From pages 67-68 of Oaxaca Tips
RUGS and WALL HANGINGS
Colorful, hand-woven wool rugs and wall hangings (originally called serapes and now called tapetes), made in the Zapotec communities of Teotitlán del Valle, Santa Ana del Valle, and Díaz Ordáz, are ubiquitous in Oaxaca. However, I have no favorite shops as I have always bought directly from the weavers themselves. Buying from the source doesn't necessarily give you any advantage in price, but it provides an opportunity to learn how the rugs are made and  creates a personal connection with the producer.

The villages are also the place to go if you are interested in rugs woven with natural dyes and unique designs. For superb quality, head to Teotitlán, the best-known of the rug weaving villages, and visit Isaac Vásquez García, one of Oaxaca's premier weavers and a leading expert in the use of natural dyes.   Hidalgo 30, Teotitlán del Valle. Tel: 524-4122

However, if you haven't time to go to the villages, or if you fear the choice will be overwhelming (it is!), there are several rug stores on Macedonio Alcalá and García Vigil, as well as rug stalls in the Mercado de Artesanías on J.P. García. Note, however, that most of the market stalls are operated by vendors, not by the weavers themselves.

A Note about Dyes
Many rug vendors will swear to you that their tapetes are colored with  natural dyes. Be skeptical! Nowadays aniline dyes are much more subtle in shading than they used to be, and it is increasingly difficult for the untrained eye to distinguish synthetic from natural colorants.
Price is one factor to help you judge; natural dyes are more laborious and complex to prepare and use, and cochineal and indigo are costly. So rugs dyed with natural tints are more expensive given their size and design.
  • The fame of the weaver is another factor to consider; weavers who specialize in natural dyes are well-known and keen to maintain their reputation. If you visit their workshop, they will gladly explain and demonstrate the dying process.
  • For anyone eager to buy a tapete colored with natural dyes, this is another reason to make the trip out to Teotitlán or Santa Ana.
    skeins of wool colored with natural dyes
    Tapete by Isaac Vásquez García
    Teotitlan del Valle
    Choosing a tapete at the home/workshop of Isaac Vásquez García
    cochineal dye demonstration