Shopify

Faire

Shopify

Shopify charges merchants a monthly subscription fee — $39/month for Basic, $105/month for Shopify, and $399/month for Advanced. Enterprise clients pay more through Shopify Plus.

On top of the subscription, Shopify takes a cut of every transaction processed through Shopify Payments (2.9% + $0.30, similar to Stripe). If merchants use a third-party payment provider, Shopify charges an additional 0.5-2% fee.

The genius of the model is stacking revenue. Subscription fees are the base layer.

Payment processing is the second layer. Then there's Shopify Capital (lending money to merchants), Shopify Shipping (discounted shipping labels), Shopify Email, the app store (Shopify takes 0% on the first $1M in app revenue, then 15%), and Shopify Balance (banking for merchants).

Every new service extracts more value from each merchant.

Faire

B2B wholesale marketplace — Faire connects brands (sellers) with independent retailers (buyers). Faire earns commission on every wholesale order, typically 15-25% from the brand side.

The platform also earns from Faire Direct (where existing brand-retailer relationships are processed through Faire for payments and logistics) and from financing products. The key financial innovation is that Faire takes the risk on net-60 payment terms — they pay brands quickly and extend credit to retailers, earning the spread.

Machine learning powers product recommendations, predicting which products will sell well in specific types of stores based on location, category, and purchase history.

Shopify

Tobias Lütke was a programmer from Koblenz, Germany who moved to Ottawa, Canada in 2002 because he fell in love with a Canadian woman. He wanted to sell snowboards online through a store called Snowdevil.

The problem was that every e-commerce platform in 2004 was absolute garbage. They were expensive, ugly, and painful to use.

Most required a computer science degree just to set up.

Lütke was a Ruby on Rails developer — one of the early ones, when Rails was still a brand-new framework. Instead of suffering through the existing tools, he just built his own e-commerce platform from scratch.

Snowdevil launched on the custom-built platform, and it worked beautifully. Other small business owners saw it and started asking if they could use the same software.

Lütke teamed up with Daniel Weinand and Scott Lake. In 2006, they launched Shopify as a product — a hosted e-commerce platform that let anyone set up an online store without knowing how to code.

The first year was slow. They had about 100 merchants.

But the product was so much better than everything else that word spread. By 2009, they had launched an API that let developers build apps and themes for Shopify stores, creating an ecosystem that would become one of their biggest advantages.

Faire

Max Rhodes was at Square when he noticed that small retailers had been underserved by technology for decades. Walk into any independent boutique, gift shop, or bookstore and ask the owner how they find new products to sell.

The answer is almost always: trade shows twice a year, word of mouth, and salespeople who cold-call. The wholesale buying process was analog, inefficient, and biased toward brands big enough to afford trade show booths and sales teams.

Rhodes teamed up with three Square colleagues — Marcelo Cortes, Daniele Perito, and Jeff Kolovson — to build Faire in 2017. The initial insight was powerful: use data from point-of-sale systems to predict which products would sell well in which stores, then connect those stores directly with the right brands.

They launched with a bold offer: free returns on first orders, net-60 payment terms, and zero upfront risk for retailers. The pitch to retailers was "try products for free, only pay for what sells." Brands got access to thousands of stores they could never reach on their own.

Shopify

Shopify grew by being the anti-Amazon. Their pitch was simple: Amazon is a marketplace where you're one of millions of sellers with no brand identity.

Shopify lets you build your own brand, own your customer relationships, and control your destiny. "Arm the rebels" became their unofficial motto.

The app ecosystem was a multiplier. By letting third-party developers build apps, themes, and integrations, Shopify created a marketplace of 8,000+ apps that extended the platform's functionality infinitely.

Need email marketing? There's an app.

Need inventory management? There's an app.

This meant Shopify could stay focused on the core platform while the community built everything else.

The Shopify Partners program turned freelance developers and agencies into a sales force. Partners who built stores for clients earned recurring revenue from referrals.

Over 10,000 agencies worldwide now specialize in Shopify development. It's basically a franchise model for tech.

COVID was rocket fuel. When physical retail shut down in March 2020, every small business in the world suddenly needed an online store immediately.

Shopify's new store creation surged 71% in Q2 2020. The stock went from $400 to $1,700 in less than a year.

Faire

The risk-free first order (free returns + net-60 terms) was the unlock that got retailers to try the platform. Once a retailer placed a first order and it sold well, they kept coming back.

Brand acquisition scaled through direct outreach to emerging brands who couldn't afford trade show booths or sales teams — Faire offered them access to 700,000+ retailers. Geographic expansion from the US to the UK, Europe, and Australia brought the same model to international markets.

Faire Markets (virtual trade shows) replaced the expensive, twice-a-year physical trade show model with always-on digital discovery. Category expansion from gift and home goods into food, beauty, apparel, and pets increased the platform's relevance to more types of retailers.

Shopify

The Amazon problem looms over everything. Amazon controls roughly 40% of US e-commerce.

Every Shopify merchant competes against Amazon, and many of them sell on both platforms. Amazon can always undercut on price, offer faster shipping, and has nearly unlimited resources.

Shopify's entire business depends on convincing merchants that owning their brand is worth more than Amazon's convenience.

The post-COVID hangover was brutal. After the pandemic boom, Shopify's stock dropped 80% from its November 2021 peak.

The company had hired aggressively during COVID, expecting the e-commerce shift to be permanent at pandemic levels. It wasn't.

In May 2023, Lütke laid off 20% of the company — about 2,300 people — and wrote a public letter admitting he had bet wrong on how much of the COVID shift would stick.

The fulfillment pivot was expensive. In 2019, Shopify announced the Shopify Fulfillment Network — their plan to build a warehouse and logistics network to rival Amazon.

They poured hundreds of millions into it. By 2023, they realized it was a money pit that distracted from their core business.

They sold the logistics operation to Flexport and wrote off the investment. Lütke called it "taking the medicine."

Faire

The $12.4 billion valuation was set in 2022 and requires sustained hypergrowth to justify. Wholesale margins are thin and Faire's take rate compresses as brands grow and negotiate better terms.

The net-60 payment terms mean Faire is essentially running a lending business — credit risk increases during economic downturns when small retailers struggle. Competition from established wholesale platforms (Handshake by Shopify, Tundra, Abound) and from the trade show industry fighting back with digital offerings.

Small brand churn is high — many brands on Faire are small and fail, requiring constant supply-side replenishment. And the fundamental challenge of B2B marketplaces: once a retailer and brand establish a direct relationship through Faire, they have an incentive to cut out the middleman and transact directly.

Shopify

Shopify Online Store is the core — build and run an e-commerce website. Shopify POS (Point of Sale) handles in-person retail with card readers and inventory management.

Shopify Payments is the built-in payment processor powered by Stripe. Shop Pay is the accelerated checkout — it saves customer info so returning buyers can check out in one tap.

Shopify Capital provides cash advances and loans to merchants based on their sales data. Shopify Fulfillment Network was their attempt to compete with Amazon on shipping (they scaled it back in 2023).

Shopify Markets handles cross-border selling — currencies, duties, and translations. Shopify Audiences uses anonymized data to help merchants find new customers on ad platforms.

Faire

Faire marketplace — browse thousands of wholesale brands across categories including home goods, beauty, food, apparel, jewelry, kids, and pets. Faire Direct — brands bring their existing retail relationships onto Faire for order management and payment processing.

Net-60 terms — retailers get 60 days to pay, reducing cash flow pressure on small businesses. Free returns on first orders — retailers can return unsold products from new brands, eliminating the risk of trying something new.

Machine learning recommendations — "brands you might like" based on store type, location, and purchase patterns. Faire Markets — virtual trade show events with special promotions and new brand launches.

Shopify

Bessemer Venture Partners, FirstMark Capital, Felicis Ventures, Georgian Partners, OMERS Ventures

Faire

Investors include Sequoia Capital, Lightspeed Venture Partners, Founders Fund, Y Combinator, D1 Capital Partners, and Dragoneer Investment Group. Series G in 2022 valued Faire at $12.4 billion.