Fab to Buy European Company, May Create New Furniture Shopping Site
Fab's board of directors has approved yet another new strategic plan for the e-commerce company that will include the purchase of a European furniture company and the likely creation of a new shopping site …
Context & Ripple Effects
Fab has been in strategic retreat mode for over a year: after the 2013 hype cycle in which it declared itself the world's alternative to Amazon and Wal-Mart, the company spent late 2013 weathering a very public beating, with employees pointing to early warning signs like the bike-locks episode. By January 2014 it had narrowed its entire European business down to selling only custom-made furniture — a fraction of what the once high-flying flash-sales site had been.
The board's approval of yet another new plan, built around buying a European furniture company and likely spinning up a separate furniture shopping site, reads as doubling down on exactly the category Fab retreated into: own-brand, higher-margin furnishings rather than the broad curated marketplace of its 5-million-member heyday.
First-order effects
- Fab's European operation, already stripped back to custom-made furniture sales in January, now gets rebuilt around an acquired company and possibly a standalone furniture site — a structural change for the staff and inventory tied to the old marketplace model.
- Investors and observers who have tracked the string of pivots since the Amazon-and-Wal-Mart framing get confirmation that the board itself is now steering strategy, not just management.
Second-order effects
- Design merchants and brands that sold through Fab's general marketplace face a shrinking stage as the company concentrates capital and traffic on a furniture-specific property.
- Custom-furniture makers in Europe gain a committed buyer and distribution channel at exactly the moment Fab needs supply for the new site.
Third-order effects
- If repeated pivot-plus-acquisition cycles keep failing to stabilize growth-stage e-commerce companies, the pattern points toward consolidation — distressed or discounted exits for once-hyped commerce startups rather than independent scale-ups.
- Flash-sales-era platforms broadly look set to trade breadth for owned verticals, since curated-marketplace economics have not held up against mass retailers.
The trend: Post-flash-sales e-commerce companies are retreating from broad marketplaces into owned vertical brands, using acquisitions as the fastest route to rebuild around one category.