On July 9th I’m going to do something that most startup CEO’s never do.
I’m going to share some of our actual sales/revenue data from the first month of Fab.com.
Ahead of that post, here are 8 reasons why we’re really excited about the Fab.com business model:
- Prior to Fab.com, there was no single destination for design online. Prior to Fab.com consumers had to go to thousands of websites and physical retailers to uncover interesting design objects, inspirations, and sales. We’ve brought that all into one place. Our vision is for Fab.com to be synonymous with design. And, we think we’re just at the very start of creating a new e-commerce 2.0 model for shopping design online, providing richer browsing and shopping experiences for consumers coupled with better reach and economics for designers and suppliers.
- Design is a horizontal market, cutting across numerous vertical categories. Good design can be found in all sorts of products ranging from furniture to tabletop to electronics to bikes to desks to handbags to luggage to jewelry to art, food and more. And we’re selling it all on Fab.com. What’s great about this is that our product range is bounded only by good design, not by category. We’re not a home shop, we’re a design shop.
- Design is social! People love sharing their latest design find and people love getting inspiration from design. Amazingly, of the nearly 300,000 members of Fab.com, half have come from another user’s invite. That sort of viral coefficient does not happen with most e-commerce categories.
- We’d like to think that we’ve designed an elegant and fun user experience. Our daily emailers are specifically designed to appear more like inspirational magazines than groupon-like daily deal coupons. Our entire web experience is meant to be aspirational, making design approachable for everyone. This extends to the design of our customer service, where our motto is: Delight Every Customer, period.
- Our flash sale model keeps people coming back regularly. We currently launch 4 to 8 new sales daily. Each sale features a designer or supplier and range of products that many people have never seen before. Each sale only last 72 hours and quantity is limited. This creates daily interest in what’s going to be on Fab.com as well as urgency to purchase before someone else grabs it. Perhaps the coolest thing about our business is that every day we get to introduce exciting new designers and products to people everywhere!
- Consumer love a great deal on design. Our unique cost model with viral/social invites, low working capital requirements, and more predictable demand and inventory, enables us to pass along extraordinary savings to consumers — far better than what they can achieve at any offline retailer — while still enabling suppliers/designers to make money to support their ongoing creativity and product development.
- Suppliers and designers love Fab.com because we provide them with a direct to consumer marketing channel like they’ve never had before. We cut out the retailer and enable suppliers to sell more during a 3 day period on Fab.com than they normally would in several months. Some of our supplier partners are already reporting that their Fab.com 3 day sales equated to more than 6 months worth of their normal business! That’s called having an impact. To be clear, more than 95% of the sales on Fab.com thus far are with suppliers who view Fab.com as a new sales/marketing channel. Less than 5% of our sales so far are production liquidation / closeout sales. Design is very different from fashion flash sales in this respect. I like to say that Fab.com is in many ways a step-up from Etsy in that we provide a platform for designers who can mass-produce but who don’t otherwise have effective direct-to-consumer sales channels.
- Our business model scales based on the relationship we are developing with our customers, enabling us to (hopefully) obtain significant lifetime customer value vs. traditional e-commerce where SEM takes all the margin. Couple this with low customer acquisition costs and our social/viral invite model, and this business could really scale up nicely.