The growing trend of e-commerce aggregators has caused significant disruption in the Asian market. South Korea, the fifth-largest e-commerce marketing in the world is now rolling up.
Wholesum, a Seoul-based e-commerce aggregator jumped into the bandwagon and is now buying third-party merchants that would normally sell on large e-commerce platforms like eBay and Amazon. The company reported on Tuesday that it has raised $15 million in equity and a whopping $35 million in debt in a Series A round.
The co-founder, Andrew Joo said that the investment came only months after the startup had raised $4.75 million in seed funding in August 2021 and an additional $18 million in debt in November 2021. Currently, Wholesum owns five Korean local brands. With the massive growth in the eCommerce space, the aggregator aims to acquire 15 – 20 brands across health, lifestyle, pet, and children categories this year.
Growth of eCommerce During the Pandemic
Joo notes that e-commerce platforms matured significantly during the pandemic and led to the creation of more than 10,000 new independent brands per month in Korea. Customer curiosity to try new retail experiences grew in the same period. As brand traction and consumer following increased, it became difficult for many brand entrepreneurs to sustain their businesses. Wholesum came in to solve these pain points and support small merchants.
The growth and maturity of fintech and e-commerce platforms in South Korea have promoted the rise of independent brands. According to Joo, more than 500,000 third-party merchants exist on e-commerce marketplaces like eBay, Coupang, cafe24, SSG.com, and Naver SmartStore. However, third-party sellers struggle with access to growth capital, recruiting challenges, and a steep marketing learning curve.
Wholesum Value Proposition
Wholesum was founded in 2021 to address and resolve the problems that small brands in South Korea faced. Andrew Joo, who has a background in finance and private equity joined hands with KB Ham, a former employer of Coupang and LG fashions to form a platform that would allow small merchants to showcase their problems without limitations. The Wholesum value proposition to third-party merchants is the ability to take proceeds from the sale of their brands and create a new brand that aligns with their passion or values.
Wholesum’s total addressable market is about 45,000 brands, generating over $1 million of years a year. The company’s organic growth of a portfolio of brands is high teens but expected to hit 30 – 40% year on year. Although Wholesum does not view acquisitions as the most important key performance indicator, its acquisitions have ranged from $250,000 to $6 million in valuation.
Wholesum acquires made-in-Korea brands and scales them across global marketplaces. At its core, Wholesum honors brand owners and their product achievements through post-acquisition organization growth. In so doing, Wholesum hopes to inspire the next generation of entrepreneurs who can transform their passion into a sustainable brand.
With the latest funding that was led by Antler Global and Widus Partners and Kingway Capital, Wholesum aims to extend its lead in the South Korean e-commerce market. The funding was also backed by new investors Bold Ventures and KSV Global alongside Nordstar and Bass Investment.