Decacorns: Faire Brings Small Retailers Together To Compete With Big Players
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According to reports, small businesses in Europe and North America are a $2 trillion market. The recent pandemic has seen even these businesses accelerate their digital transformation. It is mostly incomprehensible to see how these small retailers can compete with the might of retailers like Amazon and Walmart. But there are companies like Faire who are trying to make it a more level field for them.
Faire’s Offerings
Founded by Daniele Perito, Jeffrey Kolovson, Lauren Cooks Levitan, Marcelo Cortes, and Max Rhodes in 2017, San Francisco-based Faire is a two-sided marketplace and wholesale platform that helps retailers find and buy unique wholesale merchandise while also helping brands and makers reach local retailers.
Faire was started with a simple vision to build a wholesale marketplace that would help small brands and retailers come together to compete on a more level playing field with bigger retailers like Walmart and Amazon. It provides business owners with access to technology, data insights, financial insights, and logistics solutions to support the future of this local retail.
Unlike traditional channels like trade shows where retailers are expected to pay an upfront fee, Faire only earns a commission on sales when its brands form new relationships with retailers on its platform. The retailers get 60 days after purchasing from a Faire vendor to see how the products sell through before paying for them. Faire maintained, and even improved upon, some of these terms during the pandemic. Despite multiple waves of lockdowns, it reported that revenues of its stores had quickly reached pre-pandemic levels. With re-opening of the economy, its store sales are reaching all-time record highs.
Faire relies on the resurgence of small, local stores. Across the country, and globally, small stores have been taking back market share from chains due to continued government support and focused marketing programs. During the pandemic, the federal government also launched a $300 billion forgivable loan program targeted specifically at small businesses. The growth in consumer support combined with these loans has helped Faire’s retailers, and Faire, grow through difficult times.
The combination of its wholesale operating system and its marketplace creates a flywheel effect, creating momentum that grows and strengthens its community. When it brings on brands and gives them software to run their wholesale business through Faire, those brands introduce more retailers to the Faire community and strengthen their relationships with the retailers already here. When it brings on retailers and gives them software to source and manage all their inventory through Faire, those retailers attract more brands to the Faire community and strengthen their relationships with the existing brands.
As this community gets bigger and stronger with more brands and retailers using its tools, Faire gets access to data that helps it drive down the costs of its business, allowing it to offer better prices and better credit terms to its retailers, which results in more retailers and brands wanting to join its community.
Faire’s Financials
Being privately held, Faire does not disclose its financials. But the company did reveal that in 2020, it had sold 125 million products on its platform and recorded over $10 million in sales per day during peak buying events. As of November 2021, it was clocking in more than 3x year-on-year growth and had reached over $1 billion in annual volume. It has already expanded its presence to 15 markets in Europe and the United Kingdom. Its marketplace connects over 450,000 retailers globally to more than 70,000 brands from over 100 countries.
Faire has raised $1.7 billion in 12 rounds of funding from Sequoia Capital, Y Combinator, Golden Ventures, Founders Fund, Y Combinator Continuity Fund, Forerunner Ventures, Khosla Ventures, Baillie Gifford, and D1 Capital Partners. Its most recent round was held in May 2022 where it raised $416 million at a valuation of $12.59 billion.
Faire has a slew of competitors trying to do similar things for small retailers. Companies like Bulletin, NuOrder are offering similar services. Additionally, there are more regional players like Peeba in Asia, and a few niche players like Khula that offer similar services for farmers in South Africa.
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Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research ...
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