The Cost of Doing Business on Faire.com vs. Direct Outreach

Rethinking Wholesale Strategies is very important – Especially today.  

Let’s talk about the The Cost of Doing Business on Faire.com vs. Direct Outreach

In the evolving landscape of wholesale retail, platforms like Faire.com offer a streamlined, albeit costly, avenue for connecting retailers with suppliers. While Faire simplifies the sourcing process with its vast selection and supportive terms, the fees associated can eat significantly into a brand’s profit margins. 

For businesses serious about controlling costs and targeting specific retailers, direct outreach is definitely a more strategic approach. Below I share the implications of Faire’s fee structure and the benefits of  building your own wholesale relationships.

The High Cost of Convenience on Faire.com
Faire.com offers connections between independent brands and retailers, but this service comes at a steep price. Faire charges a 25% commission on a retailer’s first order with a brand and 15% on subsequent reorders if the buyer wasn’t acquired through the retailer’s direct link or isn’t on the retailer’s pre-existing store list. 

These fees are substantial, especially for brands looking to build a steady wholesale clientele.

Adding to the expenses are the credit card processing fees, typically around 3%, applied to each transaction completed through Faire.

Moreover, Faire’s model is predominantly passive for sellers. Brands list their products and wait for interested retailers to discover them, which can lead to unpredictability in sales and difficulty in strategic marketing.

I want to show you the COST difference between doing business on Faire.com, and reaching out to boutiques on your own. 

CASE STUDY 1
A Candle Company that sells on Faire.com.
Candles cost: $5
Wholesale: $12.50
Retail $30
Minimum wholesale order: 24 pc   x $12.50  = $300
**Faire’s 25% of the first order = $75 in commission in their pocket
Net profit: $105 ($300 sales – $75 commission – $120 COGS)
**Faire’s 15% of future orders = $45 in commission in their pocket
Net profit: $135 ($300 sales – $45 commission – $120 COGS)
**Plus any other transaction fees or specials, or discounts Faire.com requires you participate in.

If you sell directly to stores YOURSELF, this is your NEW profit margin structure

Candles cost: $5
Wholesale: $12.50
Retail $30
Minimum wholesale order: 24 pc   x $12.50  = $300
0% commission  – Leaving you $180 in net profits ($300 sales  – COGS $120)
$45 MORE per order in your pocket than on Faire.com

That means if you sell to 50 stores, and they each order 1x that is $2250 more in your pocket than if you got them on Faire.com and paid 15% commission.
***But if those 50 stores order 4x in one year (very likely), that is an extra $9000 in your pocket.  

Imagine if you had…
100 stores – $18,000 more in your pocket
200 stores – $36,000 more in your pocket

CASE STUDY 2
A Jewelry Company that sells on Faire.com
Average Jewelry cost: $40
Wholesale: $100
Retail: $240
Minimum wholesale order: 8pc x $100 = $800

**Faire’s 25% of the first order = $200 in commission in their pocket 
Net profit: $280 ($800 sales – $200 commission – $320 COGS)

**Faire’s 15% of future orders: is $120 in commission in their pocket
Net profit: $360 in profits  ($800 sales – $120 commission – $320 COGS)
**Plus any other transaction fees or specials, or discounts Faire.com requires you participate in.

If you sell directly to stores YOURSELF, this is your NEW profit margin structure
Average Jewelry cost: $40
Wholesale: $100
Retail: $240
Minimum wholesale order: 8 pc x $100 = $800
0% commission  – Leaving you $480 in net profits ($800 – $320 COGS)
$120 MORE per order in your pocket than on Faire.com

That means if you sell to 50 stores, and they each order 1x that is $6,000 more in your pocket than if you got them on Faire.com and paid 15% commission.
****But if those 50 stores order 4x in one year (very likely), that is an extra $24,000 in your pocket.  

Imagine if you had…
100 stores – $60,000 more in your pocket
200 stores – $120,000 more in your pocket

CASE STUDY 3
A High End Handbag Company that sells on Faire.com
Handbag cost: $80
Wholesale: $200
Retail: $480
Minimum wholesale order: 6 pc x $200 = $1,200

**Faire’s 25% of the first order = $300 in commission in their pocket 
Net profit: $420 ($1200 sales – $300 commission – $480 COGS)
**Faire’s 15% of future orders: is $180 in commission in their pocket
Net profit: $540 in profits  ($1,200 sales – $180 commission – $480 COGS)
**Plus any other transaction fees or specials, or discounts Faire.com requires you participate in.

If you sell directly to stores YOURSELF, this is your NEW profit margin structure
Handbag cost: $80
Wholesale: $200
Retail $480
Minimum order: 6 pc  x $200 – $1,200
0% commission  – Leaving you $720 in net profits ($1200 – $480 COGS)
$180 MORE per order in your pocket than on Faire.com

That means if you sell to 50 stores, and they each order 1x that is $9000 more in your pocket than if you got them on Faire.com and paid 15% commission.
****But if those 50 stores order 4x in one year (very likely), that is an extra $36,000 in your pocket.  

Imagine if you had…
100 stores – $72,000 more in your pocket
200 stores – $144,000 more in your pocket  (You can see how quickly I scaled my handbag line with 1200 stores)

The Strategic Advantage of Direct Outreach: In contrast to the passive approach required on Faire, PROACTIVE direct outreach to potential retail partners can offer several compelling advantages:

No Extra Fees: By bypassing platforms like Faire and reaching out directly to retailers, brands can avoid hefty commissions and minimize your processing fees. Every dollar saved is a dollar that can be reinvested into growing your business or paid to you as a salary!

Targeted Marketing: Direct outreach allows brands to handpick the retailers that align most closely with their market and brand ethos. This targeted approach ensures that products are placed in locations where they are most likely to succeed, increasing the likelihood of repeat orders and long-term relationships.  Approaching retailers directly allows brands to control how their products are presented and explained, ensuring the brand story and product information are conveyed accurately and compellingly.

Building Strong Relationships: Personalized communication with retailers strengthens collaborations and can result in better terms like exclusivity deals and tailored marketing. While Faire.com provides a simple wholesale entry, it may be costly and less targeted. Brands should focus on direct outreach to select retailers to control costs, maintain market control, and forge profitable, long-lasting partnerships.

To learn more about working with Sarah to start your own strategic outreach to stores book a call here: https://calendly.com/sarahshaw/strategy-session-blog