Bracketed by Black Friday and Cyber Monday, this November 30 is Small Business Saturday. It’s independent retailers’ day to shine. Last year American Express, the event’s sponsor, reported that 104 million shoppers spent a record high of $17.8 billion that day. Nearly 60% of participating small business owners said that Small Business Saturday contributes significantly to their holiday sales each year.
They need it, since the other 364 days of the year are such a struggle. A recent survey among specialty-independent retailers conducted by the Institute for Local Self-Reliance found that these retailers are suffering from the Amazon scourge, with 75% saying it is their top competitive challenge. Over 90% have seen their sales negatively impacted by Amazon, with more than half describing the impact as significant.
Further, over two-thirds are being hammered by their suppliers, which give big retailers more favorable prices and terms. The ILSR concludes that local independents aren’t so much challenged by technology or changing consumer habits. Instead, they are competing on an unlevel playing field.
To the rescue comes wholesale marketplace Faire. It is out to level the playing field for small independent retailers. Currently connecting 7,000 product suppliers with 50,000 retailers, Faire just announced it has raised an additional $150 million in a new Series D round, bringing its total company valuation to $1 billion. To date it has raised $266 million in venture capital.
With NRF reporting some 3 million small retailers with fewer than ten employees operating in the U.S., Faire has barely scratched the surface of its addressable market.
Faire gives small independents a competitive edge
Launched in 2017 as Indigo Fair by Max Rhodes, Jeff Kolovson, Marcelo Cortes, and Daniele Perito who met while working at Square, Faire helps specialty retailers source unique products that aren’t widely available elsewhere. In addition, it offers retailers extended payment and return terms which are unheard of in retail today.
Faire removes the friction in the wholesaler/retailer relationship and gives retailers confidence to try new products that will give them an edge in their local markets. Its 7,000 makers offer a vast array of products for every specialty retail niche, including gifts, holiday, apparel, beauty, jewelry, stationery, and more.
A maker is what Faire calls its wholesale partners and not to be confused with Esty’s kitchen-table crafters. Faire’s makers are established companies from all over the world who are vetted to ensure that they can deliver.
Currently, some 50,000 independent retailers shop Faire averaging $1 million in orders per day, up from $1 million in orders per month at the start of 2018. Gift retailers were early adopters on Faire, but it is rapidly spreading across other retailers as well.
“We supply a wide range of retailers, including clothing and fashion, kid’s stores, spas, beauty salons, pet stores, home and kitchen stores, even car washes and hardware stores. The common thread is these are local retailers who tend to have one to five locations that are looking for interesting, unique products,” shared Lauren Cooks Levitan, Faire’s CFO. “We are a very convenient and attractive marketplace where they can discover new products.”
With the holidays approaching, this is Faire’s busiest season. “We help retailers offer more thoughtful and meaningful gifts to their customers that are more personalized than just another gift card or generic gift,” Cooks Levitan shares and adds that the most in-demand items for holiday this year are Bath and Body, Candles, Gourmet Food, Fashion Accessories, and Jewelry, especially earrings.
To facilitate retailers’ hunt for distinctive products, Faire also offers a special search feature to find products that are not available on Amazon, as well as those that are eco-friendly, hand-made or made in USA. “We give retailers 60 days to try something new. If it doesn’t work, they can send it back,” Cooks Lauren says.
“We allow independent retailers and independent makers to be more competitive,” Cooks Levitan continues. “Through Faire makers can reach a much broader audience in a much more efficient way. And this is just what the universe of local retailers are looking for: novelty and uniqueness that can set them apart. It is a two-sided marketplace that is effective because both sides prosper,” Cooks Levitan says.
“It becomes a virtuous circle where the more makers and more supply of products mean more retailers sign on, so more businesses on both sides succeed by leveraging the benefits of Faire,” she continues.
I reached out to several makers and retailers to get their perspectives on how the Faire marketplace gives them an edge. Here is what they had to say.
Makers view of Faire
“When I first heard about Faire, it seemed too good to be true. I admit I was hesitant at first to get involved,” says Adam Fetsch, founder of Rewined, which repurposes wine bottles into wine and spirit-scented candles. It also produces wine and spirit-scented soap and other gift products. He previously evaluated other companies trying to service the wholesale-to-retail trade but found them wanting. “They over-promised, but under-delivered. Faire doesn’t do that.”
Faire’s streamlined payment system, for both retailers and makers, was especially appealing. “Cash flow on both sides is always an issue,” Fetsch says. “It kept us from having to chase people down for payment and its payment terms are a huge thing for our customers. It allows us to do the things we like to do, which is creating new products. We can now really connect with our customers, rather than have to be administrators.”
Easing the administrative load for retailers was also one of the big draws for Trip Van Roden, president of gift and stationery maker Wellspring, which joined Faire in early 2019. “Every business decision we make starts from the retailer perspective. If it makes sense for retailers, it makes sense for us,” he shares.
Faire helps retailers operate more efficiently and effectively thanks to its sophisticated digital tools. “We all live in both a digital and physical world today. We understand the physical side of retail, going to trade shows, talking with sales reps, and placing orders. But that takes time and produces a lot of paperwork that is cumbersome for retailers to deal with. Faire eliminates all that,” Van Roden says.
Both Van Roden from Wellspring and Fetsch at Rewined note that the orders coming from Faire tend to be smaller than from existing accounts, but reorders also tend to be more frequent.
Van Roden appreciates Faire as a prospecting tool, where Wellspring has seen some 80% of its orders now coming from new accounts. And Faire helps keeps those accounts active through its CRM program, that Van Roden says is even better than his company’s own.
Rewined, which came on board Faire not long after it launched, has experienced dramatic growth from a couple of orders per week to between 15-to-20 every day.
“It’s become a legitimate part of our business,” Fetch says. “It’s scary to put your business in someone else’s hands, but it’s become a big chunk of our business. We rely upon it now,” Fetsch says.
Retailers view of Faire
Brianne Mees’ Tender Loving Empire is far more than a little gift shop on the corner. It is both a record label and a chain of five Portland, OR stores, with a sixth slated to open in 2020.
“We are founded on the belief that creativity makes life better. We want to share that with the world,” Mees says and is doing that by showcasing handmade goods in highly experiential retail settings.
“We love the opportunity to create an experience in real life. In this day and age you can’t be a retail company if you are not focused on the web. But there is something special that happens in real life. You can’t just be behind a screen your whole life.”
Mees has a team of four buyers to source products for her rapidly growing chain of stores, including one devoted to designing the company’s own line of gift products. They have found Faire a god-send.
“We’ve increased the number of vendors we source from over the last year,” Mees says. “Until Faire, it’s been challenging for us not only because we carry only handmade, but about 70% of our items are regional. It’s a must for us to be able to filter those categories.”
She adds that while her company’s focus has been on growing direct-to-consumer sales, she anticipates that there will come a time when they are ready to offer the company’s own handmade gift line wholesale through Faire as well. Its own line currently generates about one-third of Tender Loving Empire’s sales.
With a similar focus on art and handmade goods, Holly Addi and Heidi Jube, co-owners of Art Haus Collectif and Collectifrue, are looking to the internet to grow beyond the confines of their Salt Lake City shop which started as a gallery for Addi’s art.
“We opened as an art gallery and home accessories store to help people find unique things for their home,” Addi says. “Today you have to compete with the Amazon’s of the world. Faire has given us the opportunity to find these makers that can add to our inventory.”
But more than finding inventory for the Art Haus Collectif store, Addi and Jube use Faire to source products for their rapidly-growing, national-in-scope Collectifrue gifting website.
“Faire is helping us scale,” Addi adds. “About 70% of our sales now come from our gifting site, which is heavily focused on corporate gifting. These orders can be big and corporate customers demanding. We put a more luxurious, handcrafted spin on the old concept of ‘Harry and David’-type corporate gifts.”
Faire has helped Addi and Jube manage the risks of ordering 60 items, like bath salts, to fulfill a corporate gift order only to have the shipment delayed or something else fall through. “Faire has really streamlined the process and helped small operations like ours compete with bigger ones. Back in the day, cash flow put a really big strain on our business.”
Faire has enabled Addi and Jube’s team to focus on satisfying its customers, rather than on the backroom administrative tasks of sourcing, ordering, and processing payments. “We get really fast turn around for orders,” Jube says. “I’d say 95% of the time it is within a week. So we can focus on executing for our customers.”
Both retailers are using Faire not just to find new products for their respective shops and websites, but they are leveraging Faire to scale their businesses thanks to its reach, its digital resources, and terms customized to the needs of small businesses.
“So much of retail is the old, traditional model where you go to market, see what everyone else sees, then everyone ends up with the same thing in their store and ultimately the same levels of sales,” Addi says.
“Faire is a new business model and it’s enabling us to change our model. We don’t want to have the same products or the same level of sales. We want to have something different and get somewhere different in our sales. We don’t accept those limits,” she concludes.