An IBISWorld research report published earlier this year pegs the US home goods market which includes furnishings, furniture, and décor products to be worth $30 billion this year. The industry is estimated to have grown 2% annually over the period 2009 through 2014. While the industry is dominated by the traditional brick and mortar stores, the online sector is gradually establishing its presence. Analysts estimate that a mere 6% of the market is currently catered to by e-commerce.
Founded in 2010, Manhattan-based Fab.com is another player trying to make it big in the niche space of home goods market. Initially launched as a social networking site for gay men, the site has pivoted itself to becoming a flash-sales site for everyday design products. Then last year, the company moved out of the flash sales business as well. Today Fab sells home goods and other products such as Jewelry and Personal Accessories on their website at a discount. Unlike other sites, Fab does not require a user to necessarily sign up with them. Instead, Fab attracts users through social media sites like Facebook. But Fab’s transformation has not yet ended.
Within the first month of the company transforming to an e-commerce site in 2011, they attracted over 300,000 members. By the end of the year 2013, Fab had grown that base to over 14 million members. They have shipped more than 7 million products so far.
Fab does not disclose detailed financials. Reports estimate that they were on track to deliver $250 million in sales last year with nearly 50% of the sales being derived from their home categories. That is a significant growth over the $100 million revenues Fab was expected to have generated in 2012. In 2013, Fab is expected to have 43% in gross margins compared with 29% in 2011.
They are venture funded so far with $336 million in investments from Itochu Corporation, SingTel Innov8, Tencent, DoCoMo Capital, RTP Ventures, Pinnacle Ventures, Andreessen Horowitz, Phenomen Ventures, VTB Capital Investment Management, Atomico, Mayfield Fund, Menlo Ventures, First Round, SoftTech VC, Baroda Ventures, Thrive Capital, BoxGroup, Jon Anderson, Don Baer, Zelkova Ventures, SV Angel, The Washington Post Company, Allen Morgan, and Lars Hinrichs. Their latest round of funding was held last year when they raised $150 million at a valuation of $1 billion. They are not looking at an IPO soon.
Fab’s Expansion Plans
Despite all the growth and funding, Fab is still struggling. Recently, they announced plans to lay off nearly a third of their employee count. The market was also abuzz with rumors that the company will probably shut down their US operations. However, Fab has vehemently denied any such plans, and instead continues to expand.
Recently, Fab announced the acquisition of One Nordic Furniture, a Helsinki-based furniture company for an undisclosed sum. The move will help them build their private label business as they move away from third party sellers in Europe. One Nordic is referred to as a luxury Ikea with focus on high design wooden and metal furniture with operations in Finland and Sweden.