Continuing with our theme of niche e-commerce, here is another interesting vendor, Fab.com. Fab.com is an online retailer of home design products offering to their members at big discounts.
Manhattan-based Fab.com was founded in 2010 by Jason Goldberg, Bradford Shane Shellhammer, Deepa Shah, and Nishith Shah. The site was initially launched as a social networking site for gay men. But in 2011, the company transformed itself into a flash-sales site for everyday design products and enabling members to connect with designers. Soon, Fab.com reached more than a million members.
Today, it has more than nine million members and sells more than four items each minute. Fab attracts nearly 40% of its members from its iOS and Android-based mobile apps, which were released in October of last year. It has also integrated its shopping pages with social networking sites such as Facebook and Twitter. Through the social integration, Fab’s members can see what their friends are liking or buying, and they can then buy those products themselves directly through Fab’s sites. Nearly half of the site’s daily traffic is attributed to these social media sites.
Fab does not divulge financial details, but it did confirm that it was on track to earn more than $100 million in revenues this year.
It has received $156 million in venture funding from several individual investors such as Ashton Kutcher and Andreessen Horowitz, to name two, and venture funds, including The Washington Post Company, Baroda Ventures, First Round Capital, Zelkova Ventures, SoftTech VC, SV Angel, Menlo Ventures, Thrive Capital, RTP Ventures, Pinnacle Ventures, Docomo Capital, Mayfield Fund and Atomico. Its latest round of funding of $105 million held in July 2012 helped the company attract a $600 million valuation.
Fab’s Growth Plans
To build visitors to the site, Fab recently discontinued the need for users to sign up. Any visitor to the site can now browse the site and needs only to sign up when he or she wants to buy a product or add it to a favorites list. The move was designed to help visitors who come in from other social sites such as Facebook and Twitter and had to sign up again to be able to browse the site. Fab hopes to take better advantage of its growing popularity by removing the requirement.
Fab is looking to grow its geographic footprint. Earlier this year, it bought German firm, Cascanda. Berlin-based Cascanda followed the similar business plan as Fab’s, and the acquisition has helped Fab expand their presence in Europe, especially Germany, Austria, and Switzerland. Another European acquisition, that of U.K.-based LLUSTRE.com, helped Fab grow in the U.K. Fab is now present in 18 European countries and this year, it expects nearly 20% of revenues to come from outside the U.S. In addition, Fab is also focusing on growing in South America and Asia.
For now, Fab is not thinking of an IPO. But analysts expect that if it continues to move along its current high-growth path, it may be looking at an IPO by the end of next year.