Faire and similar wholesale marketplaces connect Canadian makers directly to independent retailers, which is a different transaction model from the direct-to-consumer sales most e-commerce accounting is built around. A wholesale order settles on different terms, at a different margin, and with different tax treatment than a retail sale of the same product, even when both move through the same maker’s business in the same month.
Wholesale Pricing Is Not Retail Margin With a Discount
A maker selling on Faire typically sets a wholesale price at roughly half the suggested retail price, since the retailer needs enough margin to mark the product up and still sell it competitively. Treating wholesale revenue as retail revenue at a discount, rather than as its own pricing structure with its own margin math, understates how much unit volume a maker needs to move at wholesale to hit the same contribution the direct-to-consumer channel produces. Cost of goods sold does not change based on which channel a unit sells through, so the margin compression on wholesale orders is real and needs to be visible in channel-level reporting, not absorbed into a blended average margin across all channels.
Commission, Payment Processing, and the Insider Program
Faire charges a commission on each order, historically higher on a retailer’s first order from a given brand and lower on repeat orders, with the exact structure subject to change on Faire’s own commission terms. Payment processing fees apply on top of commission. Brands enrolled in Faire’s Insider program, which offers retailers extended net payment terms and often free shipping and returns, take on additional cost and timing exposure in exchange for the visibility and ranking benefits the program provides. Each of these, commission, processing fees, and any Insider program cost absorption, needs its own line in the books rather than being netted silently into a single “Faire fees” figure that obscures which specific cost is compressing margin.
Faire’s Shipping Subsidy Is a Marketing Cost, Not a Pass-Through
New retailers ordering through Faire for the first time from a given brand frequently qualify for free shipping, funded in whole or in part by Faire itself rather than charged to the retailer. Where Faire subsidizes the shipping cost, that subsidy is not revenue to the maker and should not be booked as such; it reduces the shipping expense the maker would otherwise carry on that order. Where the maker is instead absorbing shipping cost that Faire is not subsidizing, in order to stay competitive on the platform, that cost is better classified as a customer acquisition cost tied to the wholesale channel rather than folded into general shipping expense, since it is functioning the same way a discount or ad spend would.
Net Terms Change When Revenue Actually Settles
Faire payouts do not follow the order date. Depending on the retailer’s terms and the brand’s own settlement configuration, cash can arrive weeks after an order is placed, and Insider program net terms extend that gap further for enrolled retailers. Recognizing revenue at the order date, with the corresponding receivable tracked separately until Faire settlement, keeps the books matched to when the sale actually happened. Waiting until cash settles to record the sale at all understates revenue in the period the order was placed and overstates it whenever settlement clears, the same timing distortion that shows up whenever a payout lags the transaction that produced it.
GST/HST on Wholesale Sales to Canadian Retailers
A GST/HST-registered maker selling wholesale to a Canadian retailer charges GST/HST on the wholesale sale in the same way as any other taxable supply, calculated on the wholesale price actually charged, not on the retailer’s eventual resale price. This differs from Faire’s marketplace facilitator collection obligations on direct-to-consumer marketplaces, since Faire is a business-to-business wholesale platform and does not collect and remit tax on the maker’s behalf the way a consumer marketplace does under marketplace facilitator rules. The maker remains responsible for charging, collecting, and remitting GST/HST on Canadian wholesale sales directly.
Retailer Returns and Faire’s Buyer Protection
Faire’s buyer protection policies allow retailers to return unsold inventory or damaged goods under specific conditions, and a maker who does not track returns separately from wholesale sales will see gross wholesale revenue that does not match what was actually kept. Returned inventory needs to flow back into stock at its original cost, and the corresponding revenue reversal needs to hit the same period reporting is being reviewed against, not silently net against a future period’s sales figure.
What This Requires from Your Bookkeeping
- wholesale revenue and margin tracked separately from direct-to-consumer revenue, using actual wholesale pricing rather than a discounted retail estimate
- commission, payment processing, and any Insider program cost absorption itemized separately, not combined into one platform fee figure
- Faire-subsidized shipping excluded from expense; maker-absorbed shipping on wholesale orders classified as a channel acquisition cost
- revenue recognized at order date with a tracked receivable until Faire settlement clears, particularly under extended Insider net terms
- GST/HST charged and remitted directly on Canadian wholesale sales, since Faire does not collect this on the maker’s behalf
- retailer returns tracked by original order period, with inventory restored at original cost
Scope of This Guide
This guide covers the accounting mechanics specific to selling through Faire and comparable wholesale marketplaces. It does not cover:
- direct-to-consumer marketplace GST/HST collection under marketplace facilitator rules, covered in Amazon GST/HST for Canadian Sellers and the equivalent guides for other retail marketplaces
- general inventory costing method selection, covered in Inventory Costing Methods: FIFO vs Weighted Average
- returns and chargeback treatment on retail marketplaces, covered in Returns, Refunds, Chargebacks, and Reimbursements for E-Commerce Sellers
Related Guides
- Inventory Costing Methods: FIFO vs Weighted Average covers the COGS mechanics wholesale margin calculations depend on.
- Returns, Refunds, Chargebacks, and Reimbursements for E-Commerce Sellers covers return handling in more detail than the wholesale-specific summary here.
- GST/HST Input Tax Credits for E-Commerce Sellers covers the ITC side of GST/HST registration relevant to a maker’s input costs.
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