The resilience of Faire

Local retailers form the bedrock of their respective communities. In aggregate, they sell over $1 trillion of goods each year in the U.S. alone. In times of crisis, they have repeatedly proven to be resilient. During the Great Recession, for example, retailers with 1–4 employees were the only segment of retail to add net employees every year after 2008. Taken as a group, these small business owners found a way to innovate their way out of a crisis.

COVID-19 had the potential to be even more devastating for these local entrepreneurs. “Stay at home” orders prevented consumers from entering stores in many neighborhoods, and unemployment quickly rose to its highest level in recent memory — 50% higher than its peak during the Great Recession.

 

Faire, the leading online wholesale marketplace for local retailers, sits at the center of this ecosystem. Its customer base includes over 100,000 independent retailers and 10,000 brands. Put in perspective, its network consists of more retail locations by door count in North America than Starbucks, Walgreens, Walmart, Sephora, Target, and Nordstrom combined.

Faire bore witness to the precipitous decline of sales in these stores at the beginning of the COVID-19 crisis. It took immediate and bold action to help its customers stay afloat. The company extended payment terms to retailers in financial need, giving them critical time to adapt their businesses to the effects of COVID-19. It spread best practices and created resources for retailers to find emergency financing through PPP and other programs. Faire overhauled its recommendation algorithm to emphasize “essential” merchandise and other products in demand by the COVID-19 consumer. And, most importantly, it was able to drive product discovery and fulfillment services at a time when other wholesale channels were shut down.

The resilience of local retail drives Faire’s resilience. Faire saw its business rapidly bounce back in late Q2. On average, its customers are now growing YoY despite the ongoing pandemic, and Faire’s business more than tripled YoY in Q3. The recovery was driven by the adaptation of Faire’s customers to the post-COVID environment, and by the consolidation of the wholesale channel onto Faire. Like the rapid acceleration of e-commerce during the pandemic (see below chart), the wholesale supply chain also moved rapidly to online channels — and Faire is the industry’s leading online marketplace.

 

Today, Faire is announcing that it has raised a Series E of $170M, led by Sequoia at a $2.5B valuation, with strong participation from us at Lightspeed and many of its other current investors. The capital will go towards growing the team, building more incredible products for retailers and brands, and expanding into Europe in early 2021. We’re proud to continue to support the company and help it fulfill its mission of empowering entrepreneurs to chase their dreams.

For more on Faire, please read my past blog posts from 2018 and 2019 on the company.