Less than 40% of Fab’s Revenue Comes From Flash Sales

By Devon Glenn 

After two years, the creators of the social shopping site Fab have announced a five-part plan to transition the company from a flash-sale retailer to its own unique brand. One reason, explained founder and CEO Jason Goldberg, is that less than 40 percent of the company’s revenue comes from flash sales.

In 2012, Fab’s inventory grew from 2,000 products to 15,000 products from more than 10,000 designers. Aided by improvements to the website’s search and browse functions, the majority of Fab’s revenue now comes from “first-run merchandise at everyday good prices.”

Flash sales, which are deep discounts on luxury brands in limited quantities, are the main draw on sites like Ideeli, where shoppers are able to buy the overstock at a discount. Groupon has also entered the space with Groupon Goods, which offers a group rate if enough people sign up for the deal. Brick-and-mortar stores like TJ Maxx or Nordstrom Rack have brought department store discounts to budget-minded shoppers for decades.  All of these deals are based on recognizable, and usually coveted, brands. On the other end of the spectrum is Etsy, where everything is hand-made (and often well-made) by crafty people who work out of their homes and small boutiques.

Going forward, Fab says it will focus on its own collections, collaborations with designers, and other furniture, home goods, or clothing items that fall into the category of “colorful, modern, fun, functional products across all categories and price points.” That’s phase two of Fab’s five-phase plan to become “synonymous with design” through products, not brands, while growing as large as Ikea or Amazon. So far, the site has 12 million registered members and receives 6 million page views per month.

Fab has also launched in France (phase three), bringing the site to 99 percent of the European Union. In April, 40 percent of Fab’s sales were outside the U.S., the company said.

Phase four was Fab’s acquisition of MassivKonzept, a furniture store (now called Fab By You) where shoppers can customize bookcases and other home items to fit their living spaces, and phase five is the launch of Fab’s first brick-and-mortar store in Hamburg, Germany.

Phase one? A redesigned site. Check it out.