Amazon aggregators are in the middle of a shopping frenzy. They are trying to attract sellers who have successful brands on Amazon with incentives like giveaways from Tesla and exclusive parties.
Some of Amazon’s biggest aggregators, Thrasio and Perch, have multi-billion dollar valuations. In July, they were among the many companies in the space that attended the Prosper Show, a popular conference for Amazon sellers.
Marketing and recruiting dollars flowed in as they sought to attract salespeople to join them.
“People give away a Tesla, you only get a lot of talk about commissions if you can get a deal, and to be honest, it’s like the talk of the town,” said Casey Gauss, vice president of Thrasio. , which has raised $ 1.75 billion and acquired more than 125 Amazon brands since its founding in 2018.
CNBC ranked Thrasio, whose investors include Oaktree Capital and Upper90 Capital, at 22nd on the 2021 Disruptor 50 list.
Following the success of Thrasio and others, the number of aggregators has grown rapidly in recent months. There are now at least 69 Amazon aggregators based in at least 12 countries, and they have raised more than $ 7 billion together since April 2020, according to Marketplace Pulse.
“Micro-brands have been taking off for a long time and I think they are reaching this tipping point,” said Chris Bell, who founded Perch in 2019. Perch has raised $ 900 million, from investors like Spark Capital and Tectonic Ventures, and acquired more than 70 brands.
Bell sees some probable reasons why momentum has accelerated so dramatically.
“I think there was a confluence of the Amazon market becoming more mature and tightening, so to speak, at the edges to make it more trustworthy,” he said. “And then the pandemic and I think a lot of people realized that this was possible and followed it.”
Aggregators give venture capitalists a foothold in the familiar world of Amazon sellers, which until now has been largely dominated by individual entrepreneurs and brands. Typically, the aggregator buys from the seller and then tries to drive sales with large-scale marketing and software solutions.
“The brands that we are acquiring do not have experts in literally all the fields in which we can: from [search engine optimization] to writing and creativity, “Gauss said.” We can put all of these brands on this checklist and make sure that we are optimizing them much better than the average marketer. “
Some aggregators, like Heyday, focus on fewer high-potential acquisitions. Heyday has raised $ 250 million and acquired 16 brands. Sponsors include Desjardins Capital and Innovobot.
“We are not looking to acquire 100 brands,” said Chas Woodward, Heyday’s director of business development. “We are looking to take our brands and multiply them by ten. We believe that an attractive statistic is the ability to identify, subscribe, acquire and then truly drive the growth and improvement of existing brands. “
Amazon acknowledges that a new trend is underway, but the company still sees a prominent role for the entrepreneur.
“We expect the majority of sellers and brands to remain independent and continue to use our store for its scale and scope,” an Amazon spokesperson told CNBC in a statement.