Novica United

completed

Founded in 1998, Novica is an Internet-based artisan marketplace which enables a network of over 10,000 artisans located in emerging markets to sell their products to international retail and wholesale buyers. The company has created a global infrastructure that includes on-line retail, wholesale and catalog distribution channels, served by a network of sourcing hubs in seven developing countries. The company’s goal from its inception was to create a destination on the Internet for sales of locally produced arts and handicrafts. This has been accomplished by providing professional and strategic resources to its artists, all of whom are located in the emerging markets, as well as by providing a scaleable technology platform that enables online sales to customers in the developed world. The company is allowing artists to increase their standard of living and hire additional workers and is also helping to spread the use of technology among a group of people that were not previously part of the global marketplace. Novica has had, and will continue to have, a significant impact on the earning potential of numerous low-income artisans, due to higher volume sales and better prices for their goods. As part of its stated “Novica Law of Pricing,” the company pays the artisans more for their product than alternative purchasers, yet keeps end prices relatively low, contributing to higher volumes. Novica''s focus on quality and authenticity also enables the artisans to preserve their cultural heritage and prevents the loss of high quality skills that occurs when artisans are forced to focus on low cost buyers. For smaller artisans, the rolling purchases facilitated by Internet sales help them avoid "boom and bust" cycles that characterize contracts with traditional exporters, allowing them to build up working and human capital in a sustainable manner. A strengthened relationship with IFC would benefit Novica in many ways. The company is already working with artisan groups and with IFC’s Small and Medium Enterprise (SME) department to build supplier capacity, which allows the groups to access more profitable markets and hire additional employees. There is also potential for IFC’s Microfinance and Small Business Group (part of Global Financial Markets) to facilitate discussions between Novica’s artists and IFC’s micro finance portfolio companies. This could enable Novica’s artisans to secure small loans from these credit providers. Novica believes these loans could enable its artisans to take increased inventory risk, and allow smaller artisans to increase their scale. It is expected that many Novica artisans who currently have little or no access to formal credit institutions in their own countries will benefit from introduction and access to financial services from IFC’s portfolio of dedicated micro finance institutions, enhanced access to working capital and other services that micro finance banks typically provide to self-employed artisans and other micro entrepreneurs. IFC’s experience has shown that this can have a major positive impact in reducing poverty and unemployment in emerging markets worldwide.