The Disadvantages of Faire

disadvantages of faire

Over the last several weeks, I’ve been exploring the potential pros and cons of Faire (formerly Indigo Fair) here on the Lucky Break blog. Today I’m sharing some of the disadvantages as part of an ongoing blog series about emerging wholesale marketplaces. While there’s certainly a lot to love about working with this wholesale platform for artisans, there are notable disadvantages of Faire, too. I shared a few of those disadvantages in a previous blog, and I’m back with additional thoughts to help you determine if Faire is the right opportunity for your brand.

 

The Disadvantages of Faire

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I’m pleased to share that Max Rhodes, Faire’s CEO, graciously provided answers to a tidy list of queries I sent his way. In the final two blogs of this series, I’ll share his responses, my final thoughts, and the results of the Lucky Break community survey.

 

FAIRE FAVORS BUYERS ABOVE BRANDS

There’s a general feeling among many makers and product designers that retailers are getting the better deal when it comes to Faire. They enjoy generous ordering incentives, including free shipping, free returns on first orders from any brand, and $200 cash to spend when signing up through a brand’s Faire link.

 

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However, artisans often believe that they’re getting the shorter end of the stick. We’re enjoying an increase in exposure, but we’re also paying a princely sum (up to 28% of the order) for the privilege of being seen. Thankfully, we’re not saddled with the burden of product returns, though passing the baton to Faire on that front creates separate issues that are worth exploring.

 

SLUGGISH CUSTOMER SERVICE

I frequently hear criticism about slow responses from the Faire team, especially as it pertains to reviewing applications for new makers. Despite those rumbles of frustration, artisan satisfaction with Faire’s customer support team appears to increase exponentially once we gain acceptance onto the platform.

 

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The Inevitable Downside of Faire

downside of Faire

As part of my ongoing blog series about emerging wholesale marketplaces, I’ve been exploring the potential of Faire (formerly Indigo Fair). While there’s certainly a lot to love about working with this wholesale platform for artisans, we don’t often hear much about the disadvantages. I’ve spent weeks studying this wholesale platform and speaking to retailers and brand owners who have a stake in the marketplace. I’m eager to share what I’ve learned about the disadvantages of Faire so that you can make an informed decision for your business.

 

The Inevitable Downside of Faire

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Faire executives have agreed to address my concerns, and I look forward to sharing their response in an upcoming blog.

 

FAIRE CHARGES A HEFTY COMMISSION, ESPECIALLY ON FIRST ORDERS

A significant downside of Faire wholesale is their fee structure, which has evolved over time. The rate for new makers onboarding in early 2019 is 25% on the first order from any buyer.  It then becomes 15% on subsequent orders from the same buyer. Faire frequently extends net 60 terms to shopkeepers, and makers can elect to pay an additional 3% fee for immediate payment. You can also choose to wait thirty days for payment and skip the 3% fee.

 

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That translates to a substantial commission of up to 28% on Faire orders. As a consultant who’s had the privilege of coaching hundreds of brands through the mechanics of product pricing, those margins make me cringe. Let’s explore how that breaks down for a product that retails for $30.

 

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Tariffs and Their Impact on Small Business

Price increases.
Delayed shipments.
Complicated paperwork.
Uncertainty in vendor relationships.
Welcome to life in the age of heightened tariffs.

 

When the Trump administration announced new tariffs with China in August of 2018, I was optimistic that this was a short-term problem that would resolve itself in short order before many of my clients felt any significant impact. Regrettably, we’ve had no such luck. The administration seems to be digging in its heels, announcing successive waves of new tariffs that have expanded both the scope of goods affected and the degree to which they’re affected.

 

Cargo Ships On The Sea With Mountain On Background

 

Small businesses are beginning to feel the crunch, so I’m diving in to help decode the impact these new tariffs are having on our community.

 

WHAT IS A TARIFF?

Tariffs are a kind of tax leveraged on a particular category of imported goods. The amount of the tax depends on many factors, including the type of products you (or your suppliers) are importing and the country in which those goods originated. These charges are collected by U.S. Custom and Border Protection agents at all U.S. ports of entry, and the funds are deposited into the U.S. Treasury.

 

Tariffs aren’t some new taxation scheme. They were first introduced by the U.S. government in 1779, but 2018 saw a flurry of new tariffs assigned to Chinese goods in an attempt to “level the playing field” while renegotiating international trade agreements.

 

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That might sound good in theory, but tariffs aren’t generally welcome news within the small business community, and economists have been putting in some serious overtime to analyze the current situation and fact-check the administration. No matter where you fall on the political spectrum as a voter, these tariffs are likely coming home to roost for you, too. I surveyed my community this week and discovered that 46% of my clients have already felt the squeeze.

 

WHICH PRODUCTS ARE AFFECTED BY TARIFFS?

There have been several waves of new tariffs enacted by the administration, with the most recent taking effect on January 1, 2019. Many basic supplies used by artisans were included in recent tariff expansions, including:

  • Leathers
  • Wool
  • Yarn
  • Silk
  • Cotton Fabrics
  • Buttons
  • Glass containers
  • Metal containers
  • Citric acid + many common personal care ingredients
  • Pigments, dyes, inks, paints
  • Plywood
  • Film
  • Paper
  • Glass beads

 

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#LBCWantsToKnow >> July 2018: Pricing

LuckyBreak-LBCWantsToKnow-Pricing

LuckyBreak-LBCWantsToKnow-Pricing

 

Each month, I ask my Instagram community to join me in a focused, crowd-sourced discussion of a specific subject.  For the month of July, we dove head-first into pricing… one of my favorite topics. Often worried about, but seldom discussed, I welcomed an opportunity to roll up my sleeves and see how I could help.

 

When was the last time you implemented a price increase? How did you roll it out? How was it received?

 

THE LUCKY BREAK COMMUNITY SAID…

 

lillabarnclothing: Ah! I need to do this now. I’m going to up prices by 10%. Rolling it out next week after my summer sale.

 

stellachroma: At my rebrand a year ago. Just did it. No one batted an eyelash. Granted, it was at a rebrand. 🙂

 

yukonsoaps: A year and half ago. I just did it. No questions asked! And sales increased!

 

cocosabon: I increased on two products last year. I informed my customers prior to the increase and explained why it was necessary. No problems at all. 👍🏼

 

MY THOUGHTS: I recommended that my clients carefully monitor their costs and review them at least once per annum. If a nominal (3-7%) price increase is needed, it’s better to roll those out once a year as opposed to “saving them up” for years and then hitting your buyers with a large jump in pricing every few years. Anything less than 10% is typically received well by buyers, provided that the rollout is properly framed. Price adjustments on the order of 10%+ require more of a brand re-positioning (connecting with a new audience) and are decidedly more complicated, but totally possible.

 

I find that the very subject of price increases unnerves many makers + product designers, but this doesn’t have to be an anxiety-inducing affair. There’s definitely an art to framing the announcement, but we’re usually far more worked up about it than our wholesale partners and retail customers. Need some help in this arena? My instantly-downloaded price increase workshop can build confidence and guide you through the process of designing an elegant announcement. And Price-O-Matic, my product pricing software, can help you keep an sharp eye on costs and profitability, too.

 

Do you feel like you’re currently charging what your products are worth? If not, what’s holding you back?

 

THE LUCKY BREAK COMMUNITY SAID: 

 

westcoastleslie: I’m not mostly because I feel like it will hold me back from making sales. And I know you’ll say “those people aren’t your customers” which is true to an extent. But tell me who is going to buy a $200 scarf?🤷🏻 Honestly, point me in their direction!

 

idigyourhair: No, but I want to. I feel unknown and feel I need to grow my brand in order to do that. I have made them slightly higher online.

 

normalish_: Nope. I don’t feel like I am because I’m stuck in this crazy Facebook bubble of small businesses that all feel like we can only charge so much. Even the customers in this bubble complain/dictate if your prices are higher than the average. I’m desperately trying to work my way outta there.

 

focsimama: I wasn’t but I will be once this new brand launches.

 

scentshomebodybaby: Agree with all these comments!! Just trying to charge enough for people to purchase to make my brand known. It’s so hard.

 

sasaloo.living: There is the never ending question!…. among others, lol.🤦🏻

 

MY THOUGHTS: Pricing is decidedly complex. It brings together many elements (brand presentation, audience awareness, consumer psychology, distribution strategy, tricky math… blech!) and we must take all of those elements together to create a narrative and a presentation that both taps our people and keeps food on our tables. That’s no simple task!

 

Finding the right people, crafting a capable narrative, and increasing your company’s ability to communicate value are all pillars of strong brand development. If you haven’t laid the critical foundation for your brand, then it’s virtually impossible to command the prices you want or need. I echo the sentiments above: we must break out of our bubbles by becoming aware of the larger competitive landscape and staying tethered to the players in that market. As to the $200 scarf question, I ask: Are there $200 scarves on the market? If so, there are $200 scarf people out there!

 

Not everyone can afford a $200 scarf, and not everyone who can afford it wants to spend that sum, but pricing runs along a spectrum. You could buy a new car for $12,000 (Smart cars) or a new car for $260,000 (hello, Ferrari!), and virtually every price point in between. The Ferrari peeps know their audience and they aren’t worried about the Smart car audience. It’s up to each of us to decide where on the pricing spectrum we want to play, and the key is to build value that’s commensurate with the price tag we attach to our work. You can’t sell a Smart car at Ferrari prices, but you can sell a Ferrari at Ferrari prices. And you’ll need to create a Ferrari-worthy experience for buyers at a premium price point.  Think: flashy showroom, attractive salespeople in elegant suits, champagne as you shop, etc.

 

We can all take the reigns on our pricing by doubling-down on our attempts to control costs and create efficiencies. In this case, every penny saved really is a penny earned. I’m often tasked with helping my clients develop more efficient production strategies, seek new suppliers, and offer a “bird’s eye” review of expenses to help trim things down. Once we’ve become as efficient as possible, then the work pivots to cultivating the customers we want, becoming more aware of the market, and sending the right signals to show that we’re creating premium products for a specialty audience.  It’s possible, I promise!

 

If you want to work on becoming more intimately aware of your audience, broadening your view of the marketplace, and upp’ing your brand presentation, then I invite you to explore Brick House Branding, my 9-week brand mentorship. Enrollment for the first live semester of 2019 opens on October 2, and the program is now available in an instantly-available “On Demand” version, too.

 

JOIN THE CONVERSATION

Be sure to stop by the Lucky Break Instagram, where every month we chat about all things business. I’d love to hear your thoughts and hope you’ll lend your voice. Search the #LBCWantstToKnow hashtag to weigh in! In August, we’re chatting all things website.

A Inside Peek at the Kiva Loan Process

A Inside Peek at the Kiva Loan Process with Print Therapy

Hi! Lela here. I recently passed my blog microphone to Shannon, Lucky Break’s Creative Director- and she generously gave you a peek behind her Hettie Joan brand launch. This week, I’m passing the mic to Melissa, Lucky Break’s Operations Manager a.k.a. “My Right Hand.” She’s a brilliant project manager and ball juggler here at Lucky Break, but she also has a pretty amazing stationery company as well.  I invite you to discover Print Therapy and then read on to learn how Melissa recently crowdfunded a $7,000 loan through Kiva to help her launch a new product collection.  

 

I’m a big Kiva fan… after all, who else invites entrepreneurs to borrow up to $10,000 to grow their business at ZERO interest, with ZERO fees, and without having your personal credit attached to the transaction? Kiva a reputable non-profit with a long track record of facilitating microloans to entrepreneurs around the world. And Melissa’s going to pull back the curtain and show you how it’s done. Take it away, M!

 

A Inside Peek at the Kiva Loan Process with Print Therapy

 

If there’s anything I’ve learned from being a part of the Lucky Break team, it’s that I’m not alone when it comes to my dreams being bigger than my wallet. The idea of starting a business can be intoxicating, but when you learn the dollar signs associated with that dream? That can be pretty darn sobering.

 

I spent the first three years of my business sort of floundering, trying new things, learning what worked, and learning what didn’t. Once I honed in on my niche (thanks, Brick House Branding!), and after a few brainstorming session (thanks, Lela!), I had a handful of ideas I knew I wanted to bring to market. The one thing I didn’t have? The money.

 

Although I had heard of Kiva before – in fact we lend through them as a part of Luck Break’s philanthropy efforts – I had never thought about attempting to raise a loan through them for my business. I mean who wants to fundraise? Who wants to raise money? Who wants to ask the people they know for help? I’ll tell you who. This business owner. And maybe you, too.

 

During one of my consultations with Lela, as we were discussing products and the financial state of my business (spoiler alert: I was out of money), she mentioned casually that she thought I could get a Kiva loan funded with relative ease. I’m not sure why, but I shrugged it off. I’m not the best at admitting that I need other people to help me, and asking people for money always feels a bit weird. But once I hung up the phone after our consultation, and the dreaming phase was over, and the get-to-work phase began, I realized that I needed to find money somewhere, and I needed to find a good amount of it, fast.

 

A Inside Peek at the Kiva Loan Process with Print Therapy

 

I’d like to tell you that I did my due diligence, studied Kiva and their stats, and took a few days to make my decision. In reality, I did a quick review of the site to understand their terms … and had my application started not even five minutes later. And about twenty-five days later, the money was comfortably in my account, ready to make those dreams a reality. Curious to know how it happened?

 

THE APPLICATION

 

1. The Application process was pretty straightforward, but it included creating everything you see on my lender page.  My story and my dream were just as important- if not more important- as statistical information about my business. Also important? A great photo that shows the people – and the heart – behind the business. The application is also where I indicated the amount I wanted to raise, and the number of months I wanted for my repayment terms.

 

Hint: You’re only allowed to have one Kiva loan active at a time, which means you cannot initiate a second loan while you’re repaying your first. Think wisely about how much money you’ll need – and don’t let fear talk you into a smaller number. First-time Kiva borrowers can tap up to $10,000.

 

2. About 24 hours later, I had a call scheduled with Kiva, and my application was approved (HOORAY!) on the call. We also discussed repayment terms, and, most importantly, what it would take to make my loan public. As it turns out, once you’re approved, your loan page doesn’t just go live on the Kiva site, for any and everyone to throw money at you.

 

3. My Kiva rep, Richard, informed me that I needed to have at least 22 people I’m personally connected to lend me $25 each within the first fifteen days in order for my loan to go public, and for any Kiva lender to be able to find it and lend to me. It’s important to Kiva to see that you’re committed to your own success and that the people who know you believe in you, too. If I didn’t hit that magical number of 22? My loan would effectively be canceled, never to see the light of day.

 

 

THE FUNDRAISING

 

1. As soon as my Kiva page was live, I wasted no time sharing it on social media – both through my business pages and through my personal page. I knew that I had 15 days to get 22 people to lend me their hard earned money, along with their belief and support. I shared daily on both Facebook and Instagram.

 

A Inside Peek at the Kiva Loan Process with Print Therapy

 

2. I then proceeded to stalk my lender page, and I’m pretty sure I wore out my mouse with all of the incessant refreshing. I was on pins and needles, nervous that I wouldn’t find 22 people who believed enough in me to lend me $25. In those moments, my lack of money was only matched by my lack of confidence. I. Was. Nervous.

 

3. As it turns out, people like to give their money to things and people they believe in. I had 50 people within my network – friends, family, old high school and college classmates, former co-workers – lend to me in the first two days, bringing in over 30% of the money I had to raise. I was on my way! My loan was now public on the Kiva page, available for all Kiva lenders to see.

 

4. 30% was great, but I knew the momentum would begin to slow down if I didn’t keep fanning the flame. I posted. I blogged. I newslettered. I posted again. I blogged again. I newslettered again. I talked about how the money would support my business. I talked about how the business would support my family. And I talked about how much their support would support me.

 

I harped on the fact that this was not a donation; my business dreams were not a charity case. I had every intention of paying every cent back. And the people who had already lent to me? I was able to send notes to them, letting them know how things were going, and sharing my gratitude with them. Every day I tracked how much money had come in, and what I had left to be fully funded. It was a great reminder to keep on talking.

 

A Inside Peek at the Kiva Loan Process with Print Therapy

 

5. On Day 20, I received a loan from “Tom”. It was my biggest loan by far, at $900. And it took me all the way to 100% of my goal. I had no idea who this Tom was until I received an email a day later from this mystery Tom, and his wife, Heidi. They were my high school classmates that I hadn’t talked to in 15 years, but they had been following along with my business on social media, waiting for the right moment to jump in to help. They found their moment. And it gave me my moment. I was funded.

 

6. In the end, 147 people lent their money to my campaign, most lending $25. I know less than half of them. I’m grateful for all of them (especially those of you who are reading this blog). That’s 147 people who said, through their wallets, “you can do this. I believe in you.” We all know money talks, but in this case, it really did.

 

THE FUNDING

 

1. Kiva is an all or nothing lender; if you don’t reach your goal 100%, you don’t receive any of the money. And when you reach your goal? You get every single penny. There is no fee associated with the distribution.

 

2. The money is distributed via PayPal, and it’s pretty instantaneous. One day the money isn’t there, and a few days after you’re fully funded… there it is!

 

3. This is a 0% interest loan, so what you borrow, you pay back. No more.

 

4. Kiva prefers an automatic repayment setup, where they withdraw the monthly repayment from your bank account each month. At each repayment, each lender gets a percentage of their loan paid back to them – usually a few dollars each month, depending on how much they loaned. Hint: When I was determining how much money I wanted to apply for, I built-in a cushion for a few additional months. I knew that it’d be hard to start making repayments while I was getting my new products ready to sell, so I allocated a portion of my funding to, well, re-funding my lenders.

 

5. After the funding is completed, it’s recommended that you continue to update your lenders with your progress, to let them know how you’re putting their dollars to work. Sure, they care about their money, but many of them care more about your success.

 

A Inside Peek at the Kiva Loan Process with Print Therapy

 

The beauty of the Kiva process is that you’re not getting approved by some guy at a bank who deems your credit or business savviness is worth investing in. You’re getting approved by normal, every day people who deem your dream, and your story, worthy. They deem you worthy. They believe in what you believe in, and what you’re trying to do.

 

So you believe in you, too. Put yourself out there. Tell everyone and anyone why you, and your dream, and your story, are worthy. And get that money, honey.
Hi, Lela again. *wink* How much do we love Melissa, eh? I’d love to hear about your Kiva experience… please pop a comment below and let me know if you’ve given Kiva a try- either as a borrower or a lender. And if you’ve discovered other creative ways to fund your business, then I’m “all ears” to hear about those, too!