Over the past 2 years, dozens of investment firms have banded together with a united purpose: To buy off small companies on Amazon. Essentially, buying out mom-and-pop Amazon sellers and utilizing their wide range of expertise to drive up additional revenue across a large range of brands.
ECommerce aggregators have been gaining tremendous traction over the past few years and have the funds to back themselves up. Investment firms acquiring successful brands on Amazon have raised over $12 billion in 2021.
The Amazon aggregators space is the latest gold rush. The sellers out there are the gold and the aggregators are the miners going out trying to find them.
If you go back to the gold rush days, those who had the best tools were able to locate the best mines. Similarly, Amazon aggregators with the highest level of strategy and tech can excel in today’s eCommerce climate.
Aggregators typically acquire private-label sellers that use Amazon as their primary source of distribution. For Amazon sellers, the number of deals that have been made has greatly increased since the pandemic started. Buyers have also become more aggressive and in some cases offer 20% to 30% premiums, looking to take advantage of the new shift in eCommerce.
Amazon is no doubt at the top of all e-commerce businesses. Amazon is impressively popular. Amazon online shopping has become a common and integral part of daily life. You can order body wash, toothpicks, clothes, a bookcase, or whatever tickles your fancy. And their impressive, speedy shipping is hard to beat.
I mean, who doesn’t order from Amazon these days? 50% of Amazon’s $386 billion revenue came from third-party sellers in 2021, according to a JungleScout industry report. Big players like Thrasio and Perch understand the massive potential and are therefore investing in this lucrative gold mine.
With all this explosive growth, we are seeing a recent uprise in Amazon Aggregators. These companies, commonly funded by private equity, are buying out successful Amazon brands.
Many sellers are excited about this lucrative opportunity to exit with a great payout. If you are a seller, here are some reasons you may want to sell:
- You need money for a new venture
- You have experienced cash flow or supply chain issues
- You feel as if your business has reached its peak and you want to make a substantial profit
- The complexities of running an Amazon FBA business has become too burdensome for you
- You no longer have the time or resources to continue to run your business
Selling your business can give you the momentum to swing your entrepreneurial spirit to even greater heights.
Meny Hoffman
Business owners choose to exit for various reasons, and when they do, they can be rewarded handsomely for their hard-earned work.
It takes hard work to build an amazing Amazon FBA or eCommerce business on your own. With the amazing opportunity of selling your FBA business, you will then have the ability to get instant funding and utilize your knowledge and experience for future ventures. Now you’re armed with exponentially more knowledge and funds compared to your first launch.
Emmett Kilduff, the CEO of The Fortia Group, predicted that there could be 1,000 Amazon FBA brands sold next year. He also ran a survey in which a quarter of aggregators anticipated to close between 40-49 deals in 2022. 20% expected to close from 20-29 deals, and 10% predicted under 5 deals. They surveyed 20+ aggregators.
When it came to deal trends, aggregators were primarily focusing on a few products. According to Fortunet, an investment firm specializing in eCommerce M&A, the majority of aggregators prefer products that are easy to operate and don’t have too many regulations, such as personal care items, home and garden, pet supplies, outdoor gear, and baby products. They tend to steer clear of categories such as electronic devices, toys, supplements, apparel, and food.
Selling to Amazon aggregators is increasing in popularity and can result in a life-changing exit strategy for many FBA sellers. For Amazon sellers looking to grow and expand, aggregators can offer funding, resources, marketing technology, research, and supply chain management.
There is a recent uptick in buying and selling Amazon’s third-party seller businesses and it shows no sign of stopping. In 2021, aggregators bought several hundred FBA businesses in addition to eCommerce businesses. This market is moving fast. The prediction for 2022 is that these same investors will buy hundreds of existing businesses. They have the capital and are looking to spend it.
Amazon aggregators acquire companies that are designed for growth but could use more capital, human power, or marketing investment to reach their full potential. Your business may be worth more than you think. Don’t hesitate to find out. We’d be happy to have a conversation and learn more about you, your business, and the future.
