Billie Carnes had been selling vintage items through Fab.com for about 10 months when she received notice from the company in October that the category had been terminated, and that her upcoming sale was cancelled.
“I was absolutely blindsided,” Carnes said. “That pretty much ripped the rug out from underneath me.”
Carnes was one of hundreds of vendors who had supplied the ecommerce startup with vintage items for its popular flash sales, offering one-off listings that suppliers would either drop-ship directly to buyers, or send the items to Fab, which would then relay them to the buyer.
The vintage category was a casualty of a major shift in Fab’s business model that the ecommerce startup set in motion in July, when it began phasing out flash sales in favor of a more conventional, inventory-based retail distribution operation. Fab also terminated the food category as it abandoned flash sales.
In addition to Fab cutting ties with vintage vendors, the company’s transition has brought significant layoffs. In October, CEO Jason Goldberg announced that the company was letting 101 people go worldwide. Of those let go, 84 were from Fab’s headquarters in New York.
That followed a reported earlier round of layoffs in July that cut deep in Fab’s European operations, while this week, reports have emerged about a new wave of cuts.
Deb Roth, Fab’s senior vice president of communications, said in a statement that the company will be implementing “a number of management changes … as we streamline the organization,” but would not confirm the specifics of the layoffs.
“It is accurate that Fab is undergoing management changes as we realign the business to execute on our 2014-2017 plan,” Roth said. “As not all of the organizational changes are final yet, we are withholding comment on any specific individuals until later this week.”
Fab explains the move toward a conventional model where inventory is held in a central warehouse as an attempt to speed delivery times. Under the flash-sale model (or short-term event/sell-first, as it is alternately known), suppliers would submit their listings to the site, but hold onto the physical product until it was purchased.
“Since the inventory doesn’t change hands until it has been purchased by a consumer, this model is good for reducing risk while generating sales. That said, it has some inherent challenges, including long lead times between when the customer makes a purchase and when they receive the item,” Kimberly Oliver, a spokeswoman for Fab, explained in an email.
When it first launched, Fab relied on its vendors to ship all items directly to the buyers, though that shipping requirement limited the number of suppliers that the company could work with.
“To expand our assortment, we established our own distribution center where vendors could bulk ship goods to us, which we would then send out to customers individually. While good for the overall breadth of offering, this structure had the downside of extending the “click-to-ship” time, Oliver said.
“Moving to a data-driven inventory model, where we offer in-stock product in quantities based on what our planners project our customers will buy, has allowed us to reduce click-to-ship times from several weeks to several days,” she added, noting that orders in the continental United States typically arrive within one to three business days.
Fab’s warehouse is located in New Jersey, so items ordered in the tri-state area frequently arrive within 24 hours of placement, according to Oliver.
The business case for terminating the vintage category, which does not lend itself to keeping an on-hand inventory of large quantities of identical SKUs, is small solace for sellers like Carnes, who said that her business had been flourishing on Fab.
Carnes said that she drop-shipped every item that she sold, and is incredulous about the argument that flash sales entailed intolerably long click-to-ship delays.
“I was shipping the day of or the next day, so people were getting my items immediately,” she said. “The flash sale thing worked really well for me. I don’t know what was going on, but I was selling very well on there.”
Prior to becoming a Fab supplier in January, Carnes was operating on Etsy, which she essentially abandoned after things took off with Fab.
“With Fab it was more than full-time,” she said. “There was stuff going on on Etsy, but I was not participating. If I sold something great, but for the most part I was Fab.”
Fab, which displays links back to its suppliers’ websites, inspired Carnes to launch her own site as her business was thriving, though she admitted that Phat Dog Vintage is still “a shell.”
As for her post-Fab life, in addition to building out the website, Carnes said that she is in the process of “reinventing myself on Etsy.”
