Loco for local: How Faire helps small shops competeJackie Gill - August 8, 2019
We live in a world where big box stores dominate our shopping centres. Where you can get almost any product with the click of a mouse or a tap on a screen. Where same-day shipping is the norm.
Still, one startup knows small brick-and-mortar shops can keep up – and win out.
“We believe that people still want the experience of walking into a store, touching the items, talking to the people, learning the story behind the merchandise and buying that way,” says Marcelo Cortes, CTO of Faire.
“If you’re looking to buy a USB cable for your phone, yes, you should buy it on Amazon. But if you’re looking to buy a special gift for somebody you love, you will find it in the stores we serve.”
Faire is a wholesale marketplace that connects retail shops with independent makers across the U.S. Think of it as a beefed-up Amazon for store owners, where they can browse and buy unique, curated items that’ll keep customers coming back. Or like Etsy for business, where makers can showcase their products to stores that otherwise wouldn’t know they exist.
And they’re determined to help local shops by giving them the products, technology and data they need to keep people walking in the front doors.
It all started with an umbrella
Faire has three co-founders: Cortes, Max Rhodes and Daniele Perito. They met while working at Square, a company focused on making mobile payments easy. Together, they helped develop Cash App, a mobile money transfer service that now has over 15 million active accounts.
That’s when two things happened.
First, Rhodes was working with umbrella maker Blunt to get their product on store shelves in North America. If you haven’t heard of the Blunt Umbrella, it’s exactly what it sounds like – an umbrella with rounded edges. No spikes, no corners, no poking.
But he struggled to connect get the attention of retailers because there were only two ways to do so: through sales reps who go store-to-store, and tradeshows that involve a ton of travel. There was very little technology involved, actually.
“From that experience, we learned the market was broken and there was something that needed to be done,” says Cortes.
They didn’t figure out what, exactly, until the second thing happened: Cash App launched and started picking up steam. Even from the early days, it was a hit with small retailers who could now process credit card payments, hassle-free.
“Square was a great place for us to learn how to build successful products. It also gave us a very good insight on small merchants and the issues they have.”
– Marcelo Cortes, CTO and co-founder of Faire
That experience opened Cortes’ eyes. When he’d visit local stores that were using Cash App, they’d tell him how much of a lifesaver it was. He and his team had spent years understanding the market, and now they were making a real difference.
By now, Cortes and his team had a strong understanding of their market, from both a maker and retailer perspective. They had new technologies that made it more possible than ever to collect data online. Suddenly, the pieces were in the right place.
Bringing light to the darkness
Before Faire, small retailers were “in the dark of technology,” Cortes says.
Unlike online retailers and big box stores, local shops didn’t have a good way to tap into their data. And without data, store owners didn’t know what products to buy because they didn’t know what products would sell.
Instead, they’d experiment with new products based on gut feelings or intuition. That’s really risky, though. If new products sold, great. If not, that store was in a pickle.
“They would either have to mark it down and lose time and money to get rid of the product, or they would leave it on the shelves for years until it actually gets sold,” says Cortes. “If you make too many of those mistakes, you go out of business.”
The result? Stores that don’t bring in new products as often as they should, which translates to less traffic. It’s the vicious circle of retail.
Solving that circle is where Faire got innovative.
“For us, this whole idea of how to make it work and helping local commerce was very appealing.”
– Marcelo Cortes
Faire screens every item in their marketplace – and they have over 200,000 items on the platform right now – to make sure it’s high-quality and trending. AI helps a lot with that, looking at what’s hot across social networks and the internet.
Their AI also gets to know each retailer. By scanning a shop’s website, the platform can collect valuable data like location, price point and product categories. It only serves up products that are likely to fit in – and perform well.
Then there’s their return policy. “Anything they buy on Faire today, they have 60 days to pay and within those 60 days they can return anything for free,” says Cortes.
“It becomes a no-brainer to come to our platform and try it.”
In the blink of an eye
Faire started in 2017. In the short two years since then, the team has grown to 120 employees, spread between San Francisco, Calif. and Kitchener, Ont. It’s raised $116 million in funding. It’s currently helping over 25,000 retailers and 4,000 makers.
Growing is hard work, much less growing at such a fast pace. In fact, it’s one of the biggest challenges Faire has had to date, says Cortes.
He noticed it in his own role. “Initially, in the first year, my biggest contribution to the company was programming. I made a big difference by building out the technology,” he says. But that quickly changed. “I have a lot more responsibilities on the culture in the company, the whole business, hiring executives, which I never did before.”
He noticed it in bigger company decisions, too. Take hiring their CFO, for instance. That’s the kind of thing you need to get right on the first try – “there isn’t a lot of room for error,” he says.
For problems like that, Faire’s founding team turned to more experienced minds – advisors and investors who had been there before. “They help us with blind spots, things that we think we need to learn better and things we need to improve on.”
While they expect to reach a roster of 200 employees by the end of this year, Cortes and his team didn’t start out with the intention of building a giant.
“I wanted to build a successful business, whatever that meant,” he says. “We tried to find a place that, with technology, we could help a lot of people and businesses, and make a difference – and build a successful business ourselves at the same time.”
“What we provide is hope. When they look at us, they see there is a tech company that’s helping them be more efficient, have more data, get cool products and compete.”
– Marcelo Cortes
Of course, Cortes wants Faire to grow, but he doesn’t measure that success in dollars raised or products sold. He measures it in lives changed.
“Like when you hear people talk about how they love to make things. They had a part-time job, and they were making things part-time. They started to work with Faire and their business grew so much that they could focus 100 percent on building what they loved to build,” he says.
The same goes for the retailers. “A lot of it is not only helping them thrive as businesses by making them more efficient and finding products that are going to sell,” he says, “but a big thing we do for them is give them confidence and hope for the future.
“The faster we grow, the more I see that becoming a reality. That, for me, is what I’m the most proud of.”
- Name: Faire
- Solution: A marketplace that helps local shops find and buy wholesale products
- Owners: Marcelo Cortes, Max Rhodes and Daniele Perito
- Employees: 120+
- Headquarters: San Francisco, Calif. and Kitchener, Ont.
- Founded: 2017
- Initial investment: $116 million
- Contact: [email protected]
The status quo is dangerous so don’t get comfortable,...Jackie Gill - August 23, 2019
Terry Stuart, Chief Innovation Officer, believes that companies need to not only embrace new technology, but understand what it really means for their business and society as a whole - even if it makes them uncomfortable.