The city of Oaxaca  is renowned as a handicraft shopper’s paradise. Prices are moderate, quality is high, and sources—in both large traditional markets and many dozens of private stores and galleries—are manifold.
In the city, however, vendors do not ordinarily make the merchandise they sell. They buy wholesale from family shops in town, the surrounding valley, and remote localities all over the state of Oaxaca and Mexico in general. If your time is severely limited, best buy from the good in-town sources, many of which are recommended here.