What is Faire?- Formerly Indigo Fair
If you haven’t yet heard of the Faire (formerly Indigo Fair) wholesale marketplace, then chances are that you soon will. Over the past few months, it seems that every other ad in my Instagram feed was a sponsored post for this new wholesale platform for makers. The messages have permeated Facebook too, encouraging both shop owners and product designers alike to dive in. But something happened in December of 2018 that essentially threw a lit match onto a waiting puddle of gasoline: Faire secured $100 million in venture capital funding.
That princely sum brings the total investment to $116 million. This gives Faire’s mission to reinvent the methodologies of wholesale a lot of oxygen for the burn. If the volume of emails I’ve received asking about Faire is any indication, then there’s tremendous interest within the artisan community. I’ve been exhaustively studying this wholesale marketplace for weeks, and I’m eager to spill all the tea to help you make an informed decision about the pros and cons of working with Faire.
A BRIEF HISTORY OF FAIRE (FORMERLY INDIGO FAIR)
Daniele Perito, Marcelo Cortes, and Max Rhodes originally met through their work as executives at Square. In January of 2017, they struck out on their own to launch Indigo Fair. The name was simplified to “Faire” after the established brand Fair Indigo filed suit for trademark infringement. Surprisingly, Indigo Fair never submitted a trademark application for their name. It was unlikely to win federal approval in light of Fair Indigo’s long-registered mark.
Describing the company as “Amazon for local retailers,” Max and his teammates realized that the antiquated wholesale model was overdue for an upgrade. There’s little debate that the means by which retailers connect with new brands has scarcely evolved in the last few decades, and it’s exciting to see someone take the reins of such an ambitious project.
Faire quickly became the darling of venture capitalists, securing funding from prestigious partners like Peter Thiel’s Founders Fund and Sequoia Capital. This latest round of financing valued the company at $535 million… not bad for a business on the cusp of its second birthday! Headquartered in San Francisco, the tech world seems confident that Faire is on to something big. In December of 2018, Max Rhodes confirmed that “5,000 stores are actively buying on the Faire platform and 2,000 makers are fulfilling orders.”
HOW DOES FAIRE’S WHOLESALE MARKETPLACE WORK?
Interested artisans can apply to sell on Faire via a simple online application. The Faire team reviews each applicant before beginning an onboarding process for those who win approval. That’s one of the things makers appreciate most about working with the platform. Faire handles the lion’s share of onboarding tasks, using the product images, descriptions, and pricing information provided by brand owners.
Once a brand’s profile is live on the Faire platform, boutique buyers can shop from among hundreds of makers spanning a wide variety of product categories. Candles, stationery, home decor, kids, beauty, jewelry, pets, kitchenwares, and apparel are all available. Footwear, denim, women’s swimwear, men’s fitted apparel, gourmet items with a shelf life of under six months, firearms, or any products containing alcohol and drugs (including CBD products) aren’t currently allowed. Fun fact: Candles and stationery are the two best-selling categories on the platform.
Retailers enjoy a streamlined shopping experience while discovering new brands. Buyers can quickly assess the size of a brand’s social media following and view their latest posts on Instagram. The platform pulls data directly into the brand’s profile. There they highlight where the business is located, the year they launched, and applicable wholesale order minimums. Buyers shop from within the Faire interface, and orders are forwarded to the individual brands for fulfillment.
USING TECHNOLOGY TO IMPROVE THE BUYING PROCESS
There’s a healthy dose of savvy tech woven into this fabric, too. Faire uses machine learning technology to suggest brands they predict will sell in each shop. They account the store’s current inventory, customer demographics, and overall style. According to founder Max Rhodes: “We’ve built our own AI-powered image recognition software to automatically surface new products to stores that match the aesthetic and category of their website and Instagram. It’s difficult to overstate the importance of this breakthrough. We can take a database of hundreds of thousands of products and automatically show retailers the subset that matches their store most perfectly, saving them countless hours traveling to trade shows or wading through paper product catalogs.”
Max boasts that Faire’s prediction algorithm “will get smarter and smarter as we feed our own sell-through data into it. Each week, retailers get a new list of top items that are ideal for their stores. If the products don’t resonate with customers, retailers can simply send them back and swap them out for new items that will.”
Though the simple act of streamlining the ordering process is enough to woo many wholesale buyers, Faire doesn’t stop there. They also offer boutiques the ability to purchase goods on Net 60 terms, free shipping on their first order from a brand, and the (virtually unheard of) ability to return products that aren’t selling well within 60 days. Peering through the lens of a retailer, there’s much to love when it comes to Faire.
HOW MUCH DOES FAIRE CHARGE?
Of course, all of that technology and exposure doesn’t come cheap. Retailers pay nothing to shop the platform, though handmade artisans often pay a hefty 28% commission on each sale.
- Brands pay a 25% commission on the first order they receive from each shop.
- Brands pay a 15% commission on the second and every subsequent order they receive from the same shop.
- Faire offers brand owners the ability to receive immediate payment via bank transfer for an additional 3% fee. This is the case even when the store has opted to utilize Net 60 terms
Twenty-eight percent of your order evaporates when you request immediate payment for an order from a shop that’s just discovered your brand. Don’t feel nauseous. Remember that rep groups in the gift industry typically charge a 15-20% commission. In addition, rep groups often charge showroom fees, and makers traditionally bear the cost of samples and sales materials, too. Even still, many makers find that 28% commission rate a bit hard to swallow.
FAIRE ACCELERATES MAKER APPLICATIONS
According to a 2018 TechCrunch article, “Indigo Fair receives hundreds of applications from makers every week… and the team accepts about 5% of those applications.”
In its first eighteen months of operation, Indigo Fair appeared to be highly selective when choosing which brands to onboard. However, over the past two months, I’ve spoken with dozens of previously rejected artisans who have seen their applications seemingly resurrected from the dead. Something tells me that pouring $100 million of capital into the company from investors who are eager to see a return is driving this sudden sense of urgency.
There are lots of other changes and new programs in development at Faire, though we’ll get to those soon enough!
DO YOU HAVE EXPERIENCE WITH FAIRE?
This blog is the first in a series about Indigo Fair/ Faire. Precious little has been written about the platform (save for Faire writing about themselves or articles announcing how much VC money they’ve secured). As this blog series continues, I’ll explore:
- Some of the special programs Faire has developed (including Maker Market, Faire Protection, the Insider program, and Elevate).
- Why many brand owners and shopkeepers find Faire to be so compelling.
- Some of the primary concerns, disadvantages, and missteps of working with Faire.
- My interview with Max Rhodes, CEO of Faire.
- How makers in the Lucky Break community feel about their experiences with Faire, plus the hard data about how much and how often they’re selling.
What questions do you have about selling wholesale on Faire? Drop them below and I’ll do my best to answer them either in the comments or in another installment of this blog series!