Can Faire get local retailers to go digital?

If you were Max Rhodes, you’d probably hate trade shows, too. The first time he attended one, he was 24, hawking $79 umbrellas as a side gig to his job as a management consultant. He left wounded, emotionally and physically. Customers ignored him, no matter how hard he tried to grab their attention. And he cut his thumb badly on the last day while dismantling his booth.

Nearly a decade later, Rhodes is out to render the trade show business unnecessary. His company, Faire (No. 31 on LinkedIn’s 2019 Top Startups list) runs a wholesale marketplace that makes it simple for even the smallest of retailers to stock their shelves with a vast collection of homemade goods—without ever wandering through a convention center. 

This isn’t just another Etsy. The startup aggregates sales data from its thousands of retailers to create a recommendation engine that can suggest products to shops based on their customer demographics, location and the type of retail operation they’re running. Rhodes also lets stores test out new products with limited risk. Shops can return any item that doesn’t sell within 60 days at no cost. For a small retailer, this means there’s no more need to trust the fancy umbrella hawker—your customers will tell you if you picked correctly.  

Getting this right could mean upending the $1.8 trillion business-to-business e-commerce market, but there’s a reason why no one has done it yet. 

Traditionally, retailers—small gift shops in Oxford, Miss to the upscale cooking store in Santa Fe, N.M.—have stocked their boutiques by attending trade shows throughout the year, ordering from manufacturers’ catalogs and buying from sales representatives, many of whom they have known for years. 

Entrepreneurs have tried to bring this process to the internet multiple times in the past, to not much avail. Etsy launched in 2005 to help artisans crafting handmade goods circumvent not only trade shows, but stores entirely. While crafters flocked to the site, the e-commerce platform focused more on corporate values than turning a profit. After going public in 2015, the company remained unprofitable and its stock price fell 75% in just nine months. And while Etsy is experiencing a turnaround under new leadership, it has yet to displace the trade show.

Rhodes, however, asserts that Faire’s data will help separate it from the pack, and he’s convinced plenty of others with deep pockets. Faire has locked in $116 million in venture capital backing with Alex Taussig from Lightspeed Ventures and Anu Hariharan from Y Combinator leading its series C funding in December 2018. 

“We’ve been investors in Stitch Fix and saw how data-driven merchandise can change apparel. Here we can take that same approach but at a retail level,” Taussig said. “This is a dual combination of finding a problem for the retailer and finding a data science-driven way of solving the problem on the backend.”

Faire hopes to lure in retailers by providing access to thousands of artisans that produce a variety of home goods and knickknacks, like leopard-print baby onesies or dinosaur-etched flasks. But it’s the product recommendations that will make them stay. When a business signs up, Faire combs its website and social media accounts to generate a profile of its client’s customer demographics and aesthetic preferences. By mapping this profile against Faire’s aggregated sales data, the startup advises a retailer on what will sell in their stores.

Rhodes is betting that Faire can serve as local, independent stores’ secret weapon amidst the onslaught of e-commerce, particularly from behemoths like Amazon. 

Today, in-person shopping is all about the experience. Customers want to find unique items they might not stumble upon on Amazon or another site, said Philip Krieger, managing director at investment firm TM Capital. They also value having an expert advise them on what they should look for. This is where local retailers can shine.

Retailers, however, are not convinced they need an algorithmically-based digital buying option just yet. 

For 44 years in Madison, Wis., Carol Schroeder has run Orange Tree Imports, a shop that carries just about everything: kitchen supplies, toys, jewelry. She attends multiple trade shows a year, switching out products with the seasons. She’s exactly the kind of retailer Faire is courting.

Schroeder knows Faire. She’s even used them to order a Wisconsin-shaped cast-iron skillet and candles. The site’s robust search engine is a draw. But as convenient as online shopping is, she’ll never give up on the trade show.

“When I order online, sight-unseen, I’m really trusting the manufacturer in terms of quality. We’re in the Midwest—people are price-sensitive so it has to be a good value for it to sell,” Schroeder said. “Faire is ideal for something I’ve already seen and am thinking about trying out in my store.”

Perhaps, one day, retailers like Schroeder will buy into Faire’s vision, whole-cloth. For now, though, they’re willing to browse.