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 a 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

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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.

The Lucky Break Calendar – May 2018

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Am I the only one who had to do a double take when I flipped the calendar and it said May? 2018 is rolling along and it’s already time to begin thinking about holidays for the wholesale market. Time – and the holidays – wait for no one my friend.

 

This month the LBC team is busy attending The HSCG Soap Conference where we can’t wait to give hugs and mingle with our favorite alumni. Will I see you there? Be sure to stop by the booth to say hello to me and the team and pick up some Lucky Break swag while you’re at it.

 

Whatever you’re up to this month, know that I’m cheering you on!May2018