The Amazon space is becoming more and more attractive for investors. They are acquiring hundreds of brands and bringing them under the Amazon aggregator figure. Aggregators are working actively in the market acquiring Amazon brands and accelerating their growth.
According to Fortunet’s survey, aggregators are considered the main drivers of the Amazon merger and acquisition (M&A): around 18% of aggregators have acquired more than 21 businesses each. The demand of FBA business has developed significantly, and acquisition plans by eCommerce aggregators seem to continue growing in the next few years.
Amazon business acquisitions are expected to exceed 1,000, with aggregators being a major player. Let’s learn more about them...
An Amazon aggregator is a business that acquires multiple Amazon brands to make them grow. Lots of these eCommerce aggregators started working in 2020, so then, they have not made many acquisitions. They are raising funds and it is expected that acquisitions grow in 2022.
Why do these kinds of acquisitions take place in Amazon?
As we have already mentioned, Amazon seller aggregators are increasingly acting on Amazon, looking for businesses to acquire to grow and consolidate them. Many of them are getting the financing they need to carry out these operations, which reflects that there will be a lot of activity in the coming months.
One of the main concepts taken from Fortunet's report is "build to sell" as a formula for Amazon sellers to make a quick buck. So, in Amazon we find Amazon sellers making their brands more and more attractive and aggregators looking for the most attractive brands. Both of them can build a perfect tandem.
For this strategy to be successful, we need to know more about the Amazon seller aggregators: who they are, what kind of businesses they are looking to acquire, what sectors they prefer…
We have summarized some of the most important aspects of Fortunet's analysis.
As the might of Amazon grows, so does the new wave of new aggregator companies. According to The Philadelphia Inquirer, approximately 40 Amazon aggregators have emerged in the past few years.
Here are some of the well-known aggregators:
According to Fortunet’s survey, there are some common features in Amazon aggregators’ behavior. Although they are a very recent player on Amazon (most of them since 2020), we have learned some interesting things about them.
Most aggregators who are looking for an Amazon business to acquire do not give importance to the number of platforms used to sell their products. What is interesting and what brings real value to aggregators are the sales. So, contrary to what Amazon sellers often think, using multiple platforms does not make a business more attractive, it is its sales that will attract the attention of eCommerce aggregators.
Acquisition expectations for next year are very high, which puts aggregators at the center of the strategy. Of course, they will have to be prepared for the volume of acquisitions they are looking for. That means to be ready with the necessary technological and human resources to deal with it.
Most aggregators started working on this business model in 2020, so they have not yet made too many acquisitions. They are currently reaching the necessary funding to grow in the number of acquisitions by 2022. According to FE International, these are the most significant Amazon FBA aggregators, their total funding, and the companies and investors who are funding them.
From Fortunet's report, it is clear which sectors offer the best business opportunities with the lowest multiples. Aggregators prefer evergreen products (easy to operate and not subject to massive regulatory requirements). The most interesting categories are Home and Garden, Pet Supplies, Baby Products, Outdoors and Health, and Personal Care.
The "build to sell" concept. A real strategy that brings sellers and aggregators closer together. The concept of “build to sell” as a very quick monetization route for Amazon sellers. Many aggregators are open to acquiring very young businesses for a minimum period of one year only, as long as profitability is at least 15%.
When a brand is acquired by an aggregator, they often have to undergo a process of restructuring and refocusing in order to fit into the new company’s goals. This is especially true when it comes to online businesses since their products and services may need to be re-evaluated in order to work better within the larger framework. The new owners of an acquired brand have to put in the effort and resources to ensure that the transition is smooth, both for customers and employees.
This could involve changes to pricing structures, customer service policies, product offerings and marketing approaches. In most cases, brands acquired by aggregators are expected to achieve greater success due to increased exposure within the broader market.
The acquisition process can provide aggregators with access to a larger customer base and potential new markets, while allowing them to benefit from increased economies of scale. Aggregators are able to leverage the strengths of their acquired brands in order to boost their own sales, as well as maximize profits.
There are several benefits to selling to aggregators. It offers them the opportunity to reach a much broader customer base than they would be able to through independent selling.
Aggregators have established marketplaces that offer access to millions of customers, often across different countries and continents. This means that brands can gain access to new markets and customers more quickly then they would be able to on their own. Aggregators often provide marketing tools such as promotional discounts and campaigns that can help brands increase sales.
The acquisition process is complex but, with the right guidance from experienced professionals, it can be a great way for brands to expand their reach and increase their profits. With the right strategy and support, brands can benefit from increased exposure, access to new customers and higher sales.
