How fair Is Faire? A retailer gives her perspective | Carol Schroeder

Many independent retailers have a love/hate relationship with the B2B platform Faire. We love being able to find obscure, small lines that would never have been shown in a trade show. We hate what this direct ordering option is doing to the sales rep system. We love knowing exactly what is in stock when we write an order. We hate the fact that every store in our area can order exactly the same merchandise.

I suspect that some of our vendors also have mixed feelings about Faire. While it must be nice to have Faire take care of the billing – no more chasing down credit references or credit card numbers – it is undoubtedly time-consuming to keep listings on the platform current, and frustrating to not have any input into what is being ordered. There is also a significant cost to doing business on this marketplace: the standard commission rate for orders from Faire is 15 percent. When a customer first discovers a company for the first time on Faire’s marketplace, there is a one-time new customer fee of $10 on top of the standard commission rate.

The 100,000 brands now on Faire are still responsible for fulfilling their own orders. They pack and ship the goods, either using Faire’s shipping account or their own. Those who use their own UPS or FedEx account are reimbursed by Faire when the invoice is paid. There is pressure to ship promptly, because orders that aren’t fulfilled within 30 days of the expected ship date are automatically canceled.

Retailers who have chosen to pay $20 a month to be Insider members receive free shipping (aside from the $240 a year paid to Faire) on certain orders. Faire has control over which companies qualify for this program, as explained in this statement to vendors: “Insiders will see free shipping on your brand when the estimated cost to ship is below 6 percent of the order value. We use the retailer’s location and your prior reported shipping costs to estimate the shipping cost and determine eligibility.”

A recent change is that Faire now requires a minimum order of $300 for certain vendors to be part of the program – a decision that is not popular with some retailers. The Insider program is “refreshed” quarterly based on actual shipping costs and other factors, so the vendors included may change. It’s interesting to note that Insider members make up 80 percent of sales on Faire.

Another recent change is in the Faire Direct option, which allows vendors to put a widget on their web page in order to encourage retailers to buy through Faire (instead of a sales agency, or the vendor’s own website). The idea is to bring more buyers to Faire, so when a retailer who has not ordered from the vendor this way places an order through the platform, no commission is charged. This is a particularly strong threat to the rep system, as one of the advantages listed on Faire’s website is “You save money on commission.”

The Faire platform is obviously not ideal for building a relationship between a vendor and retailer like the one forged by a good sales agency or rep. So while Faire may be a great option for individual makers and smaller companies, larger ones should consider whether it is smart to hand so much control of their line to this huge B2B company.

See more from Carol Schroeder, author of Specialty Shop Retailing and co-owner of Orange Tree Imports, in the Savvy Store Solutions tab.

Editor’s note: This opinion piece is republished from the Specialty Shop Retailing blog. The information was not verified by Faire at the original time of publishing and the opinions expressed are not necessarily those expressed by Gifts & Decorative Accessories. In response, Faire would like to clarify:

• Retailers can opt-in to Faire’s exclusivity program so that they can get exclusive access to an entire product catalog in their area.
• Brands accept every order (and can deny any order thus having control over what is being ordered), and they choose their expected ship date when they accept the order. Only orders that are not accepted within 30 days are auto-canceled, and only orders that are not shipped within 30 days of the expected ship date (set by the brand) are auto-canceled.
• Each Insider member is eligible for free shipping on a personalized selection of brands. Faire determines eligibility based on the estimated cost to ship between a given retailer and a given brand. Only some Insider free shipping requires a minimum order size of $300 to qualify. The minimum exists when the estimated shipping cost is too high on a smaller order to be eligible for free shipping — this is the company’s way of offering free shipping on orders that otherwise wouldn’t have been eligible.
• Insiders have free shipping on a largely consistent selection of brands, according to Faire, but Insider coverage is refreshed on the first day of each quarter to “give members as much free shipping as possible.” Retailers are notified two weeks before each quarter by email and in their Faire account of upcoming changes to brands they have ordered from previously so they can plan their buying.