Faire (company)

Faire is an e-commerce wholesale marketplace that connects independent artisans and brands with local retailers. The company is headquartered in San Francisco and has offices in several cities, including Kitchener-Waterloo, Ontario, Amsterdam, London, São Paulo, and Salt Lake City. Faire was founded in 2017 by Max Rhodes, Daniele Perito, Marcelo Cortes, Jeffrey Kolovson, and Lauren Cooks Levitan. In 2019, the company was valued at $1 billion after securing Series D round funding.

The company sells curated artisanal apparel, kitchenware, beauty supplies, home décor, and jewelry in its online store. According to co-founder and CEO Max Rhodes, one of the most popular filters for merchandise searches is a "not on Amazon" category, which offers retailers a chance to find products and brands not sold through Amazon's e-commerce site. Other popular product categories in 2020 included home décor, beauty and wellness, and women's apparel and accessories. This was, in part, driven by COVID-19 mandates requiring people to wear masks in businesses, with the top search category in 2020 being the cloth face mask.

As a B2B marketplace, Faire allows local and independent retailers to connect with brands, without needing to travel to multiple trade shows. The platform allows retailers to discover brands, purchase products online, get free returns on new orders, and finance their working capital. For the brands, Faire enables them to find new customers, manage existing customer bases, and reduce risk of non-payment.

Faire supports around 300,000 retailers buying wholesale goods on Faire, with retailers in over 15,000 cities, and at least 40,000 brands selling on or through Faire.

Faire offers business owners a toolkit of technology, data insights, financial terms, and logistics solutions to support local retail. Faire offers retailers working with them free returns and Net 60 payment terms to help take the risk out of the wholesale business, giving local retailers and independent brands a better chance to compete with big-box and e-commerce companies. Faire uses artificial intelligence and predictive analytics to forecast which products are popular to source and manage their inventory as efficiently as possible.

The company's platform offers retailers a chance to search for items that are environmentally friendly, handmade, or not sold on Amazon. During the COVID-19 lockdowns during 2020, Faire also began offering extensions on its payment terms for retailers who had purchased inventory. During this period, Faire also began offering products like masks, cleaning supplies, and food items that were in high demand, and held an online trade show to give retailers access to discounted inventory.

Part of Faire's platform is the company's Net 60 terms, for which any retailer is automatically approved. The terms mean that purchases made through Faire will not be charged to the retailer until sixty days after the order in order to give the retailer time to sell the products before paying for them. This is intended to help retailers hold onto their cash to cover costs such as rent or payroll, while being able to introduce new inventory.

When a retailer signs up with Faire, the company determines an appropriate limit, depending on the business type, size, and location, as well as payment history, revenue, and financial information. According to Faire, these terms can change over time, as a retailer's business changes or grows. There are also no fees for paying with terms, and there is no penalty assessed to a retailer for using the terms' entire limit.

Part of what Faire offers through its platform is accepting free returns within sixty days for items that do not sell, to help reduce the risk a retailer runs when buying new inventory. This offers retailers using Faire a chance to experience and try a product, similar to the "touch and feel" benefit of traditional trade shows, to help retailers find products they want to sell. Faire is able to offer this service due to the platform's visibility into product sales data and the ability to predict return rates. This policy is intended to encourage retailers to experiment with new brands and order more frequently, which works to drive up gross merchandise volume.

By using the company's position as an aggregator, Faire negotiates bulk shipping rates with national carriers; it works to pass on that savings to its brands, which in turn decreases shipping costs to retailers and reduces the cost of buying products online. These savings, along with improved product discovery and access, are intended to help Faire compete against big-box retailers. And through its aggregation services, Faire offers independent retailers benefits those big-box retailers have enjoyed for years.

For brands, Faire's platform offers the company a chance to increase revenue without having to navigate networks of independent sales representatives and travel to trade shows. Instead, those brands can use Faire and sell to the retailers already buying inventory on Faire.

Through the platform, brands are given the tools to fulfill orders, manage customers, and promote brands through marketing campaigns, including email campaigns to existing retail partners. This also includes customer relationship management (CRM), chat, invoice management, automatic payments, and a mobile app, all as tools to help those brands. Further, the brands are given detailed sell-through analytics to understand how product SKUs are performing in retail stores. This offers brands better understanding of how products are performing, which can, in turn, help companies iterate on those existing and popular products in real time and work on merchandising strategies for those products.

When a brand receives orders from a new customer who finds the retailer through the company's marketplace, Faire charges a 25 percent commission on opening orders and a 15 percent commission on reorders. While orders from existing customers do not incur a commission fee. Faire uses this commission structure to encourage brands to onboard existing retailers, both for the ease of the brand through managing those retailers through a single ecosystem, and without charging a commission on those retailers. This further offers Faire a chance to become a place where brands and retailers come to manage their business.

Exploration of Faire's viral loop.

In Faire's business model, the company uses a viral loop. This is achieved through brands referring their retailers to Faire because they benefit from using the platform, while retailers, once signing up, benefit from the access to free returns, the Net 60 payment terms, and more favorable shipping rates. Called a viral loop, this creates a certain viral action that can allow Faire to grow both in its supply and demand side exponentially, and as more sign up with Faire, the more value the marketplace offers to both retailers and brands. This gives retailers more brands to choose from and offers brands more retailers to sell from, with the marketplace's home page boasting around 300,000 retailers and 40,000 brands.

This comes as research has suggested that independent retailers and brands sales are continuing to grow, with them seeing 23 percent of the entire US retail sector, which includes categories such as gifts, home goods, groceries, pharmacy goods, and apparel. These retailers are beginning to show interest in using more technology, such as what Faire offers, to keep costs down and diversify their product portfolio.