What is an Amazon Aggregator and Why Should Sellers Pay Attention to This
There was a time, when thirsty entrepreneurs realized the big potential that selling on Amazon was. It was like finding golden nuggets. The premise? Private labeling products and selling them on the Amazon platform. It made total sense, Amazon had grown into the biggest e-commerce platform in the world, and was spoiling customers left, right and center.
All you had to do was to put good quality products on Amazon and within a few hours of your product going live on the platform you started seeing people buying it. Websites like alibaba.com made it easy for sellers to source products overseas and to private-label the products.
But nothing stays the same. The word of mouth of this amazing opportunity of leaving your 9-5 job spread like a wild fire. Online courses started popping up all over the place teaching how to profit from this business model. And more and more people got into it. Competition created challenges for these sellers of course, but it also led to brands being forced to pay more attention to the quality and functionality of their products including innovation to differentiate.
Many of these 3rd party sellers created empires by their own, with brands seeing annual sales reaching 7 and 8 figures. Some of these brands went on to become household names.
Around 2020, a new trend began: buying out these brands and creating a portfolio of very profitable brands and products in the hands of companies dedicated to scaling these brands to a whole new level. These companies are known as Amazon aggregators. “Aggregate” by definitions is a whole formed by combining several elements.
Investing in an Amazon Fulfilled By Amazon (FBA) business is becoming an increasingly popular trend. Traditional investors realize that a lot of money is to be made by investing in e-commerce brands built on platforms like Amazon and eBay, which make up close to two trillion dollars combined.
Another reason why these small brands became hot commodities for investors, is that it has become a lot harder to start from scratch on Amazon when competing with a five-year-old established brand; thus acquiring a business can have a much wider moat comparatively.
Why many Amazon Sellers are Exiting or Planning to Exit the Game*
Each seller might have their own unique reason why they would want to cash out their brands and exit the game such as taking long vacations, retiring or just wanting to do other things in life.
The other reason is, that while the pandemic increased Amazon sales by about 200%, the supply chain industry that many sellers depend upon was unfortunately affected by shipping prices going out the roof.
Additionally shortage in the freight trucking industry created delays to keep inventory in stock. Amazon also added restrictions about the number of items that all third-party sellers could stock in Amazon fulfillment centers creating a big concern and higher external storage costs for many brands owners. This concern lead to feeling safer to sell their hard-earned brands to those who would have more capital and better strategies to be able to thrive in these difficult times.
No matter what the reason is for sellers wanting to exit the game, these Amazon aggregators have given profitable brands a very unique opportunity to exit and in a glorious way—being rewarded monetarily for their effort and skill that brought their brand to this level of success.
What Amazon Aggregators Are Looking For
Amazon aggregators are searching for brands both on or off Amazon that they can acquire and scale to gain revenue. Amazon aggregators are similar to investment firms. They raise money from other investors to buy brands that they feel have a potential for growth.
While not all aggregators have the same exact qualifications for the brands they want to buy, they all have the same goal: scaling brands they acquire and taking them globally.
According to E-Commerce Aggregators:
- Most aggregators will require a minimum average gross profit margin of 20%. And you could sell your business in as little as 30 days. However, there are things outside of this that need to be considered in your timescales.
- The majority of them do not like products that are fads; e.g. a fidget spinner that was extremely popular for a few months but where sales did not and will not stay at that level.
- They do not like cheap electronics that a Chinese seller could sell directly and outcompete the brand with. However, if it is electronics that are a bit less generic, then some aggregators are interested.
- Clothing is one that some will be interested and others not. In fact, most do not like clothing that has a huge number of SKUs under a parent listing or is a fashionable clothing item that might not be fashionable in the future.
- Supplements depend on the aggregator. Some do not like supplements at all. Some like them but not things in the diet sector or things like testosterone boosters.
- Overall, aggregators like product categories and products that they believe will continue to perform as well as they are now into the future.
A list of Amazon Aggregators
As a brand strategy design agency we have worked with a handful of them, helping elevate the brand presence of the brands they have acquired. According to Hahnbeck they have identified over 83 Amazon aggregators which together have raised over 13 billion dollars in funding.
- Berlin Brands Group
- Razor Group
- Boosted Commerce
- Elevate Brands
- Society Brands
- Accel Club
- Olsam Group
- Moonshot Brands
- Cap Hill Brands
- Nebula Brands
- Suma Brands
- Foundry Brands
- Forum Brands
- D1 Brands
- Una Brands
- Profound Commerce
- Mensa Brands
- Win Brands Group
- Ecommerce Brands
- GOAT Brand Labs
- TCM Digital
- Telos Brands
- Highfive Brands
- Evenflow Brands
- Alpha Rock Capital
- Amazing Brands Group
- Brand1 Ventures
- Cling Capital
- Excite Foundry
- Mantaro Capital
- Marketplace Powerbrands
- Merx Brands
- Monolith Brands Group
- New Vessel
- One Retail Group
- Orange Brands
- Premier Holdings
- Spring Commerce
- Tapuya Brands
- Umbrella Fund
However if you are planing to exit the game and you can’t point to a specific Amazon Aggregator, the website https://www.ecommerceaggregators.com/ say that they can compare over 150 potential buyers for your amazon business, in 2 minutes or less.
Whatever the reason is for you to sell your amazon business, at Principium Studio we specialized in helping brands with their brand identity, brand perception, brand loyalty and brand awareness which in turn increases company value.
If you want to increase your profitability when selling your business, having a strong brand presence can increase your selling price by a larger amount. And this is where we come in.