FastAF is expanding just a few months after its launch.
The two-hour delivery e-tailer, which officially opened last fall, first in Los Angeles and then New York, will be coming to San Francisco and Miami by the first week in April. Next up is The Hamptons in New York’s Long Island region, and founder and chief executive officer Lee Hnetinka sees the company being available in eight to 10 U.S. cities within the next 18 months as part of an “aggressive growth plan.”
“Our vision is to bring FastAF to every single city,” Hnetinka said from a friend’s home in Malibu. “The largest retailer in the world has more than 10,000 stores in 24 countries. I don’t know why we can’t be that size.”
Being a six-month-old offering that grew out of an earlier company, Darkstore Inc., which has so far raised a little more than $30 million in venture funding, there is quite a ways to go before FastAF is the size of Walmart. But Hnetinka has a 30-year plan for the company. And he’s already turned down acquisition offers. His goal is to grow as a funded enterprise and take FastAF public.
But it will take time and money to get there. As of now, Hnetinka seems pleased with the company’s progress and although the timing of launching an online retailer with two-hour delivery amid a global pandemic was somewhat fortuitous, he doesn’t think a post-pandemic world will be any less interested in convenience.
“When I grew up, you had to go to Blockbuster to pick out a movie,” Hnetinka said. “Now that you have access to all these digital platforms and you can get a movie more quickly, you’re not going to go back to a previous habitual behavior.”
While Hnetinka would not disclose revenue or number of users so far, he pointed to the company’s Instagram handle, which recently broke 10,000 followers, as a gauge of FastAF’s popularity. He said none of the followers were purchased. Nevertheless, growth has been limited by certain things, like FastAF only being available as an app on iOS and only accepting ApplePay, both of which are set to change. Credit cards are just now starting to be accepted and FastAF will be on Android within a year.
Nevertheless, Hnetinka noted encouraging user metrics, like users growing 20 percent week-over-week, who make on average a purchase every week, but log into the app to browse every other day, with a return rate of less than 1 percent. And 70 percent of FastAF’s sales growth has come from repeat customers, while more brands are coming on as wholesalers.
“We’ve definitely reached that tipping point where brands are approaching us,” he said. “Eighty-eight percent of our brands are exclusive to us for two-hour delivery. Seventy percent are not sold on Amazon. We look for brands we can have a unique relationship with.”
Goop, APL and Boy Smells are recent additions to FastAF’s 350 brands. While Hnetinka admitted to purchasing some brand items at retail and putting them on the site in order to see what demand is like, FastAF is a retailer that mainly makes its money through wholesale margins. Bala Bangles, wrist and ankle weights, are the site’s top seller, with personal care goods like Aesop and Hotel Lobby candles among the most popular.
But several months of growth have brought some lessons, too. When FastAF managed to get some PlayStation 5’s over the holidays (by purchasing at retail, not wholesale) and dropped them on the app, there was some surprising outrage from shoppers who did not manage to purchase one.
“People got pretty rowdy,” Hnetinka said. “You have to manage customer expectations. But drops are going to be big for us this year.”