I had ventured once in the arts and crafts domain. The problem with that segment is that your sellers are still illiterate and do not have access to Internet. Some do not understand English and only understand their regional languages. Also you can not verify if the articles are hand made or machine made. Also most of the sellers are very small traders or artisans and do not have the infrastructure required to support dispatches etc. Yes, craftsvilla started like that, got a lot of publicity on how they are helping the artisans etc and completely changed their model later. They made more money that can be seen.
Hope this helps you.