Faire, the online marketplace that connects small retailers with wholesale brands, and that has soared to a valuation of over $12 billion since it was founded just five years ago, is investing its own form of seed money to create more small retailers, and more Faire customers.
Over the past year Faire has given over 6,000 small businesses owners $60 million in inventory credit to help them open new stores or launch online sites.
Startup inventory credit of up to $20,000 for each qualified applicant was extended as part of a program called Open With Faire, which Faire began offering widely to North American businesses in May, 2021. It recently expanded the program to 7 additional markets in Europe and the United Kingdom.
Under the program, the wholesaler is paid immediately by Faire, but the retail startup gets, in effect, a zero interest loan for inventory purchases, and 60 days to pay for the inventory.
The program was created when Faire executives saw retail entrepreneurship surge during the pandemic, but also saw how hard it was for retail newcomers to get working capital to open a store, and for existing retailers to open a new venture, Faire Chief Financial Officer Lauren Cooks Levitan said.
“Open With Faire is an extension of our core business model,” she said. “The whole premise of the Faire marketplace is to equal and level the playing field for entrepreneurs. Open With Faire takes that one step further because it’s leveling the playing field at the point of creation of a new business,” she said.
“We’re partnering with them right as they’re getting set up, and that’s when they need it most,” Cooks Levitan said. “It’s really difficult for small businesses – particularly women and minority-owned businesses – to find the working capital to get started,” she said.
Children’s clothing store owner Janel Andersen used Faire inventory credit to quickly open a women’s clothing store next to her original store, when the adjacent storefront suddenly became available.
Initially, “I thought to myself how in the world am I going to pull this off? It was after trade show season, and I was thinking how am how am I going to fill this huge space with product?,” said Andersen, who owns the children’s clothing store Bird + Bean, and women’s clothing and gift store Stitch + Sparrow, in Berkeley, CA.
She learned about the inventory credit program, then in pilot stage, and “we were able to pull it off,” opening the store within six weeks of the space becoming available.
“Basically, if I didn’t open it in six weeks, financially it wouldn’t have worked out,” she said.
Andersen has been using the Faire marketplace since 2017, a year after she opened her first store, Bird + Bean. She has used the marketplace both as a retailer, ordering goods for her stores, and as a wholesaler, selling the children’s clothing line she designs.
As a retailer she likes the convenience and wide assortment of unique merchandise available on Faire. As a wholesaler, Faire has helped her connect with many more retail accounts. “I’ve been designing my brand for 17 years. I’ve been in all the showrooms with all of these massive, huge brands and I never got the attention because I was a small brand,” she said.
“On Faire I was able to get the attention my brand deserves because I wasn’t competing with the big brands; stores were willing to try me; and now we’re a top shop on Faire,” Andersen said.
Faire soared to unicorn status within two years of its launch. Its strategy of helping mom-and-pop shops discover new products and buy from creators and brands around the world has changed how many small stores do business.
Faire helps small stores get better prices by enabling independents to buy collectively, and helps small retailers get access to more craftspeople and small manufacturers.
Faire’s online platform facilitates the ordering, payments and returns. Faire allows store owners to return merchandise when a new brand they try isn’t a fit for them, and gives them net 60 day credit terms similar to those enjoyed by the big retailers.
Investors also love the business model. A $416 million extension to its Series G funding, announced in May, brought its valuation to $12.59 billion.
Faire was started by four former Square employees after they tried marketing a high-end, imported umbrella in the United States. While they got the umbrella into big name department stores, they discoverd that it sold better in independent shops, but that there was no way to easily leverage the collective power of small stores.
The platform now is being used by 500,000 retailers in North America and Europe and by 70,000 brands from 100 countries.
Faire doesn’t reveal its revenues, but Cooks Levitan said the company is seeing over 300% year-over-year growth in its overall transaction volume.
Cooks Levitan frequently gets asked what Faire’s plans are for a public offering. As of now the company has not specified any timeline for that.
“If we think the best way to address our customers’ needs is to access the public markets, that’s something we would certainly consider,” she said, “but right now our focus in largely on being the most reliable partner for our customers.”