Faire

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“The #1 platform for remote sales team”
Founded: 2016, San Francisco, CA, USA

Category: : Ecommerce Marketplace

Primary office: San Francisco, USA

Core technical team: : San Francisco, USA

Status: Private

Employees: 150

Amount raised:

USD$265.95 million (7 rounds – October 2019)

OVERVIEW

  • Faire Wholesale Inc. uses an online platform to buy from makers (i.e., brands, artisans, and independent wholesalers) and sell to small, local retailers. The reseller helps (1) local retailers find and buy novel and unique goods that can make their stores distinctive, and (2) makers reach local retailers.
  • Significantly grow the number of local retailers and makers that use the reseller’s platform by helping them increase their sales and decrease their operational costs
  • Enables local retailers to find and buy new inventory and a fighting chance to go up against Amazon and major chains. Also enables makers to reach local retailers across the USA and Canada
  • Distinct competences include: (1) Entering new markets, (2) improving value propositions to both sides of the platform (retailers, and makers), (3) improving and adding features to its online platform (e.g., streamlined systems such as payment, sourcing, ordering, processing, and recommendations to purchase) and (4) providing excellent customer service (e.g., manage complaints received by each side, provide information about taxes)
  • Origin and evolution:
    • Three Square Inc. executives left in January 2017 to launch Indigo Faire. The name changed to Faire as result of a lawsuit for trademark infringement filed by Fair Indigo.
    • The founders sought to upgrade the wholesale-retail model, particularly the way in which local retailers connect with new makers.
    • Faire raised $118 million in its first year of existence
    • Pivoted in January 2018 due to the large number of returns. The company tweaked some of the rules of the marketplace, imposed credit limits on retailers, re-ranked makers, and products, made it easier for retailers to pay their invoices and bootstrapped a prediction algorithm that can get smarter as its feed its own sell-through data into it.
    • By December 2018, 5,000 local retailers were actively buying on the Faire platform and 2,000 makers were fulfilling orders.
    • In mid-December 2018, the company raised $100 million at $535 million valuation.
    • Faire was worth $1 billion in October 2019, less than 3 years after it was founded. As of October 2019, the company had raised $266 million
  • Faire is known as the “Amazon for local retailers.” It offers business owners a toolkit of simple technology, data insights, financial terms, and logistics solutions to support the future of local retail. Faire’s net 60 payment terms, and free returns take the risk out of the wholesale business so that local retailers and independent makers can compete with big-box and ecommerce giants.

PERFORMANCE METRICS

  • Valuation: USD $1 billion (Oct 2019 – less than three years after launch)
  • USD$1 million in orders per day for makers from 39 countries

 

ACHIEVEMENTS

  • Connects 7,000 product suppliers with 75,000 retailers

Sells

  • Makers: Faire’s platform enables makers to sell to local retailers in the USA and Canada.  A maker pays a 25% commission on first orders from any buyer, 15% commission on reorders from the same buyer, and an optional 3% fee for immediate payment (as opposed to waiting 30 days for invoice settlement).
  • Retailers: Faire’s platform enables retailers to purchase products from new makers and return them to Faire if they do not sell free of charge

Channels

  • Free services to local retailers
    • Weekly recommendations of the products that Faire thinks can sell particularly well at the retailer’s location
    • 60 days to try new inventory, if it does not work, they can send it back to Faire and swap it out for new items that will sell
    • Search feature to find products that are not available on Amazon
    • Financial calculator tool that helps small businesses figure out how long they can stay in business using revenue forecasts and costs such as rent and payroll
  • Social media – Actively promotes Faire’s platform on Facebook, Instagram and other social media platforms
  • Blogs – CEO/co-founder writes blogs

Competencies

  • AI/ML. Uses artificial intelligence and predictive analytics to match local retailers with goods that are predicted to sell well in their specific locations for the purpose of sourcing and managing inventory as efficiently as possible
  • Glocal. Faire believes that local is the future – consumers will buy from local retailers
  • Customer support. Faire continuously improves the support it provides retailers and makers seeking to make its customer and supplier support world class

Distinct AI Features

Type

  • Develops algorithms to improve product recommendations, ranking, search, logistics, and more.

 

  AI use

  • Uses artificial intelligence and predictive analytics to match local retailers with goods that are predicted to sell well in their specific locations for the purpose of sourcing and managing inventory as efficiently as possible
  • Developed its own AI-powered image recognition software to automatically surface new products to stores that match the aesthetic and category of their website and Instagram. Faire can take a database of hundreds of thousands of products and automatically show a retailer the subset that matches the store most perfectly, saving them countless hours traveling to trade shows or wading through paper product catalogs

Rate of return on customer’s investment to make AI work

Immediate:

  • Local retailers.
    • Find new products that are guaranteed to sell in their stores
    • Save time and money when selecting new products to carry by using Faire’s AI-powered image recognition software
  • Makers and local retailers.
    • Faire’s predictive analytics recommends the products that will sell best
  • Makers.
    • Faire’s buy-back program enables makers to buyback the goods that local retailers return instead of distributing them. For example, a maker sells $100 of goods to Faire and Faire sells these goods to a retailer for $200. The make receives $100 minus the commission fee (15-28% commission fee, based on how quickly they requested payment and whether this was a new store for them). If the retailer returns the goods and the makers opts into the buyback program, those goods will be delivered to the maker not Faire. The maker will buy the goods at 70% of the original order (representing a 30% discount off the $100 wholesale price).

Long term:

  • Makers and local retailers.
    • Faire’s AI applications may be able to help compete against Amazon and large chains

Databases

  • Unique database comprised of information on wholesaler-Faire and Faire-retailer transactions.

Quantum Computing

  • Data security is very important. Faire has a trust, safety, and security team to ensure that private data is protected and not misused.

Resources

Assets

  • Resellers platform that enables Faire to sell to local retailers and purchase from makers
  • AI-powered image recognition software
  • Image as an innovator that attained objectives that a publicly listed company like Etsy (etsy.com) failed to accomplish
  • Relationships with thousands of local retailers and makers in north America
  • Buy-back program available to makers

Processes

  • Process to onboard makers into platform
  • Process to onboard local retailers into platform
  • Process for local retailers to select the new items to purchase
  • Process to streamline transactions

Priorities

  • Continuously improves Faire’s value propositions to local retailers and makers
  • Improve operational costs for small business owners while improving their sales and profitability
  • Balance between number of makers and local retailers on the platform. To maintain a healthy ratio of makers and retailers, Faire adds new makers based on retailer demand

References

  1. Azevedo, M.A. 2018. Wholesale Marketplace Faire Secures $100M At $535M Valuation. Crunchbase News. December 14.
  2. https://news.crunchbase.com/news/wholesale-marketplace-faire-secures-100m-at-535m-valuation/
  3. Barker, L. 2019. What is Faire? – Formerly Indigo Fair. https://www.luckybreakconsulting.com/what-is-faire-formerly-indigo-fair/
  4. Barker, L. 2019. The disadvantages of Faire. https://www.luckybreakconsulting.com/the-disadvantages-of-faire/
  5. Barker, L. 2019. The Inevitable Downside of Faire. https://www.luckybreakconsulting.com/the-inevitable-downside-of-faire/
  6. Barker, L. 2019. Review of Faire – The Wholesale Marketplace Platform https://www.luckybreakconsulting.com/review-of-faire-the-wholesale-marketplace-platform/
  7. Barker, L. 2019. An Interview with Max Rhodes, CEO of Faire. https://www.luckybreakconsulting.com/an-interview-with-max-rhodes-ceo-of-faire/
  8. Crunchbase 2020. Faire Wholesale, Inc. https://www.crunchbase.com/organization/indigo-fair
  9. Danziger, P.N. 2019. Main Street Retailers Have A New Weapon This Holiday Season: Faire. Forbes, November 3.
  10. https://www.forbes.com/sites/pamdanziger/2019/11/03/main-street-retailers-have-a-new-competitive-weapon-this-holiday-called-faire/#29ea449928ea
  11. Debter, L. 2019. Faire, A Wholesale Marketplace, Notches $1 Billion Valuation. Forbes. October 30. https://www.forbes.com/sites/laurendebter/2019/10/30/faire-wholesale-marketplace-series-d-1-billion-valuation/#32d38d187aa9
  12. Debter, L. 2020. A High-Flying Unicorn Bet Its Business On Local Shops. Now It’s Trying To Help Them Survive. Forbes. March 27.
  13. https://www.forbes.com/sites/laurendebter/2020/03/26/faire-small-businesses-coronavirus/#13f547dc17c2
  14. Rhodes, M. 2018. The Story of Faire. Medium. December 13.https://medium.com/faire/the-story-of-faire-465d3d4c161f
  15. Rhodes, M. 2017. Betting Big on Local Retail Introducing Indigo Fair: the First Wholesale Marketplace to Offer Guaranteed Sales to Retailers, March 7. https://medium.com/faire/betting-big-on-local-retail-1aa9706c4e04
  16. Sawers, P. 2019. Wholesale marketplace Faire raises $150 million at a $1 billion valuation. VentureBeat. October 30.
  17. https://venturebeat.com/2019/10/30/wholesale-marketplace-faire-raises-150-million-at-a-1-billion-valuation/

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  • Tony Bailetti
SERS

Scale early, rapidly and securely (SERS) is a global community actively collaborating to advance and disseminate high-quality educational resources to scale companies.

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