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What is ‘Fragmentation of Value Chain?’

Fragmentation of value chain happens when there are different suppliers, component manufacturers and other important factors scattered about in the whole process right from production to sale of a good. In context of the crafts industry a Fragmented value chain would be characterized by:

Little to No Market Linkages


Consumers of craft products are increasing and are widespread across the world. More and more people from the urbanized community continue to buy handmade goods. But artisans have fewer opportunities to reach the expanding consumer base due to lack of proper retail channels and outlets. Local markets are not enough for them to thrive in this competitive scenario and therefore gaining access to relevant retail platforms such as department stores and shopping malls becomes necessary. Further, due to most of these artists belonging to rural backgrounds, they are often unable to access the internet to sell their products online. 

The Dominating Middlemen


Exploitation of artisans at the hands of middlemen is quite common. Middlemen are meant to enable market linkages and help artisans gain access to wider markets. It is seen though in many cases that they exploit them by paying them just a fraction of their fair wages or promised price. Artisans due to their lack of industry knowledge and bargaining power often get coerced into ceasing their fair price.

Lack of Organized Aggregation

Day of the Dead Handicrafts, Terlingua Trading Company, Terlingua ghosttown, near Big Bend National Park, Texas USA.

With crafts production typically being carried out in rural areas that are widely dispersed in a geographical location, it becomes difficult to reach out to urban centers where most consumers are located. These scattered clusters lack organized systems that can efficiently collect and aggregate goods from small producers. Thus there is no means to carry out quality checks and stock quality or approved goods in warehouses. This prevents wholesalers and retailers in urban areas from getting the right products at the right time. Such conditions leave no other choice for them but to depend on select producers which results in losses of a large number of artisans.


Getting a Fair Price

As pointed out earlier that artisans often get coerced into settling for a price much less than what was promised to them, there are ways to prevent that from happening.

By Educating Artisans on this aspect we can create awareness among them about their products and the rising demand for their produce thus, handing them over the bargaining power.

The information asymmetry prevalent in the market often doesn’t let artisans identify potential or new markets for their products.

That combined with lack of access to technology required to interact with such markets prevents them from getting a fair price.

A very relevant example of it is the UK’s crafts industry which is one of those setups that do have an infrastructure in place but is not functioning at its best. The British economy finds it difficult to engage more number of artisans due to extensive fragmentation and lack of connectivity among artisan communities. Due to the size of this industry it is lacking in many infrastructural elements.

 Studies say that 70% of creators work from home, while 24% experience isolation and a meager 6% engage with craft networks or organizations. There is also a rising need of critical functions such as writing and curating of crafts that mandates sellers to sell directly to consumers. Out of all the handmade goods makers 45% report a dislike for direct selling which results in low market engagement. Developing infrastructure, leadership and constant defragmentation is an ongoing challenge for this sector.

How You Can Help

  • By helping us with this cause, you will play a vital role in linking various small scale craft producers to relevant retail channels.


  • This will let artisans focus on enhancing productivity rather than attempting to reach out to retailers or their final consumer base.


  • Contributing to this effort will ensure that artisans all over the world are able to get a fair price for each of their products.
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