ICYMI: How startup Fab died

Good overview.  tldr: Jason Goldberg is a great salesguy but bad at execution.

How it went south:

Tried to go global too early (to head off Samwer bros threat):

Fab reasoned, if it could acquire another cheap clone and stake an early claim in Europe, it might be the most cost-effective way to beat Bamarang.

As the flash sales concept peaked, Fab decided to start holding inventory:

 

Fab’s customers complained about long shipping times. It took, on average, 16.5 days for a customer to receive a product ordered on the site.

Fab worked with small designers to feature and sell their third-party goods through flash sales; the designers fulfilled orders themselves, which resulted in the slow shipments.

In mid-2012, Fab made an effort to deliver products faster, within 6.5 days. The most obvious time-saver was for Fab to begin holding inventory.

That eventually led to Fab losing it’s differentiated edge:

The expansion caused Fab to lose its competitive edge. Fab’s early users loved discovering products they couldn’t find anywhere else on the web. But as Fab’s SKUs increased, the originality diminished: Fab products could be found on competing sites like Amazon for less, where they could be shipped faster.

The kiss of death:

Fab’s warehouse workers noticed the first signs of trouble during the holiday season of 2012. Fab generated $110 million that year, but piles of inventory remained unmoved. Buyers didn’t seem to understand what would sell on Fab. And margins didn’t seem to be taken into account when items were priced and sold on the site.

Despite that, in 2013, Fab decided to ditch flash sales completely and sell only the items it kept in stock. 

“That was the kiss of death,” one former employee said.

via How startup Fab died – Business Insider.

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