Amazon is one of the great disrupters of the modern economy.
It’s revenue from the web purchases of consumers accounts for nearly a quarter of total U.S. online retail sales.
As the company expands so does its logistics infrastructure, which in turn creates more jobs. But that infrastructure also helps small businesses and other individual third-party sellers as well.
There are over 2.3 million active sellers using the platform to put their products on the global stage.
Now some of these sellers are finding themselves in the middle of bidding wars. These sellers are becoming attractive acquisition targets to aggregators. These aggregators are betting that they can take these garage-based companies and make them global brands.
Investment banks, venture firms and private equity shops are among these aggregators. And many of them are headed by individuals who have had their own ecommerce companies or other deep retail experience.
According to statistics from Jungle Scout, 54% of third-party sellers operate their Amazon business as a side-hustle. And 37% of them have full-time jobs.
This means that for many of them, this isn’t something that they intend to grow and scale, and the right offer would convince them to part with their brand.
Over 40 Amazon aggregators have emerged in the past few years. Since 2019, at least eight of them have announced fundraising rounds totaling more than $2.5 billion. There is massive money changing hands right now in this acquisition market.
Unfortunately for us, the big names in this new exciting trend are private. Sure, companies like JPMorgan Chase & Co (NYSE: JPM) have jumped on the bandwagon. However, with so much bad debt out there right now, it’s not the time to start adding banks to your portfolio.
I don’t think it will take long for one or more of these aggregators to go public. That’s one of the reasons this trend is on my radar right now. And why I wanted to quickly check out a few of the main players.
Branded Group is one of the latest entrants and was formed last summer with money raised by the Berlin venture firm Target Global. This aggregator is led by Pierre Poignant who previously led Lazada.
If you haven’t heard of Lazada, it was a massive Singapore e-commerce site that was bought by Alibaba.
Poignant has stated “We want it to be a multi billion-dollar company. Buying businesses is one thing, scaling them is another.” So far this aggregator has purchased over 20 housewares and leisure brands.
Another big name that caught my eye was Thrasio.
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This aggregator launched in 2018 and seems to have the deepest pockets around. Just last month Forbes wrote “Thrasio has raised another $500 million in debt, further cementing its status as the largest acquirer of Amazon businesses.”
The Massachusetts-based company has already gathered up over 100 companies and sells over 14,000 items. The company says it generated over $100 million in profits last year on $500 million in sales.
There’s clearly some profit to be made here. And sellers are in for a treat as these aggregators are lining up to make an offer.
Last year the number of transactions for aggregators was up 40% compared to 2019. That’s not going to slow down anytime soon.
In fact, I think more of these aggregators are going to pop up onto the scene.
It’s only a matter of time before one of them decides to go public.
And it will likely be through a special purpose acquisition company (SPAC).
I'm going to continue to do my research to see what SPAC management would likely be most interested.
I'll keep you updated, but if my speculation is right, it could create a good profit opportunity.
To your prosperity and health,
Joshua M. Belanger