It’s an e-commerce paradox. As Amazon (AMZN) and EBay (EBAY) have grown in size and scope, the pace of innovation in online retail has actually increased. Over the last few years there’s been a proliferation of new selling concepts like daily-deal sites, exclusive member-only services, and a variety of comparison-shopping engines. Among this class of upstarts is a company called Fab.com, a retail marketplace devoted to well-designed products like baroque furniture and eco-friendly water bottles.
Fab has an unlikely history. Two years ago, it started life as a social network for the gay community. When that didn’t pan out, the founders shifted into retail mode and the pivot paid off. Fab now has more than 5 million members and is on track to rack up $100 million in sales this year. To go along with that growth, the company just raised $105 million in venture capital from a group of investors that include Andreessen Horowitz and Atomico Ventures, a European firm led by the founders of Skype.
Fab plans to use the money to expand its European business and build out its own warehouses, where it will stock inventory and ship directly to customers. “We need to be as good as some of the best players when it comes to the table stakes, delivery, and operations. That is what we are investing in,” says Jason Goldberg, Fab’s chief executive officer. The company recently got some breathing room when a German clone created by European entrepreneurs the Samwer brothers shut down.
Goldberg sounds positively Bezosian in discussing Fab’s long-term market opportunity. He says 5 percent of U.S. retail is online, but only 3 percent in the design-centric categories Fab is targeting. “We are in the very early days of this market,” he says. “Amazon is good at being everything to everyone, if you know what you are looking for. We want to be there for the kind of design-conscious shopper who does not know exactly what they are looking for. It’s more akin to going to the mall or walking down the street.”