The world has changed a lot in the last year as the impact of the pandemic has rippled through our daily lives. Causing disruption on a scale unprecedented in our lifetime, the crisis has forced a reexamination of what matters most in our society. Now, this moment of rebirth presents a rare opportunity to choose how we rebuild the world.
We started Faire in 2017 with a simple vision: to build a wholesale marketplace that would help small brands and retailers band together to compete on a more level playing field with Walmart and Amazon. Over the past year, pandemic lockdowns pushed our community to the brink, but we never lost faith in this vision. In fact, after seeing their adaptation to a digital-first world and a surge of consumer support drive their sales above pre-pandemic peaks, we are more confident than ever in the durability of what they offer the world. As we look ahead, we are excited to help our entrepreneurs use this moment of rebirth to build a better future for themselves and their local communities.
Today, we are announcing that we have raised $260 million in funding at a $7B valuation, led by Sequoia Capital. If you’ve followed Faire for a while, that sentence may sound familiar. That’s because we announced our Series E round at a $2.5B valuation back in November, also led by Sequoia. The round includes existing investors Lightspeed, DST, Founders Fund, Khosla, Forerunner, D1, YC, and Dragoneer in addition to new investors Wellington and Baillie Gifford. This latest round is validation that our vision of a more democratized future for retail is resonating with many of the best investors in the world. This new round of funding will also enable us to broaden our vision. We will continue our rapid expansion in categories like food and apparel and in new geographies like Europe, where our sales have topped $50M annualized mere weeks after our launch there. We will also find new ways to serve our existing communities as they continue to navigate the post-pandemic shift to an omnichannel retail landscape.
How Our Bet on Small Business Paid Off
From the beginning, our success at Faire has depended upon the success of our brands and retailers. Unlike traditional channels like trade shows that demand costly upfront fees, we only make a commission on sales when our brands form new relationships with retailers on our platform. When retailers purchase from a new brand on Faire, they get 60 days to see how the products sell through before paying for them, so we only make money if the products we recommend actually resonate with their consumers.
Admittedly, this alignment of incentives made for a nerve-wracking couple of months when lockdowns cut the sales of our retailers by more than 70%, but we stood behind our community. We refocused our roadmap exclusively on helping our small businesses get through the crisis: we provided 30-day extensions on our 60-day return window, we enabled retailers to enroll in interest-free payment plans, and we waived our next-day payout fees for our brands. We knew we were taking a risk with these decisions, but we firmly believed our brands and retailers would find a way to bounce back.
“During a time when I saw up to a 70% reduction in sales over the last year, when most would give up, you gave me hope not to quit. All I can do is say thank you and let you know that for the first time since early 2020 we are up over the last year.” — Kara Brook Brown, Owner of Waxing Kara in Owings Mills, MD
As it turned out, their recovery came faster and stronger than we could ever have predicted. Despite multiple waves of lockdowns, the revenues of our stores had reached pre-pandemic levels by the holidays of last year. Now, with re-openings in full swing across the US, every week brings a new all-time record for their sales. Behind this astonishing turnaround were two pre-pandemic trends that the lockdowns accelerated: the increasing adoption of technology among small businesses and the growing support for these businesses among consumers.
Retailer recovery through the pandemic
Both retailers and brands relied heavily on technology to navigate the challenges of the past year. At the beginning of the pandemic, less than 20% of products acquired on Faire were ultimately bought through online vs offline channels by consumers. Today, that percentage has doubled as our retailers have found new ways to differentiate themselves online, and with foot traffic rebounding, retailers are selling more than ever by combining online and offline channels. Meanwhile, with trade shows canceled, brands and retailers used Faire to move their wholesale relationships online en masse. Even as trade shows have returned in recent months, brands and retailers have stayed home to continue saving time and money and to shop our more expansive, data-driven selection.
The resurgence of independent retail is something we’ve written about extensively in the past. Small stores in almost every category have been taking back market share from chains over the past decade as consumers have preferred to support businesses in their local communities. Last year, support for small businesses reached a fever pitch as consumers faced the prospect of seeing their favorite shops close forever. In response, the federal government launched a $300B forgivable loan program targeted specifically at small businesses, demonstrating a bipartisan recognition that Main Street is an invaluable part of our societal fabric. The surge in consumer support combined with these loans proved crucial in helping our community get through the last year.
With our retailers and brands coming back stronger than ever, we are excited to look ahead as we broaden our vision for Faire.
The Future of Faire
When we launched Faire, we entered the $25 trillion retail industry through a backdoor that had long been overlooked in the tech world. With all the innovation focused on connecting brands and retailers directly with consumers, the wholesale market where brands connect with retailers remained behind the scenes and full of untapped potential. Even now, with Faire reaching $1B in annual volume in just four years, we believe the size of this market is vastly underestimated. The most exciting opportunities in this space are still ahead of us.
The traditional wholesale market is broken for brands and retailers in almost every country and in every category. Just weeks after going live in Europe, Faire has already exceeded $50M in annualized sales, a milestone that took us almost two years to reach in the US. Retailers in both North America and Europe have always craved the uniqueness of international brands, but the cost of flying to trade shows across oceans has limited demand. By providing a seamless cross-border buying experience for the first time, we’ve opened the floodgates: 70% of our European sales are transatlantic so far. As we’ve turned our attention to apparel and food, we’ve seen sales in these massive categories grow twice as fast as our overall business, now accounting for over a third of all products sold on Faire. While all these new segments pose unique challenges requiring their own innovations, the core problem facing brands and retailers is the same: traditional trade shows are a painfully antiquated way to source new inventory. That’s a problem we are committed to solving everywhere.
We have also come to see our opportunity to help brands and retailers extend far beyond our wholesale marketplace. With a record number of businesses starting this year, we are excited to be helping new retailers get off the ground with our Open with Faire program, where retailers can apply to get up to $20,000 of inventory interest-free to stock their entire store with Faire. As brands and retailers are making the shift to buying and selling across multiple channels, we have realized they need an entirely new set of tools to help them source, manage and sell their inventory. As the place where an increasing number of retailers and brands are conducting the majority of their wholesale business, we are in a unique position to provide these tools and transform our platform into a digital operating system for wholesale.
This is a transformation that is already well underway. We have developed a wholesale CRM and email marketing suite for brands called Faire Direct where brands can manage all their wholesale relationships digitally, including with retailers who aren’t yet on Faire. We are building inventory management tools that enable retailers to track inventory across different sales channels and place reorders with brands not yet on our platform. As orders come in, we automatically push products with complete photos and descriptions into their online stores, saving them hours of tedious data entry.
What’s most exciting is how the combination of this wholesale operating system with our marketplace creates a flywheel that grows and strengthens our community. When we bring on brands and give 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 we bring on retailers and give 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 brands we already have. As our community gets bigger and stronger with more brands and retailers using our tools, we get data that helps us drive down the costs of our business, allowing us to offer better prices and better credit terms to our retailers, which leads more retailers and brands to want to join our community.
Ultimately, the growth of the Faire community allows these small businesses to flourish together with the power of technology and scale once reserved for giants like Amazon and Walmart. The result is an amplification of what makes shopping small so special for consumers — the experience of connection to what you buy and who you support. With consumer support and the power of technology, the future for small business is brighter than ever. What was once a fragmented group of brands and retailers has become an unstoppable community, working together to create a better world for themselves and for all of us.