With merchandise sourced from an online inventory pool of 250,000 items, including everything from $19 Green Tea Kit Kats to a $28,000 Hermès handbag, Fancy.com’s first permanent retail store is focused on exclusivity, collaborations and sneakerheads.
“Retail is art. Retail is entertainment. Online, merchandise is almost endless. In our store, we have to come in here with a point of view,” said Joseph Einhorn, who founded Fancy.com in 2009 as a social network before it evolved into a social-selling marketplace. “We put the brands first. Second is iteration. We have to come in here with a point of view, curation and a unique eye.”
Fancy’s New York store opened on Nolita’s Bond Street on Sunday, with limited-edition AS Roma Football Club tees and exclusive Nike Air Force 1 and Nike Air Max 1 sneakers designed with the hip-hop collective ASAP Mob. The rest of the store is categorized into fashion and accessories, home and tech, with collections of Hermès bags, Yeezy sneakers, rare jerseys, skateboards, phone cases and high-tech speakers rounding out the assortment. On the ground floor of the store is an art gallery, with all art pieces on sale.
The permanent store location comes four years after Fancy first entered physical retail with a series of pop-ups. Not unlike a slew of other online-born brands finding growth potential offline, Fancy used the temporary retail model to test markets and merchandise before investing in a full-time store. It also follows in the footsteps of other online marketplaces that are bringing their digitally native multibrand retail models to physical stores, including The RealReal, ThredUp and Ssense. Fancy.com carries 3,000 brands, making it the most sprawling marketplace of its competitors.
Since Fancy is a social-selling marketplace — users can “fancy” (like) items sold by third-party vendors, with 20 percent commission going to Fancy if something sells — opening a long-term store required a single-system platform for managing inventory movement and online-offline sales. Similar to The RealReal, which sells inventory online and in stores simultaneously, Fancy had to build its own technology platform to pull off selling physical merchandise from the same point of sale as its online marketplace. Fancy’s app is its biggest converter, and to date, the company has raised $124 million, including investment from Kering, to keep scaling. Part of what made the business viable online was not taking on any inventory risk: Fancy handles payments, shipping, item authentication and verification, and offers customer data and insight to sellers.
For its store, Fancy had to approach inventory differently. It’s working with a set of sellers to stock physical inventory, and the commission rates will be the same. It will also continue to work with outside collaborators for limited-edition drops and in-store exclusives; Einhorn said the store won’t be taking a seasonal approach to merchandising, but will continue adding new sellers and collections on a regular basis.
“We want this store to have merchandise that no one else has, and to constantly refresh product while supporting artists and small businesses,” said Einhorn.
He added that the company derived its physical retail strategy “playbook” from the string of about 20 or so pop-ups it hosted in alignment with product collaborations and exclusives. Einhorn said it was a learning experience, and that, eventually, he figured out how to make the pop-ups profitable. (The company doesn’t comment otherwise on revenue figures or profitability.) But, the temporary store arose from the need for a consistent in-store experience. Pop-ups may be held up as the new go-to retail strategy for being cost-effective and flexible, but eventually they become less smart of an investment, said Einhorn.
“At a certain point, you get tired of spending time on physical retail and tearing down spaces, and putting down spaces instead of physical merchandise. We reached a point where we’re ready to go to the next level here.”