Original Source - Forbes Ukraine
Kharkiv-based Sergey Ivin started selling woodworking tools from his partner's forge in 2016. At first, Fadir Tools products attracted buyers on Etsy as accessories, and during the lockdowns, they became a discovery for amateur carvers in the US, Europe, and Australia. How did the company manage to turn a traditional craft into a sustainable e-commerce business?
‘The start-up capital was an anvil, a hammer and a mountain of coal,’ says Sergey Ivin, 41, founder of Fadir Tools.
The packaging sales manager was drawn to blacksmithing by a hobby — he was engaged in amateur excavations. During one of his excavations in 2014, he found a Khazar axe dating back to the fourth to sixth centuries. ‘That's when I realised that I wanted to work with metal for the rest of my life,’ the entrepreneur wrote on the Fadir Tools website.
In the summer of 2016, he approached a blacksmith he knew. The idea was to sell axes and small knives from his forge in the United States through the Etsy marketplace. ‘I analysed the Ukrainian market and realised that there is no trend for such products here. In the US, however, handmade products are highly valued,’ explains Ivin.
Between 2014 and 2019, the number of buyers on Etsy globally increased from 20 million to 45.7 million, Forbes Ukraine reported in December 2020. As of March 2024, the platform had 31,700 Ukrainian stores, according to Koalanda. ‘This is a platform for the premium segment, which includes Fadir Tools products,’ says Oleksandr Kolb, founder of digital marketing agency Promodo.
How did you manage to build a sustainable business on the platform?
Chop through the sales channel
Ivin's Kharkiv Forge online store received its first order two weeks later, but the Kharkiv residents ran into a snag — Ukrposhta refused to send their products. ‘For each of them, I had to get a conclusion from the Scientific Research Forensic Centre or the Bokarius Institute that it was not a cold steel weapon but a garden tool,’ the entrepreneur says.
Sales on Etsy started with 15 items a month, and at first a team of two was enough. At the end of 2016, the partners rented premises and started hiring employees — demand in the US tripled on Christmas Eve, recalls Sergey Ivin. The US market has always accounted for 80-95% of sales, he adds.
The Fadir Tools brand did not appear immediately — until 2018, the partners' project was called Svarozhych, based on Slavic mythology. Customers in the US often asked in the comments how to pronounce it, Ivin recalls. The new name was based on the word Fadir (‘father’ in Icelandic), inspired by The Vikings series. ‘Some customers wrote in the comments that they would give our axe as a coming-of-age gift to their sons. So this name was very appropriate,’ says the founder of Fadir Tools.
Why did the Kharkiv Axes catch the interest of audiences overseas? From his position as sales manager, Sergey Ivin adopted a customer focus, so the Fadir Tools team responded to customer comments on the same day. ‘It was something strange for Americans, because the norm for companies there is to respond in a week,’ he says.
Insights were obtained almost exclusively from communication with customers. We conducted interviews and asked them simple questions: why the customer decided to buy the product, says Sergey Ivin.
In addition to the United States, Fadir Tools products have gained interest in Europe — the company has found a B2B client in Austria, and another in Australia in 2019. ‘I was impressed with the quality and functionality of their tools. I send several of them to my customers every day,’ says Chris Potgof, owner of the Australian online store Wood Tamer, who became a Fadir Tools distributor.
The market in the palm of your hand
It's not difficult to keep an eye on competitors — there are about a dozen mass producers of hand-forged axes around the world, says Sergey Ivin. Fadir Tools' products are relatively inexpensive: on the company's website, axes cost $140-210. By comparison, the Swedish brand Gransfors Bruk sells its axes for $150-400, and the Latvian guild Northmen sells them for $390-1950, according to the companies' websites.
In their second year of business, the founders started thinking about know-how that would add to their competitive advantage. Initially, they forged the axes from mild steel, which is used to make ordinary axes because of its ease of processing, but they need to be sharpened regularly, says Serhii Ivin.
The new material chosen was SHKH15 steel, which was ordered from Turkey. It is used for the production of bearings due to its high wear resistance, according to the Metinvest steel company's handbook.
‘We knew that it was used to make knives. So we decided to make axes that would stay sharp for a long time,’ says Sergey Ivin. By comparison, Northmen uses 65G steel, which is easier to forge and is used to make springs, according to Metinvest's handbook.
What was the result? ‘Customers realised that the axe doesn't need to be sharpened at all,’ says the co-founder.
The company saw the biggest growth during the pandemic, as residents of private homes bought carving tools to keep themselves busy during the lockdown, says Ivin. In 2021, the company employed fifty people on an area of 1500 square metres, according to the company. It was not easy to train employees — not everyone could withstand manual work at the 1,000-degree Celsius furnace, says the founder. ‘Out of a hundred students, we had five left,’ he says.
The Russian invasion reshaped the team: some employees and Sergey Ivin as CEO joined the Armed Forces of Ukraine. Fadir Tools suspended production until May 2022. A finished batch of goods worth $10,000 was stuck in Kyiv, Chris Porthof recalls. ‘We had 700 unfulfilled orders, and it took us a year to complete them all,’ says Oleksandr Konovalov, 39, who became the company's new partner in 2022.
The company has 22 employees, two of whom were hired this year. ‘We could forge axes, but we had to look for someone to sharpen them,’ Konovalov adds. The product line consists of 150 items, which is half the number of items in 2021.
How is the company going to resume growth?
The company is investing in stocks of goods, most of which it has taken to its own warehouses in the US. Delivery times have been reduced to 10-14 days thanks to a contract with Nova Poshta, says Oleksandr Konovalov.
Another partner was Promodo, which helped launch the new website and is working on updating the marketing strategy. In 2024, Fadir Tools attracted private investment from Promodo founder Oleksandr Kolb and Nova Group Supervisory Board member Taras Kirichenko.
‘I think their product is the best in the world, and they also operate in Kharkiv,’ Kolb explains his interest in the business. In addition to the US, Promodo is helping the company develop sales in Canada and testing markets in Northern Europe.
The company plans to set up a parallel production facility in western Ukraine, increase sales through its website and be represented on Amazon and TikTok stores. ‘This month, more than 50% of sales were made through the website. The idea is not to depend on platforms,’ he adds.