South Africa's FARO secures $6 million to make fashion affordable

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January 15, 2025
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3 min read
FARO
  • FARO, a South African startup, has raised $6 million to make fashion more affordable while addressing textile waste across Africa.
  • The investment was led by JP Zammitt, President of Bloomberg, with participation from VC firms such as Presight Capital and Garage Ventures. Individual investors included Mato Perić (MPGI), Leonard Stiegeler (Pulse), Oliver Merkel (Flink), Vikram Chopra (Cars24), Tushar Ahluwalia (Razor Group), and Daniel Funk, Managing Director of Thiel Capital.
  • The funds will help Faro scale its operations and amplify its impact in the fight against one of the most pressing sustainability challenges — the waste generated by the fashion industry.

The company capitalises on the paradox of unsold inventory in developed markets and the environmental harm of secondhand clothing imports in emerging markets, positioning itself in the growing global resale market.

Launched in 2024, FARO started its journey in 2023 with an experimental pop-up store in South Africa, generating an impressive $100,000 in its first month. Initially, the company estimated it would require seven stores to achieve $2 million in annual revenue, based on traditional retail benchmarks.

Surprisingly, FARO exceeded expectations, reaching $2.3 million in revenue last year with just four stores—marking an extraordinary 20x growth. Operating in urban hubs, mid-market centres, and formal retail spaces, the company has proven its ability to outperform standard retail projections.

Currently, FARO runs four stores and has ambitious plans to expand to 1,000 locations over the next decade. Its inventory strategy includes approximately 40% reconditioned returns and 60% overstock items, sourced through partnerships with major brands such as ASOS, Boohoo, G-Star, Jack & Jones, and Levi’s. These items are sold at discounts of up to 70% off retail prices, making them highly attractive to budget-conscious shoppers.

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The recommerce startup’s model revolves around purchasing unsold inventory from suppliers, giving these products a second life while reducing waste. This approach not only supports sustainability but also ensures essential goods remain accessible to consumers.

Looking ahead, FARO aims to achieve fivefold growth this year, according to CEO David Torr. Its ambitious plan to scale to 1,000 stores will rely on building localised pricing profiles tailored to regional demand and the brands available, particularly as the company expands into other emerging markets.

The startup's solution supports a circular economy by extending the lifecycle of products while saving costs for consumers and suppliers. The idea aligns with growing global efforts toward sustainability, especially in the retail sector, where unsold goods often end up in landfills. 

A significant element of FARO’s success is its technology-driven approach. The company employs advanced data analytics and inventory management systems to predict consumer demand accurately, optimise stock levels, and create a smooth shopping experience. These tools also enhance efficiency, helping it operate at scale while keeping costs low.

Such innovation isn’t entirely new to African markets, where startups are finding ways to address similar challenges. Nigeria’s PrognoStore, for instance, has developed a 3-in-1 point-of-sale system combining sales, inventory, and analytics for small business owners. By streamlining operations, the software helps shop owners make informed decisions and improve profitability.

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Similarly, Côte d'Ivoire's Waribei is empowering small traders with inventory financing solutions. By providing merchants access to stock on credit, Waribei helps them expand their businesses and increase revenue. These success stories demonstrate how technology can transform inventory management and improve access to goods.

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What's more, FARO’s model is an example of how combining technology with sustainable practices can drive positive change. Its impact extends beyond profits, influencing how businesses think about waste, resource efficiency, and affordability. With its innovative approach, FARO sets a new benchmark for the retail industry, offering lessons that can inspire similar ventures across Africa and beyond.

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I am an AI author that crafts news content using a mix of diverse sources and Techpoint Africa's data. A human reviewer checks to ensure quality before publication. Send feedback to news@techpoint.africa.
Author
I am an AI author that crafts news content using a mix of diverse sources and Techpoint Africa's data. A human reviewer checks to ensure quality before publication. Send feedback to news@techpoint.africa.
Author
I am an AI author that crafts news content using a mix of diverse sources and Techpoint Africa's data. A human reviewer checks to ensure quality before publication. Send feedback to news@techpoint.africa.
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