When Chad Anglin opened Pigment in San Diego with his wife, Amy Paul, in 2007, they envisioned creating a gallery space for local artists. As the pair added furniture, home goods, and gifts, customers began to flock to their carefully curated shelves and macramé aesthetic. Over time, the couple expanded into a 3,000-square-foot storefront, and then opened two additional locations. Ten years in, Pigment had become a fixture in its community and at the industry trade shows where Anglin and Paul sourced many of their products, from candles and doormats to crystals and greeting cards. It was around then that Anglin discovered Faire. The San Francisco startup, led by a group of former Square employees, offers store owners a way to discover new products and buy wholesale, without the hassle of trade shows and paperwork. In just a few years, Faire has grown to reach 300,000 retailers and 40,000 brands. In mid-November, the company raised $400 million in Series G funding, bringing its valuation to $12.4 billion. “It’s just very easy to use,” Anglin says of Faire’s minimalist, e-commerce-style platform. “We’ve been able to find a lot of vendors who don’t necessarily have the money to go to the trade shows.” Anglin is reconsidering the expense and time involved in going to trade shows, too. “It’s not as worth it to go when the online community is so robust these days,” he says. [Photo: courtesy of Faire]There are other wholesale platforms catering to independent retailers, but none has momentum to match Faire’s. Etsy briefly experimented with a wholesale offering, but shut it down in 2018. Shopify acquired wholesale startup Handshake in 2019 for a reported $100 million, but has been notably quiet about its performance. Abound, Bulletin, and Tundra, Faire’s remaining rivals, have collectively raised $111 million in venture funding, versus Faire’s $1.1 billion. “We are on track to do over a billion dollars in GMV (gross merchandise value) this year,” Faire cofounder and COO Jeff Kolovson recently told Reuters. It’s a big number, but also one that suggests ample room to grow: Shopify, by comparison, is on track to do $160 billion in GMV this year. Faire’s sudden success might seem surprising, given the standard narrative about retail in America: Amazon is taking over, and Main Street shops are paying the price. Anu Hariharan, a partner at Y Combinator’s Community Fund for growth-stage investments—which invested in Faire after it got its start as a YC company—says that many investors were skeptical of Faire’s Demo Day pitch following the company’s participation in YC’s winter 2017 startup batch. “‘Retail is a dog market,'” Hariharan recalls them telling Faire’s founding team. The company’s potential, she adds, was “not obvious.” Faire CEO Max Rhodes [Photo: courtesy of Faire]But the dynamics with regard to Amazon and retail are more nuanced than many investors realized. Specialty retailers that have adapted to operating in Amazon’s shadow are thriving, in some cases, by investing in areas where Amazon struggles, such as customer service and storytelling. They are also eager to stock the kind of design-forward, “je ne sais quoi” products that are better suited to in-person browsing than online searching. On Faire, which means “to do” or “to make” in French, products like that are front and center. “When push comes to shove, Amazon picks the consumer, and that puts them in kind of an adversarial relationship with their suppliers,” says Faire cofounder and CEO Max Rhodes. “I consider us really fortunate to never have to make compromises against our mission. When we make tiebreaks, sometimes we have to go with the brand, sometimes we go with the retailer, but we’re always benefiting small businesses.” Beyond Amazon To retailers, Faire isn’t shy about positioning itself as part of the Amazon resistance. The company makes it as easy to find products that are “not on Amazon” as it is to find products that are handmade or eco-friendly. “Not on Amazon” search results on Faire’s site include tattoo balm and silicone baby bibs. “We’ve pressed that [filter option] a lot,” says Pigment’s Anglin. “If we have a vendor and they start selling on Amazon, depending on the relationship with that vendor, we’ll probably stop working with them, or diminish our orders.” “One of the main things that [small retailers] want to know is, when my customers come in here, have they seen this before? Can they easily find this online, elsewhere?” Rhodes says. “And so that’s what leads them to seek out products that aren’t available on Amazon, aren’t available on Walmart.” Surfacing unique products, however, is where some makers take issue with Faire. The company charges makers a 25% commission on new orders and a 15% commission on reorders. It also seeks to honor existing relationships between brands and store owners through a program called Faire Direct; if a brand brings a store to Faire, through a custom link, Faire waives its commission fee. In the near term, however, this model incentivizes Faire to optimize for new orders, which can lead to choices that disadvantage some vendors. “They were suggesting other jewelers with 50% of my order minimum requirement on my profile page—in between my products and my ‘about me’ section,” one maker told Wholesale in a Box, a training program and blog. “We saw our wholesale sales go down after we started referring [store owners] to Faire.” ‘Open with Faire’ allows aspiring shopkeepers to apply for up to $20,000 in Faire credit to purchase inventory.Emily Kerr-Finell, founder at Wholesale in a Box and One Mill School, cautions makers to diversify how they sell. “It’s tempting to say, I got onto Faire, they’re handling wholesale for me,” she says. “What sometimes makers don’t appreciate is that relationships with store owners and customers are the lifeblood of their business. If they hand over all that to a third party, it can have really negative long-term consequences for their business. That was true before COVID, and it’s more true now, because yes, a lot has recovered, but store owners are still under a lot of pressure and their cash reserves are depleted.” “Not on Amazon” may work for indie makers. But for larger brands, independent retailers have to be part of a mix that likely includes Amazon, as well as big-box retailers. Kate Lubenesky, president of W&P, which designs sustainable kitchen products, has a brand presence on both Faire and Amazon. The model works, she says, because of W&P’s careful attention to pricing. “If you walk into a gift store and you see a bottle that you love, you might check Amazon for the star rating and see, is this a five-star product? Yes, great,” Lubenesky says. “But you’re not going to see it for half the price [on Amazon]. We keep a very tight control on our distribution so that there aren’t rogue sellers out there who are selling at a discount and undercutting the independent retailers.” Going forward, Faire’s growth depends, in large part, on the health of the specialty retail sector, which is still reeling from COVID-19 and bracing for supply chain shortages. Neighborly goodwill, says retail analyst Pam Danziger, author of Shops That Pop!, will not be enough to save Main Street. “You find survey after survey of consumers saying they support small businesses,” Danziger says. “But when it comes down to it, they’re often opting for convenience. What they say their values are, versus what they actually do, are very different.” Faire recognizes this, and is looking for ways to lower the barriers to entry for independents (and, of course, accelerate its own growth). One of its newer product offerings, Open With Faire, allows aspiring shopkeepers to apply for up to $20,000 in Faire credit to purchase inventory, plus a 60-day grace period before payment is due. After joining the site as the would-be owner of a holiday popup shop, I received a series of emails from Faire encouraging me to borrow in order to get my dream off the ground. “You’re eligible for $5,000 to $20,000 in net-60 terms, for free,” one email said. “For context, the usual limit we issue is between $500 and $3,000.” If those tactics feel aggressive, well, more than $1 billion in venture backing comes with aggressive growth targets. Next year, Faire plans to launch a credit card. Rhodes says he aspires to evolve the company into an “operating system” for wholesale, with tools like a CRM for brands, and inventory management for retailers. “The story of the independent retailer over the last 50 years has been a story of adaptation,” he says. Faire will have to adapt along with them.
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