Case Profiles / Power Up

Putting the ‘Flash’ Back into Flash Sales

Smile - Fab.com

Originally founded as a gay social site, Fab.com’s fortunes changed when it relaunched with a focus on selling great designs. Since then, it’s been rewriting the book on online retail.

Launched in June 2011, Fab.com makes for a perfect example of how the book of retail is being re-written online. With a focus on offering beautiful designs, this start-up blends products and social media to provide its customers a unique shopping experience that has earned it unprecedented success.

As a unique take on the flash sales model, Fab offers design-centred products of all kinds from artwork to watches and just about anything in-between.

Part of the business’s success, says Ryan Merchant, Communications Associate for Fab, comes from staying true to the company mission at all times.

“Our mission, first and foremost, is to make our members, partners, and employees smile,” Merchant says.

Change in Focus is a Lesson in Brand Development

When Jason Goldberg and Bradford Shellhammer decided to launch a social networking site for a gay audience, their idea was initially met with a great deal of enthusiasm. However, it wasn’t very long after the website’s initial launch that the pair realised it was under performing.

“The site was unable to grow its membership numbers to the levels the founders wanted,” explains Merchant. “After dinner one evening, the two men decided to shut down the site immediately and re-launch as an e-commerce company dedicated to design.”

Amongst many other items, Fab offers classic jewellery designs at great prices.

Amongst many other items, Fab offers classic jewellery designs at great prices.

In pairing their love of design with the social heritage of their site, Goldberg and Shellhammer’s site suddenly began to realise the potential they had been hoping for, and growth quickly began to mount.

“They believed the market for design was not being adequately covered,” says Merchant. “Design is an area they are both deeply passionate about and they felt as though there weren’t any quality websites exhibiting new, exciting, colourful and fun design.”

By sourcing products directly from designers and manufacturers, Fab is able to offer customers authentic, new-to-market products that fit within their on-brand guidelines.

“Fab features thousands of new design products across all price points and categories,” Merchant says. “We offer sales that vary in length, as well as weekly shops that showcase a variety of categories, including everything from vintage, fashion, kids, pets and food.”

Growing Pains

Having developed a strong product suite, Fab.com has since tweaked its on-site design structure a number of times in order to instill a sense of uniqueness, offering customers a novel shopping experience.

Given Goldberg and Shellhammer’s experience with social media, it was only natural that they should try and incorporate as much of it as possible with their webstore – a move that has continued to accelerate their growth.

“We place an emphasis on interactive discovery and allowing our members to engage the site with their friends, family and colleagues through our integration with social media,” says Merchant. “We believe that the emphasis we place on fun, colourful items separates us from the res of the e-commerce world.”

Since the webstore’s launch in June 2011, Fab has grown its membership base to over 4 million people worldwide as well as receiving US$51.3 million in funding to date.

Investors include a number of A-list figures from Silicon Valley, as well as celebrities, including Andreessen Horowitz, Menlo Ventures, Ashton Kutcher and Madonna’s long-term manager, Guy Oseary.

During its last funding round in December 2011, Fab was valued at US$200 million – a mind-boggling figure, considering the concept had only become a market reality six months beforehand.

However, such fast-paced growth and unprecedented success doesn’t come without its own unique challenges, which Merchant says the business has simply learned to deal with.

“The greatest challenge Fab has faced has been our exponential growth. We are the fastest growing e-commerce site in the world, having reached one million members faster than both Facebook and Groupon,” Merchant says.

“Obviously, when a company is growing so quickly there are inherent challenges in keeping up with demand, but we believe we have met these with great success and we look forward to providing an even greater design experience in the years to come.

Fab’s Social Impetus

Fab introduced a 'live feed' feature late last year, that shows which items are popular at any moment in real-time.

Fab introduced a ‘live feed’ feature late last year, that shows which items are popular at any moment in real-time.

An example of how agile the flash sales site has become, Fab.com was one of the first e-commerce sites to offer a complete integration with Facebook’s Timeline feature at the beginning of 2012. The start-up has since seen a 50 percent increase in traffic.

Previously, Fab pre-empted these features by offering a live feed feature last year, which showed Fab members’ activities on the webstore in real time, whether they were buying, liking or favourite-ing a given product. As of December 2011, more than 50 percent of Fab.com’s members had arrived on the site via social media channels.

“It has to be authentic,” Goldberg told Venture Beat. “Up to 40 percent of our traffic comes from social feeds. You can’t force that. Social isn’t just a way to get something from the user; it’s a way to give value to the user. The traffic will come when you deliver a great experience.”

Fab.com also recently purchased their German-based clone, Casacanda, relaunching it as Fab.de and is since providing the Fab experience to European customers.

Due to their ongoing expansion, the fast-paced Fab start-up has become an international retail phenomenon, creating jobs in New York, Berlin and Pune with more than 250 positions globally and growing.

Seeking more information on how to get an online retail venture off to a flying start? See our complete A-Z guide, Power Up: The Online Retail Entrepreneur’s Guide.

One Comment

  • I had never heard of this site before but after reading your post I clicked across to check it out. I am always on the hunt for good ideas and a store that can grow that fast is amazing. I am amazed by one thing though that you can’t see even a peek of the type of offers without registering. I know these sites rely on an increasing email list but I would have thought a tiny peak would work as well without the initial barrier. The stock is fantastic however and my wife will love it…unfortunately :)

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