From the beginning, we’ve built Faire on the belief that the future is local. We’re seeing communities around the country who love their neighborhood restaurants and shops rallying to support local during this COVID-19 crisis. Our mission is to empower entrepreneurs to chase their dreams, and we’ll continue to honor that mission for our independent makers and local retailers during this challenging time.
We’re in this together
Local retail is being hit particularly hard right now, with several public policies requiring brick-and-mortar stores to close for the time being. The best thing we can do for your business, long term, is help as many retailers as possible keep from closing their doors. We recently published Immediate Steps for Local Retailers During COVID-19 for our retailer community, as well as a new tool to help measure the impact of COVID-19 on their finances. We’ve also extended net terms and free return windows by 30 days, to take some more risk out of wholesale buying. Please consider sharing this information with your buyers—there is now a new template available in the Faire campaigns tool, found in the marketing hub of your maker account. This template includes resources you can share with retailers to help support your customers during this outbreak.
We also want to support you during this time. Starting today, we’re offering free, immediate payout on Faire—there will be no fees for next-day payments for the next month. Effective March 26, 2020, we’re switching all net 30 customers to next-day for free through April 25, 2020. We will also pay out all makers who have outstanding payments related to orders fulfilled since the beginning of March. We’ll continue to look into new ways to offer support, so please stay in touch with us in our community forum.
What we’ve learned
Last week, we surveyed more than 20,000 retailers and makers to hear how you’ve responded to COVID-19. We’ll continue surveying 20,000 more retailers and makers each week, and we’ll share how things are changing over time.
Key survey takeaways
- Makers are concerned for their retailers. Most makers responded to the survey asking how retailers are doing. The reality is that retailers are facing difficult times and uncertainty—read more about our retailer learnings.
- 55% of makers report not having enough cash on hand to handle this type of crisis, compared with 70% of retailers.
- 59% of makers have started running new promotions, and 51% are decreasing their overall marketing spend. More makers are moving to meet their customers where they are, and we expect to see even more marketing innovation through this time.
- Many makers are expecting a temporary revenue reduction of 50% or more, depending on what products they make. 52% have already begun decreasing orders of raw materials.
The impact for makers is varied
The highest impact areas for makers right now include decreased sales, cancelled trade shows, and disrupted supply chains. 55% of makers say that they don’t have enough cash on hand to handle a crisis like this. Of those that do have capital accessible, many makers (40%) have 3 months or less of operating expenses if they don’t take immediate action. These statistics vary by product category; as an example, “essentials” are performing better than usual, while non-essentials, like apparel, are lagging behind.
Makers are also focused on establishing more stringent hygiene policies, as well as shifting their marketing and supply chain strategies. 53% of makers have already started reducing raw material purchases, and 11% are looking for more local or regional supply chain options.
Disruptions like these will take time to rebuild. Our initial data shows about half of makers are expecting a temporary revenue reduction of 50% or more, with high degrees of uncertainty.
Steps makers can take today
1. Understand your customers and sales data
Knowing your numbers in different sales channels can help you determine who your best wholesale customers are and where opportunity lies. Call your top retailers to understand what they’re doing during the outbreak. Ask them how they’re feeling and what they may need.
Given the overall uncertainty, it’s also important to know that consumer preferences may change for your products. Start brainstorming new product ideas, designing content, and learning from your direct consumers—hearing their needs will help you create high-demand products coming out of this.
2. Adjust your fulfillment options
A lot has been written about supply chain disruptions since COVID-19 appeared in China months ago, and every supply chain is different. The situation has evolved as “shelter in place” policies continue to impact brick-and-mortar retail buying. Logistics companies are also beginning to turn off non-essential deliveries in certain regions, leaving makers with questions about how to easily ship to retailers.
To start, we recommend adjusting your lead times on Faire to reflect your current status, if necessary. You can also use messaging on Faire to confirm with retailers in high-impact areas (such as California, New York, Washington state, and Pennsylvania) if they can accept deliveries at this time. Also, consider understanding the definition of “essential” products so that you can make and market products that will be most relevant to your retailers during this time.
Let your retailers know if you’re in one of those affected regions and are not able to ship orders right now. Check updates from shipping carriers regularly to determine the best way to get products to your customers.
3. Consider new sales channels
As more major events around the world announce cancellations, it’s hard to overstate the impact of these changes on our daily lives and businesses. We recognize that cancelled trade shows will impact your plans in the short term. Know that our team at Faire has been working hard over the last year to ensure that we’re prepared for volatility, and can stand by our customers in the face of uncertainty.
Right now, we’re building features that will continue to help make selling wholesale online as seamless as possible, including offering preorders, marketing tools, and more. Stay tuned for more announcements to come.
You may also be considering selling directly to consumers (DTC). If that’s the case, make sure to invest in your social media following and consumer email list. Check out tips and tricks from Facebook on how to build a following. Also, consider platforms like Shopify or Square, who make it easy to create consumer websites. Don’t be discouraged if this path isn’t for you—starting a DTC business can take a lot of time and investment, and doing so may not be right for your business at this time.
4. Revisit your marketing strategy
A majority (59%) of makers are trying new promotions and sales events during this time. By running promotions, you can generate cash from your existing inventory in a way that’s also beneficial to your retailers. This will help you prevent an accumulation of inventory that might be difficult to sell.
Try offering discounts, close-outs, free shipping, studio sales, and local delivery—or even plan a tent sale for when people can congregate again. Also consider using community sites like Nextdoor to run local offers, see notifications about retail store hours and closures, and check on your ability to deliver.
5. Plan for recovery and beyond
Given the situation, we’re currently recommending small retailers buy fewer products from all sources, including from Faire. Until more cash hits their bank accounts from the national government’s economic relief bill, we strongly believe this is the right thing for retailers to do. Today, 70% of retailers have less than 3 months of cash available.
At moments of such strain, it can be hard to keep up with all the immediate challenges—let alone, maintain focus on the medium and long term. The U.S. government is planning for 18 months or longer of impact from COVID-19. McKinsey suggests that the economy will either take 6 months until Q4 in a “delayed recovery,” or 12 months until Q2 2021 in a “prolonged contraction.” J.P. Morgan performed an analysis that suggests we may enter a recession in the next 6 months and then recover in the second half of the year.
That said, a substantial stimulus package is currently working its way through the U.S. Congress, with significant relief for small-to-medium sized American businesses. Our team of experts will interpret what this could mean for you, and will share that information with our maker and retailer community as quickly as possible.
The only constant in all of this is change—it’s never too early to start planning for when recovery begins so you can re-accelerate your business.
6. Focus on your business’s health
In Immediate Steps for Local Retailers During COVID-19, we’ve outlined eight essential focus areas for retail businesses and actionable steps in each focus area:
- Prioritizing health
- Reducing your costs
- Doing the right thing for your people & your business
- Seeking financial relief & credit options
- Increasing your revenue
- Staying informed on economic developments
- Connecting with your customers & community
- Bookmarking essential resources
Though your brand likely has different needs than brick-and-mortar businesses, you may find these steps to be helpful, too. Read more.
We’re here for you
We’re committed to giving you the information you need to make important decisions about your business, and will provide more updates and trusted information as it becomes available. Our team is inspired every day by the resiliency of small businesses and independent entrepreneurs, and we’re looking forward to a day when this unprecedented moment in time is behind us.
Please stay safe, stay connected, and join the conversation in our community forum.
This survey was conducted online within the United States by Faire from March 18-19, 2020, among 22,094 U.S. adults ages 18 and older. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected].