.
Milk is out to quadruple sales this year and open three more offices. Diversifying his customer base is another priority: More than 90% of Novica's sales are in the U.S. The carnage on the Nasdaq has forced Milk to put off plans for an initial public offering, "but the minute we are cash-flow confident is the minute we'll file," he says. Internet dreams may be unwinding for some entrepreneurs, but Milk has just begun weaving his. By Jane Holligan in Lima