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The $12 Billion Start-Up Proving Wholesale Is Thriving

A $400 million investment in Faire, which pairs brands with retailers, is a sign of how multi-brand stores are here to stay after a decade where direct-to-consumer brands dominated the conversation.
Faire's homepage. Faire.
Faire's homepage. Faire.

Four fintech veterans founded Faire in 2017 on the premise that if local retailers and their vendors came together, they’d have shot at competing with the likes of Amazon or Walmart.

Back then, the signs were already promising. The growth of e-commerce encouraged a new wave of entrepreneurs to launch their own brands, while local retail was seeing a resurgence in cities around the world.

Four years later, and these trends are in hyperdrive. The pandemic and the ensuing lockdown in 2020 catalysed an unprecedented wave of new consumer product startups, from pyjama labels to personal care companies. All the while, millions of consumers continue to work from home, creating outsized demand for their neighbourhood shops and boutiques rather than the big box retailers they used to frequent near their offices.

Faire was able to capitalise on both shifts in consumer behaviour. The business-to-business wholesale marketplace, which allows independent retailers access to more than 40,000 brands in apparel, home goods, beauty and other categories, announced its Series G fundraise on Nov. 16. Totalling $400 million, the round values Faire at $12.4 billion. It was led by Durable Capital Partners LP, D1 Capital Partners and Dragoneer Investment Group, and all 13 existing investors participated.

Faire’s popularity among investors demonstrates a pivotal point in how industry insiders see the future of retail. For most of the past decade, investors rallied behind e-commerce, championing the direct-to-consumer channel of selling as superior to physical shops and department stores. But the tides have turned once again. Multi-brand retailers found ways to compete by investing in their own digital platforms. In luxury, Farfetch gives local boutiques a way to sell fashion globally while NuOrder empowers brands a more seamless way of partnering with wholesale clients, similar to Faire’s more mass-oriented offering. All the while, many individual brands are hitting a ceiling in customer acquisition and have turned to multi-brand retail as a way to reach more shoppers.

“There’s a powerful growth trajectory for this segment of the retail world that has been overlooked,” said Lauren Levitan, Faire’s chief financial officer.

Reaching north of $1 billion in annual sales volume this year, Faire has seen 200 percent year-on-year growth, the company said. Earlier this year, it expanded to 15 markets in Europe and the UK. Its fashion business is especially robust, sales of which quadrupled in growth this year. More than 6,000 apparel and footwear brands currently sell through the marketplace, including Alohas, BB Dakota, Frankies Bikinis, Kenneth Cole and Cole Haan.

For vendors, Faire offers a unique set of protections. The company guarantees payment from retailers by taking on the risk itself. Faire pays the brand immediately for the inventory that a retailer buys, and the retailer in turn pays Faire back within 60 days. This service is free for brands to use with existing wholesale partners, as Faire only takes commission new wholesale partners brands discover through the marketplace. For these new partnerships, Faire charges a 25 percent commission on first order and 15 percent on reorders.

Guaranteed payment is a particularly valuable attribute in fashion, where small brands are routinely forced to confront late payment and other unfavourable terms from department store partners. When the pandemic first struck, for instance, dozens of designers received notice that wholesale partners would be delaying payment for up to three months.

“The idea isn’t new, but no one has executed as well as they have,” said Gary Wassner, the chief executive of Hilldun, a company that similarly helps brands pay for manufacturing before they receive payment from wholesale partners.

“It’s one-stop shopping and therefore efficient for small stores,” added Wassner.

Faire offers independent brands another undeniable advantage in today’s online-offline retail landscape: brick-and-mortar exposure.

The original direct-to-consumer narrative, that e-commerce was the answer to retail — that was pretty naive.

With Faire, digital native brands can reach new customers by partnering with local boutiques without losing control of how they are presented. This hybrid model is exactly why venture capital firm Forerunner Ventures participated once again in its latest funding round, according to founder Kirsten Green. Forerunner first invested in Faire in 2018 and has participated in every round since.

“The original direct-to-consumer narrative, that e-commerce was the answer to retail — that was pretty naive,” Green told BoF. “Now we’ve gotten to the stage that [DTC] is somewhat mature and actually brands want to be where customers are, and customers today are everywhere. Faire is an example of that: bridging these two worlds together.”

Despite explosive growth so far, Faire said it’s still in the early innings of its total market opportunity. Soon, it hopes to be at the heels of retail’s current behemoths.

“There are more than 2 million independent retailers across North America and Europe alone doing $2.5 trillion in revenue, more than twice that of Walmart and Amazon combined,” the company noted in its announcement Tuesday.

Related Articles:

Is This the End of Wholesale, or the Beginning of Something Better?

What to Do When Retailers Don’t Pay

Can the American Department Store Be Saved?

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