<p><img src="https://static2.businessinsider.com/image/602ebfc931eb0600197c409a-2222/Faire_Web lifestyle.jpg" border="0" alt="faire" data-mce-source="Courtesy of Faire"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Online wholesale marketplaces are having a moment. </p><p>Companies like Faire and Abound aim to make it easier for retailers to stock their stores with goods. Think of these platforms like a B2B version of Etsy, selling products made by brands and independent makers so that retailers can purchase them wholesale to sell them in their own stores. </p><p>These companies may be even more relevant during the COVID-19 pandemic, which has brought more businessesand shoppersonline for the first time while simultaneously disrupting the traditional trade show process.</p><p>Since the pandemic has necessitated the cancellation of many major trade shows in both 2020 and 2021, many brands have had to rethink how they make the relationships necessary to get their products on store shelves. </p><p>Both <a href="https://www.faire.com/">Faire</a> and <a href="https://helloabound.com/">Abound</a> are facilitating that matchmaking digitally, and both have announced new funding rounds in the midst of the pandemic. </p><p>Abound, which was founded by Niklas de la Motte, Bill Shope, and Drew Sfugaras in 2019, announced Thursday it had raised a $22.9 million Series A funding round led by Left Lane Capital. RiverPark Ventures, All Iron Ventures, and Red Antler also contributed to the round. </p><p>The company said it has added over 180,000 products since the beginning of 2020, and has grown its sales volume 20 times over as a result. In a press release about the Series A, Harley Miller, managing partner at Left Lane Capital, said certain consequences of the pandemic have created opportunity for the online wholesale sector.</p><p>"With the cancellation of most major trade shows in 2020 and 2021, emerging brands and independent retailers have been seeking new distribution channels to support their business ambitions," Miller said. "Abound offers an exciting and unique alternative to the legacy wholesale model at a time when small businesses need it most." </p><p>Faire, meanwhile, <a href="https://www.businessinsider.com/7-resale-e-commerce-platforms-to-go-public-soon-stockx-offerup-2021-1">has quickly become a giant in the online wholesale space</a>, having raised a total of $436 million in venture capital since it was founded by Max Rhodes, Daniele Perito, Marcelo Cortes, and Jeffrey Kolovson in 2017. Its most recent round, a $170 million Series E led by Sequoia Capital in October 2020, valued the company at $2.5 billion. </p><p>A representative for Faire said the company more than tripled its business in 2020, selling over 35 million items. Its network includes more than 150,000 independent retailers. </p><p>"The traditional wholesale market is incredibly inefficient and really centered around physical trade shows," Alex Taussig, a partner at Lightspeed Venture Partners, an investor in Faire, told Insider. "You have tens of thousands of brands and hundreds of thousandsactually millions of retailers, depending on how you count themand they all need to get in contact with one another, but they need these aggregators in the middle to make those connections happen. And traditionally, all those aggregation points have been offline."</p><p>But Faire and Abound are not alone in the online wholesale space. There's <a href="https://www.nuorder.com/">NuORDER,</a> which has more than 3,000 brands and 500,000 retailers on its platform and <a href="https://www.crunchbase.com/organization/nuorder">has raised $36.9 million</a> in venture capital. Tundra is another marketplace that is popular with small businesses; it <a href="https://www.crunchbase.com/organization/tundra">has raised $12 million</a> in venture funding. </p><p>Bigger e-commerce players have gotten into wholesale, too. <a href="https://techcrunch.com/2019/05/23/shopify-quietly-acquired-handshake-an-e-commerce-platform-for-b2b-wholesale-purchasing/">Shopify acquired the wholesale platform Handshake</a> in 2019 and <a href="https://www.shopify.com/blog/handshake">relaunched it</a> as an official part of its ecosystem in October 2020. Etsy had its own wholesale marketplace from 2014 to 2018, when it <a href="https://www.etsy.com/seller-handbook/article/an-update-on-etsy-wholesale/319339570254">was shut down</a> due to lukewarm demand. </p><h2>Sourcing products you can't find on Amazon</h2><p>These wholesale marketplaces offer a host of benefits for both brands and retailers. They help independent brands and makers gain exposure and reach that they may not otherwise have had. And, on the other side of the equation, they help retailers source inventory that may be difficult to find. </p><p>On Faire, for example, retailers can search for products with very specific filters, like the maker's location and product lead time, and whether they fit with values like being "eco-friendly," "small-batch," or "women-owned."</p><p>Faire's CFO, Lauren Cooks Levitan, recently told Insider that the most popular filter that customers use to shop on the marketplace is for products that are "not on Amazon." </p><p>"I think that that filter is so popular because local independent retailers, the reason they're successful is they compete on something more than price and convenience. They compete on curation," she said. "They know how to make great recommendations, and their customer comes to them to discover unique and interesting things."</p><p>Retailers looking for unique inventory for their stores may think that "if it's readily available on Amazon, it's not sufficiently distinctive for their customer," Cooks Levitan said.</p><p><img src="https://static4.businessinsider.com/image/602ecde542b84000192f445a-799/Lauren_Cooks_Levitan_CFO.jpg" border="0" alt="Lauren Cooks Levitan Faire" data-mce-source="Courtesy of Faire"></p><p>Tech-enabled wholesale marketplaces also often offer analytics tools that can help small businesses gain greater visibility into which goods are selling and which are not.</p><p>They offer other benefits, too, like 60-day payment terms and other assurances to alleviate the risk that comes with investing in inventory, Robin Sherk, senior director for consumer and retail at CB Insights, told Insider.</p><p>These online wholesale marketplaces may have low order minimums, meaning that retailers can buy "a little bit of product so they know it's a hit before they invest so much in inventory," Sherk said. </p><p>Planning inventory is always a challenge for both retailers and brands. The pandemic's store closures and supply chain disruptions have made the process even more difficult. Some brands, particularly fashion brands, <a href="https://www.glossy.co/fashion/digital-wholesale-marketplaces-are-competing-for-dwindling-business-as-brands-move-to-dtc/">adjusted their strategies early on in the pandemic</a> to focus more on direct-to-consumer sales rather than wholesale, in an effort to shield themselves from the threat of canceled orders as stores were closed. </p><p>But Sherk said that many of these online wholesale companies are able to offer flexibility and convenience so that businesses can adapt without having to go DTC. </p><p>Several, including <a href="https://blog.faire.com/thestorefront/faire-winter-market-our-next-virtual-trade-show-event-is-coming-in-february/">Faire</a> and <a href="https://www.glossy.co/fashion/digital-wholesale-marketplaces-are-competing-for-dwindling-business-as-brands-move-to-dtc/">NuORDER</a>, have also hosted virtual trade shows during the pandemic so that brands and retailers could make the connections they may have made in more normal times. </p><p>And it's important to note that these marketplaces absolutely need their small business customers to survive. After its sales dropped 60% in a one-week period after shelter-in-place orders went into place last March, <a href="https://www.businessinsider.com/faire-offering-new-small-businesses-up-to-20000-through-new-program-2020-1">Faire introduced a program</a> called "Open with Faire" that extends a $20,000 credit line to retailers stocking up on inventory. </p><p>There are some downsides to using these platforms, however. For example, while Faire is free for retailers searching for products to buy, <a href="https://www.faire.com/support/articles/360015893392">makers pay a 25% commission for initial orders</a> and 15% for repeat orders. <a href="https://helloabound.com/brand_users/new">Abound's commissions</a> start at 8%. Other marketplaces <a href="https://www.wholesaleinabox.com/growingsteadyblog/faire-tundra-and-bulletin-how-to-compare-and-choose-the-right-wholesale-marketplace-for-you">may charge</a> a membership fee rather than take a commission. </p><p>When purchasing from a wholesale marketplace, retailers can generally return items that haven't been selling for themas long as it's their first order from that particular brand. If it's a repeat order, <a href="https://www.faire.com/support/articles/360007069352">Faire assumes</a> "both you and your customers love their products" and doesn't allow for the return. Abound has a <a href="https://helloabound.com/pages/terms_of_service">similar return policy</a> in place.</p><h2>Why investors are excited about marketplaces</h2><p>Marketplaces as a general category have been popular with investors lately, as the COVID-19 pandemic has accelerated growth for the e-commerce sector and brought consumer businesses online to an extent not seen previously.</p><p>Since marketplace businesses do not typically carry inventory themselves, they <a href="https://www.businessinsider.com/top-vc-firms-for-e-commerce-share-priorities-2021-2020-12#marketplaces-bringing-traditional-businesses-online-are-popular-with-investors-right-now-2" data-analytics-module="body_link" data-analytics-post-depth="100" data-uri="3c25009d411ef80215112d02016f5504">tend to be very capital-efficient</a>, Fabrice Grinda, founding partner at investment firm FJ Labs, said in an interview with Insider in December.</p><p>Cooks Levitan, who was previously the CFO of sports merchandiser Fanatics, said that the marketplace model works because "there's no limitation on growth." </p><p>"In brick-and-mortar retail, obviously to grow, you can have constant sales growth, but the biggest growth is going to come from continuing to expand your store base, and you can only do that so fast," she said. "Marketplaces don't have any of that dynamic. They can respond to demand as it ebbs and flows." </p><p>"The businesses themselves can just grow at a very different scale because they're not encumbered by those infrastructure needs," Levitan added. </p><p>Taussig of Lightspeed Venture Partners noted marketplaces make it easier for businesses to be discovered by potential customers. </p><p>"It's never been easier to set up your own online store," he said. "But there's a big discovery problem with that because there could be a million Shopify merchants online, but you'd never know because you can't find them on Shopify.com."</p><p>Marketplacesand Faire, in particularcan allow for "those hundreds of thousands of small brands that are out there to be discovered in one place," he said. </p><p><strong>SEE ALSO: <a href="https://www.businessinsider.com/jetcom-cofounder-launches-olive-to-make-delivery-more-efficient-2021-2" >The cofounder of Jet.com is taking what he learned from Amazon and Walmart and launching a new e-commerce startup that he says fixes one of the biggest problems with online shopping</a></strong></p><p><a href="https://www.businessinsider.com/wholesale-marketplaces-faire-abound-raising-millions-in-vc-2021-2#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/worlds-most-expensive-liquid-thoroughbred-horse-semen-2020-3">Why thoroughbred horse semen is the world's most expensive liquid</a></p>
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