It’s no secret that small businesses are under pressure in the current economic environment — tight margins and shorter sourcing timelines make independent retailers even more susceptible to the tides of trade than their larger counterparts, so every extra cost hurts and every penny counts.
For example, “shipping is just an absolute killer for small businesses,” shared Max Rhodes, Co-founder and CEO of B2B marketplace Faire in an interview with Retail TouchPoints. “Much larger retailers often are ordering in bulk, so on average their shipping costs are maybe 1% to 2% of the total wholesale cost. For a small retailer, where they’re ordering $100, $200 at a time, shipping costs can end up being, on average, almost 10% of the wholesale costs. It just crushes their margins, and it can often end up being really unpredictable. They don’t typically know how much it’s going to cost until after the order has shipped.”
These pressures on small businesses go a long way toward explaining the impressive milestone that Faire has just reached — more than 100,000 retailers are now members of the Faire Insider program, which, in addition to other benefits, offers free shipping on thousands of brands. Just six years after the program’s launch, Faire members now account for the “vast majority” of the order volume on the marketplace, according to Rhodes, and there’s a reason for that — these Insiders are saving a good chunk of change. Over the course of the program, members have saved more than $200 million. For most merchants the savings average around $175 per month ($2,100 annually), for a membership that costs $19.99 a month.
“There are so many expenses that go into running a small business, so any time we can cut costs, we take it — Faire’s Insider membership has helped us do that, especially with free shipping,” said Mia Sakai, Owner of the Ándale Market neighborhood corner stores in Chicago. “The margins on food products can be slim, and the cost of shipping can really eat away at them. With Faire Insider free shipping, we’re able to offer our customers fair market prices while still maintaining our margins.
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“It’s also made it easier to take chances on new brands, which is huge for us,” added Sakai, who has been a Faire Insider since 2021, in comments shared with Retail TouchPoints. “We’re a curated bodega, and our customers expect to discover fresh, unique products they won’t find at a typical market.”
Small Retailers’ Purchasing Trends Running Counter to Those of Consumers
In many ways, Faire is well positioned to serve retailers in today’s economic climate. Rhodes said that the platform has seen an inflection point in its growth over the last couple of months that he believes is driven by retailers actively looking for alternative suppliers.
“They’re looking at who they bought from in the past, and maybe prices have gone up a bunch, and I think that is leading them to come to Faire,” he said. “More and more and more retailers are turning to Faire as a way to navigate that uncertainty. We’re uniquely positioned to make it easy to find new suppliers, to get the best value, to protect their margins and to save time as well. Retailers are always really pressed for time; finding new suppliers is tiring, managing all that complexity is tiring, and we make it really easy.”
Interestingly, the Faire customer also appears to be largely immune to some of troublesome purchasing behaviors currently prevalent among today’s cost-conscious consumers, such as subscription fatigue and the instinct to stockpile.
In the first place, Rhodes said most independent retailers simply aren’t able to stockpile even if they might want to, because of their limited access to capital.
“We’ve looked at what’s happening with things like the Made in China products and others where tariffs might become a factor, and we haven’t seen any real changes,” said Rhodes. “The main thing that we’re seeing is retailers doing more discovery and bringing out more new brands, and I think that is a reflection of the fact that they’re adapting. One advantage that small retailers have is they haven’t bought way in advance, so they can respond quickly to things like price increases. One thing we have seen is our Made in America business growing faster over the course of the last couple of months than it had in the past, which is interesting.”
And given that Faire Insider offers businesses the one thing they most want right now — cost savings — the program hasn’t seen membership declines like many consumer-facing subscriptions. “Actually, the opposite,” said Rhodes. “I think the reason is, with import costs going up, retailers are looking to save money.”
Small Retailers’ Advantages: Adaptability and Agility
In fact, among the other benefits of the Insider program is free import duties on cross-border orders for European retailers, which will certainly rank higher on the list of benefits following the recent conclusion of trade negotiations between the U.S. and EU.
“I’ve been spending a lot of time talking to retailers, and to be honest, I think that they’ve just been through so much over the last 20 years, especially the last five years, that they’ve developed this resilient mindset: ‘We’re gonna get through it; we’re gonna figure it out,’” said Rhodes. “There’s definitely a little bit of, ‘Here we go again…’ but there’s also this attitude of, ‘We survived Walmart, we survived Amazon, we survived COVID and we’re going to survive this. It’s just the nature of life running a small business.”
More Insiders Means More Savings and More Growth
Faire’s ultimate goal is to help these entrepreneurs do just that, which is why, to mark the milestone of 100,000 members, the company is adding additional features to the Insider program.
In addition to free shipping and the free import duties for European retailers, Insiders already also get net-60 payment terms, free returns on opening orders (their first order with a new brand), early access to Faire Markets (a series of virtual trade shows) and new brand launches, and dedicated phone support.
Now, Insiders also will get:
- A personalized Insider page highlighting eligible brands that offer free shipping;
- 5% off on opening orders from select Insider brands; and
- Enhanced “New to You” filters that make it easier to discover new brands.
“Our ultimate vision is, we want to make it as easy as possible for retailers to discover great brands; we want to make it as easy as possible for them to get the best possible value on every single order from those brands — free shipping, generous payment terms, exclusivity — and then we want to make it as easy as possible for them to place those orders all in one place,” explained Rhodes.
In fact, Faire is so dedicated to this mission that the cost to offer free shipping is covered largely by the platform. After accounting for the membership fees, Faire still expends a sizeable chunk of its commissions on funding the free shipping offering. However, the more members it has, the more buying power that gives Faire to negotiate better rates, and Rhodes said that technology advances now also make it possible to easily surface brands for retailers that will be less costly to ship (for example those located in the same region).
For Faire, Rhodes sees this membership milestone as “a signal of commitment. It represents an important step in their relationship with Faire. They’re kind of saying, ‘I want to do as much buying as I can on Faire.’” And that they do — Insider members typically buy 2X to 3X more on Faire than non-members.
“We have hundreds of thousands of retailers buying on Faire, and now that we have over 100,000 of them subscribed to our membership program, where they’re ordering more, that’s going to mean more growth for our brands,” said Rhodes. “And that’s growth that we are helping to fund, like we want. We want to be the ones that are driving costs down for retailers and therefore driving growth for our brands.”
