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When Max Rhodes, Jeff Kolovson, Daniele Perito, and Marcelo Cortes were working at Square, they could see how digital platforms enabled small retailers to lower their operating costs and focus their efforts on improving other areas of their businesses.
As e-commerce posted phenomenal year-over-year growth, the team envisioned an opportunity to serve the offline shops that continue to make up the overwhelming majority of retail sales.
In 2017, they launched Faire, a new platform to connect local brick-and-mortar shops with small makers to source unique products from independent designers and manufacturers in one online marketplace.
"By simplifying the wholesale buying process, Faire helps retailers and makers spend more time doing what they love," Rhodes, the company's CEO, wrote in a Medium post on Wednesday.
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And the marketplace platform is heating up. In less than two years, sales have grown from $1 million per month to more than $1 million per day, and this week's funding gives Faire a valuation of $1 billion.
The unicorn of Main Street
Faire raised $150 million in its latest Series D funding round, which was coled by Lightspeed Venture Partners and Founders Fund and had participation from the existing investors Forerunner Ventures, YC Continuity, and Khosla Ventures.
The new capital brings Faire's total funding to $266 million, which will be put to work by the company's first chief financial officer, the veteran retail strategist Lauren Cooks Levitan, who brings more than 20 years of experience in wholesale, retail, and e-commerce.
Levitan told Business Insider that while she was impressed by Faire's rapid growth, she is undaunted, given her experience as chief financial officer at Fanatics, the online sports-apparel and merchandise company that topped $2 billion in sales last year.
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"A good business has more opportunities than time and capital to address them," Levitan said, "and that's really what we're working through."
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Faire now has offices in San Francisco, Utah, and Ontario, and more than 150 employees around the world. And the company expanded its network this year to include sellers from Canada and makers from 39 countries.
Aggregating supply and demand
In an interview with Business Insider, Chief Technology Officer Marcelo Cortes said that the platform offered value for small businesses by finding a market for small designers and manufacturers, and by making it easier for store owners to try new products.
Drawing upon their experience from Square, Cortes said the team was able to use data from the marketplace to offer tailored product suggestions and extend more flexible-payment terms for retailers.
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The marketplace now has more than 7,000 makers and 50,000 local retailers, and by aggregating orders and payments, Faire is able to extend payment terms up to 60 days.
Another significant advantage of the platform is that it frees shopkeepers from the traditional constraint of minimum quantities for wholesale prices. Now instead of having to purchase 50 to 100 units of a new product, they can test out five to 10 with their customers.
Taken together, those perks help businesses on both sides of the sale manage their cash flows and reduce their risk exposure, all through one platform.
What success looks like for local retail
Faire's highly curated product selection enables store owners to find products that are specifically not available on other channels. "One of the most used search filters on the Faire platform is for products that are not sold on Amazon," Levitan said.
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Both Levitan and Cortes described the company as pushing back against the homogeneity of e-commerce and big-box stores. "E-commerce is certainly growing faster, but offline is huge and still growing," Cortes said.
They also said businesses that make and sell distinctive products would be rewarded by customers who are increasingly seeking a local experience. "Retailers are looking for uniqueness," Levitan said. "They want to be able to offer their local customers something that they're not going to discover elsewhere."
Rhodes echoed that sentiment in his statement on Medium: "Our success will look like more diversity in local communities — special and unique downtowns where people can discover high-quality items sold in stores owned by their neighbors."
In the span of two years, retailers have sold more than 15 million products from the platform, and some makers have been able to turn their side-hustle passion projects into full-time businesses.
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Local retail growth already outpaces that of all other retail, according to data from MasterCard. By simplifying business for small makers and sellers, Faire is betting it can grow even faster.
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