What is Faire? – Formerly Indigo Fair

Lela Barker

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.

faire1_graphic1

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.

faire1_graphic4

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.”

faire1_graphic3

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

faire1_graphic2

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). I’ve been gathering feedback from current users about their experience with Faire. I’d be most grateful if you lent your voice to the effort, too. Take my quick, 5-minute survey and then keep an eye on this blog to hear feedback from our community.

faire1_graphic6

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 find Faire to be so compelling.
  • Some of the primary concerns, disadvantages, and missteps of working with Faire.
  • How makers in the Lucky Break community feel about their experiences with Faire.
  • 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!

About the Author

Lela Barker

Lela Barker hails from the deep-and-dirty south (ATL, represent!), where she spends her days helping makers and product designers navigate the pitfalls of product pricing, brand development, and wholesale strategy. She launched her apothecary brand in 2003 and bootstrapped the hell out of that little business to cultivate a portfolio of 1500+ stockists worldwide, generating $12million in revenue and establishing successful distributorships in the Middle East, EU, Scandinavia, and South Korea. Lela is the keeper of a well-worn passport and the maker of the finest lemon meringue pie you’ve ever put in your mouth.

14 responses on “What is Faire? – Formerly Indigo Fair

  1. DreDee

    I would like to know where you figure in such a high commission in your wholesale pricing. We currently pay 10% to our sales reps and that’s painful enough. I realize we need to restructure our prices and we’re working with price-o-matic now to get them online with all our expenses including commissions. 28% seems high especially since this seems more geared toward smaller businesses. Perhaps those that don’t have representation at a lot of the larger wholesale markets.

    1. Lela Post author

      Hi DreeDee,

      I agree that 28% is a particularly painful sum. Many in our community take the “net 30” option in Faire, which guarantees payment 30 days after the order ships. That reduces the fees to 25% on the first order from a shop and 15% on second and subsequent orders from the same shop.

      For many in the gift industry, they’re paying 15% to rep groups, on top of showroom fees and sample costs. For those makers, I think they see Faire as essentially equal to expensive rep groups. The initial commission for new orders in higher, but they save themselves the showroom fees and expenses associated with providing multiple sample sets. After the first order for a given shop (and assuming that they take the net 30 option), then they pay a 15% commission… which is essentially equivalent to most reps groups in the gift segment.

      Having coached (literally) thousands of brands through the mechanics of pricing strategy, I’m painfully aware of how slim many of our margins are and how surprisingly “off base” we can be when it comes to understanding our costs. That experience leads me to cringe when I think of many of these brands selling through the Faire platform, because I wonder if many
      of them can sustain those commission rates. Faire is delightfully accessible… and that’s a double-edged sword. Many brands who are fairly new to wholesale and simply unaware of proper margins are hopping in prematurely, and I worry that they might shoot themselves in the foot.

    2. Katrina

      Think about how much trade shows cost, in terms of hard costs and your time and energy. Customer acquisition is expensive, so I don’t really think the 25% is out of line when you consider how much it actually costs to get an order from a new store on your own. The additional 3% only applies if you want your money immediately. I choose Net30 for no additional points.

  2. Pamela Gardner

    I am a methodically slow pre-launch micro-manufacturer (currently taking a ‘for credit’ financial accounting class at college), and have been loosely following the market for several years in anticipation of jumping into these treacherous waters soon.

    I have a few observations:

    1. I looked around on the Faire site a few months ago, and saw that boutique owners could select ‘makers’ with a ‘not on Amazon’ term. When I looked today, I didn’t see that selection, perhaps they’ve moved it? Have they removed it? As a boutique owner, it would be nice to stock items that aren’t listed on Amazon. Then, as a manufacturer (a more dignified term than ‘maker’, imho), you run into the problem of this issue – if a reseller sets up an Amazon listing for your product, my understanding is, they have control of the listing. Maybe, as the manufacturer , one could ask Amazon to remove it, or give you control over the listing? Seems like a headache, one that I have not come up with a clear path to navigate.

    2. I have concerns about acquiring customers (stockists) through Faire. Are they a customer of Faire or the manufacturer/maker? If Faire is handling the transaction, how would that be recorded on my books? Sold to: ‘insert stockist business name’ or ‘Faire’?

    3. From looking at some of the manufacturer listings on Faire, there doesn’t seem to be much room for business branding. It has a vaguely Etsy feel about it. If they are only accepting 5% of their applications, seems like not much selection for the boutiques – they could become a brick and mortar ‘Faire’. I see this as a plus for micro-manufacturers who want to approach boutiques with items ‘not listed on Faire’ (see point one above).

    4. As noted above, I slightly object to the term ‘maker’. It has a hobbyist kitchen table feel about it. I consider myself a ‘micro manufacturer’, putting countless hours into analyzing asset, liability and equity flow. I don’t know, that term just doesn’t reflect how I see my efforts.

    I will probably be back with additional observations. This is only the tip of the iceberg. Thank you so much, Lela, for this fabulous blog series!!

    1. Lela Post author

      Hi Pamela,

      I understand and appreciate that we all have a preferred way of describing ourselves. I frequently use the terms “maker” and “product designer” here at Lucky Break. Faire frequently uses the terms “maker” and “artisan.” I assure you that I don’t use the term “maker” to insult or belittle my clientele, many of whom have assembled teams, moved into commercial workshops, and are growing 6-to-7 figure businesses.

      Some of your concerns are addressed later in this blog series, specifically here >> http://www.luckybreakconsulting.com/blog/downside-of-faire/

      Faire stills offer the “Not on Amazon” search feature (it’s actually their most popular filter) and while Faire does technically own the customer, you do know the names of stores that sell your work. You can read more about the actual logistics of how this works in this blog >> http://www.luckybreakconsulting.com/blog/how-to-sell-on-faire/

      I hope those additional blogs prove helpful!

  3. Pamela

    Hi Lela,

    Thank you for taking time to respond to my long winded post. This is a very interesting blog series and I’m following it with great interest.

    My apologies if I made you uncomfortable with the Maker term observation. I was only referring to Faire. I think there is a big difference in using it as a descriptive term as you do in conversation and using it as a main reference term as Faire (formerly Indigo Faire) does. In my opinion, is a relative minor point, a small part of the larger picture of my first impression of Faire.

    I Checked out the link to your blog here: http://www.luckybreakconsulting.com/blog/downside-of-faire/
    This link on your post brought up a blank page for me: your wholesale prices on Faire must match your wholesale prices elsewhere.

    I must say, the auditing process sounds a bit severe. Makes me wonder what else is in the fine print agreements.

    Thank you for all your efforts to tease out the details for us!

  4. Lori Sims

    Faire is scamming small business!! They have a 60 day return policy. I am many others have made returns only to get a generic email back stating “missing/defective” items, return rejected. But instead of sending the return back, they keep the items, do not credit the small business and then resell the items in their ‘mix & match’ section! impossible to get ahold of someone to help as it is email only! How is it acceptable to keep the merchandise – resell it and not give the business a credit! so we are out the merchandise and the money!

    1. karin

      Actually, if someone returns something it does not come back to the maker manufacturer and no money is ever taken off for returns. This makes the stores secure in ordering what they can not see and touch. They are pretty quick to respond to problems and if they make a mistake they will correct it. 25% is the cost of acquisition when you pay for expensive trade shows etc. If you provide your customer list then there is 0% commission on those orders. They give you your orders in pictures which is helpful and they do all the paperwork. If I wait for 30 days to be paid, I do not pay credit card fees which for me is a savings and every bit helps. The only down is so far I am getting orders mostly from my own accounts…some new accounts but not that many. I am sure it will just get worse for that as more maker designers get onboard and then like Etsy it will be hard to get a slice of the pie. My 2 cents

  5. CS

    I received an invite to use Faire. Logged in and placed an order and they canceled my order saying I can not shop on the platform. It seemed like a scam. Wholesale sites do not let you see prices or place an order when you sign up before you are approved. Not a good practice at all!!!!!!

  6. Herbert Hoover

    So, if I’m understanding the math correctly, Faire is taking 25% of wholesale on first orders and 15% of subsequent orders. That would make it 50% and 30% of retail if the vendor was selling the items at a craft show, and their wholesale price was 50% of their retail. That’s a pretty huge cut of the overall pie for making an introduction. Imagine if you had to give 30% of yours and your spouses’ salary to the person who introduced you.
    This really doesn’t work unless your markup is at least 4x.

  7. Kathryn

    It is WHOLESALE platform. So your really need to have a wholesale pricing strategy in place for your business. That same product that you sell direct st a craft show, market or otherwise, you have to be comfortable 1) selling that at wholesale with keystone pricing and 2) discounting off of that the 25 or 28% for Faire. I think if you are already selling direct AND wholesale in your current business, the opportunity to hop on Faire is a huge positive. If you are already in the wholesale pool with your business, you will quickly find that it takes time, samples, possible reps or distributors or trade shows…all of which are super costly. For my business it has been super positive. Many of my existing wholesale accounts use it, and I’ve gotten many many new accounts that I would have never been able to reach before. As I said at the beginning…I think you really need to have a wholesale model in place and be comfortable with it (and by that I mean products priced for
    Wholesale and all that comes with it, that still allow you to make a profit at a margin that you can sustain). If you can only make a profit, including your time, if you are selling direct to the customer…then don’t do wholesale! And if you want to, create something that fits into the numbers! Ya gotta know your numbers backwards and forwards either way you go! If the numbers don’t work you have an expensive hobby that you put a LOT of time and effort into. And if it doesn’t work wholesale fine! Stay in your lane and focus on direct retail.

  8. Tera Roeker

    Hi,

    I am working on building a sustainable catalogue/marketplace of retail products that can also be cobranded for the corporation gifting space. My parents started a traditional promotional product distributor when I was a child, and I’ve joined as generation 2 four years ago. I am passionate about reducing the waste in the industry and connecting brands with products that recipients actually want to keep and use.

    I noticed you have a lot of analysis on Faire. I feel there could be a lot of overlap in what I’m working on. I’d love to chat briefly if you have the time.

    Hope you are staying healthy and safe!
    Tera

Leave a Reply

Your email address will not be published. Required fields are marked *