How Mom-and-Pops Can Survive Retail’s Apocalypse

Serving the needs of Americas millions of micro-merchants and mom-and-pop shops is one of those business plans that always sounds much easier in theory than it turns out to be in practice. The simple reason? Diversity. Other than being small, they’re a rather diffused group in terms of who they serve, what they sell, their scale of operation and a host of other factors that make it complex to find a common thread to serve.

Complex, but not impossible, Faire Chief Technology Officer and Co-founder Marcelo Cortes told Karen Webster in a recent conversation. It really comes down to starting in the right place, which usually means starting small. It is a lesson Cortes learned at his previous job as engineering lead for Square Cash. Today, he noted, Square has built a powerful commerce ecosystem around a robust platform of small business (SMB) services, but that is far from where it started. The opening ambition was smaller and highly targeted.

Square “didn’t go in trying to change a big part of the market. They took a small target: These small business[es] had a need to be able to accept a credit card, but either couldn’t get access or it was very expensive [to] access. So, Square didn’t start at a big change; it started with that small, universal problem for SMBs,” Cortes said.

The rest, as they say, is history — in Square’s case. However, when Cortes left Square to start Faire, a B2B marketplace meant to match small merchants and mom-and-pop shops with small makers and manufacturers, it was a lesson he took to heart. Faire, in many ways, is leaving the core of the experience intact, he noted. Buyers aren’t paying more for the goods than they would have otherwise, and sellers are still making the direct connections to the mom-and-pop shops that are the lifeblood of their organizations.

What the marketplace is designed to do, he said, isn’t so much disrupt that relationship, but improve and streamline it for both sides — and add value that simply wasn’t there before.

What You Can’t Find On Amazon

What tends to pull consumers to the small mom-and-pop shops that Faire targets on the buyer side of its platform is the discover element of the trip, Cortes and Webster agreed. Getting to a local shop isn’t as convenient as ordering an item from the comfort of the couch and having it delivered the next day, but it does offer a much better chance of serendipitously discovering something neat, new and unexpected.

However, Cortes noted, providing that experience is actually a pretty tall order for both the small shops and product makers with which Faire works — and learning how to best do that for its customers has been an ongoing experience.

For example, the Faire marketplace allows buyers to filter the goods they see in a host of ways. They can limit by best sellers, things made locally in their region, goods categories, demographic favorites and whether or not the product is organic. The most popular filter category? Goods not sold on Amazon.

“We definitely weren’t expecting that,” Cortes said, “but, when you think about it, it makes sense. If the customer can just as easily have it sent to them the next day, the mom-and-pop shop can’t compete. When it comes to really driving customers through the front door, it is about having something unique on the shelves.”

That something unique is a fairly broad category of goods going to a fairly large array of stores. When Faire started, its first vertical was gifts. The company quickly learned two lessons. The first was that the number of retailers that fell into the broad category of “gift” sellers went far beyond what one might traditionally consider a gift shop. Bookstores, apparel retailers, coffee shops and even hair salons often have gift sections — and are looking for unique items to stock. The second lesson was how widely defined “gift” items can be. Apparel and pet goods, for example, weren’t originally part of the platform — what put them there was buyer demand.

At the end of the day, he explained, what all main-street small shops are looking for — and what they all struggle with universally — is access to interesting and unique inventory to put on their shelves. In the past, that need was met by salespeople brought directly to their doors, things they researched and sought out on their own, or goods they were exposed to at trade shows. They mostly had to guess, and hope that what they picked would actually sell a few times a year.

“For small shops, they want and need everything to sell. An item that doesn’t can take up shelf space, gathering dust for months, and even years, which is not good or efficient for the merchant,” Cortes said.

For the small makers and manufacturers with which Faire works (those with items that generally don’t end up on the shelves of Walmart and other big-box stores), the problem is similar. There are thousands of small shops they could be selling to, but for the fact that they don’t have a simple way to encounter them.

Faire wants to be a marketplace that provides that touchpoint, he noted. However, more than expose them to a wider array of goods, it wants to put data tools in their hands that make them more likely to stock the right goods on their shelves.

Streamlining The Shopping Experience

One of the downsides to a platform’s success, at times, can be congestion. As more buyers and sellers sign on, there is a tendency for the signal-to-noise ratio to suddenly spike up — such that it is difficult for the right matches to be made via the marketplace.

That is why, Cortes noted, the Faire marketplace is built on top of a series of curation tools, offered for free to both merchants and makers, and making it easier for the right matches to happen.

“That means we use the data on what type of shop you operate, and what you sell, to decide what types of products we show you. If your shop doesn’t sell apparel at all, it doesn’t make sense for us to show those listings,” said Cortes.

There is also the provision of a secure and stable environment, where both sides of transactions are vetted. Occasionally, he noted, Faire has had to remove a dishonest actor or two, and those trying to take advantage of the platform, but the majority of merchants and small manufacturers have been honestly looking for a connection point.

Faire has skin in the game when it comes to making sure the transactions are legit, he added. The marketplace makes its money by charging the seller a commission fee — and only collecting on good sales.

“For us to succeed, our buyers and sellers have to succeed,” Cortes said.

Ultimately, the team at Faire believes the small local sellers will succeed, because there is a hunger among consumers for the unique services they offer. Even a few years ago, when everyone was writing physical retail‘s obituary, Faire was willing to bet on the mom-and-pop shop because of its unique contribution to customers in terms of offering unique goods.

“We never believed in the retail apocalypse for small stores. We’ve always believed that we could help those small shops do what they are known for doing best (providing unique merchandise) better than they’ve ever been able to before,” he said.