All you need to know about Branded Amazon Aggregators
Companies struggling to acquire the Amazon native businesses have raised funds, making them highly profitable in 2020. According to Marketplace Pulse, the top branded Amazon aggregator had been Thrasio and Perch, but there have also been over 80 more active aggregators dominating Amazon. It has been estimated that the total funds raised by these companies had reached $10.9 billion in April 2020.
Recent surveys of aggregators by Fortunate and The Fortia Group were based on aggregators’ perceptions. The former company had over 38 firms that participated in the survey. Fortunate also conducted an aggregator survey including 42 companies’ samples. These surveys had been helpful to understand what is the branded Amazon aggregator looking for while acquiring the brands. The survey reported that Amazon aggregators are looking for anything but a lack of operational skills.
As per the most recent statistics by Marketplace Pulse, the cumulative capital raised by Amazon aggregators till December 2021 has reached $13.274.6 billion. As these companies raised this money, these aggregators have high ambitions for 2022. Till now, Fortia Group had paid over $2 to $5 million to the 47% of the established brands. However, 24% of the brands had made a deal with the aggregator to sell under $1 million. 12% of these businesses have gone even beyond $5 billion to get paid for their business. Still, it is possible to say that spending this money had been worth it as the companies have been generating large revenue from them.
With this overview of Amazon Aggregators, it can be observed that they are engaged with purchasing brands on Amazon, and they are also generating high revenue. Still, there is a need to know much in detail about Amazon Aggregators.
Who are Branded Amazon Aggregators?
For talking more about the Amazon Aggregators, there is a need to understand who they are? In simple terms, Amazon aggregators can be defined as the private umbrella companies that hold large funds to acquire new brands that the Amazon sellers are selling to generate profit for their investors. This means that branded Amazon aggregators are the Amazon brand acquirers or consolidators searching for profitable small businesses to add to their portfolio to gain more revenue. A business model of Amazon aggregators reveals that aggregator owns several businesses under Amazon, which can be referred to as their business partner. These aggregators act as intermediaries between the customers and the brand partners.
These aggregators have become an important part of Amazon as they help Amazon customers to have a variety of products available for them at the best prices. They also tend to provide opportunities for small businesses to grow. This is because, after acquiring the brand, the aggregators provide the necessary resources and energy to the brand, which they might not be able to get otherwise. With this model, it can also be said that Amazon aggregators act like investment firms aiming to look for new expansion opportunities and help small businesses to be more stable in the competitive market.
What do the Aggregators look for in a business?
The aggregator evaluates the small businesses before acquiring them to ensure that they are making a profitable investment for their investors. Some of the things that appeal an Amazon Aggregators are the following.
- Registered brands: The brand needs to have their private label
- Profitability: The brand should be profitable and have a net profit of at least 3 thousand dollars so that it can appeal to the aggregator. An aggregator is certainly not looking for the brand that is under loss or makes a minor profit
- Range of products: The aggregators are looking for the most profitable products in your product portfolio. For instance, if a product is making 1 million dollars sales and the other products are making an average sale, the aggregator might be interested in that one profitable product.
- Product demand: In addition to the good range of products, the demand also needs to be consistent. For instance, the fashion products that are “fads” and will lose the demand are not the choice these aggregators will make.
- Geographical segment: The geographical coverage of the brand also matters as it determines the demand and sales of the product. As per the data from Statista, most of the sales of Amazon occur from the region of the USA. The company had generated over 386 billion U.S. dollars in sales in 2020. It means that the ideal location for aggregators to look for brand acquisitions can be the USA. The demand in different regions of Asia and Europe is also increasing, which can be considered by the aggregators.
- Customer satisfaction and loyalty: The customers need to be satisfied with the brand, determining that they will frequently purchase from this brand. This factor can result in increased sales for the business for the future, so the aggregators can look at the customer reviews and repeated purchase statistics of a business.
- Adherence to terms and conditions: The aggregators need to choose the business that abides by the game’s rules. It means that the brand added to the portfolio needs to strictly follow Amazon’s terms and conditions. Bottom of Form
Why should you be interested in selling your business to an Aggregator?
There can be many reasons you should sell your business to an aggregator. Firstly, the aggregators have resource opportunities that can help your small business grow quickly. It has already been mentioned that the cumulative capital raised by Amazon aggregators till December 2021 was $13.274.6 billion, which means that they have large capital funds to invest in your business.
Secondly, these aggregators can help you improve your marketing, which is the key to organic sales. It includes improved SEO and advertising strategies that can help save costs and improve sales results to gain more profit.
Thirdly, these aggregators are the Amazon experts who have spent years in the Amazon market. They can help make useful improvements to your brand and make it grow at a much larger pace than you can ever expect.
What are the challenges faced by these Aggregators?
Thrasio had been the largest Amazon aggregator, which explained some of the challenges the aggregators in the market have faced. Assuming the future demand is not enough for the aggregator; rather, they need to find the product that guarantees success. It includes a deeper analysis of the brand, and some aggregators might make mistakes in this process.
The branded Amazon aggregator has a lot of pressure on themselves. They need to keep the pressure aside, analyze the brands in the market with potential success, and purchase when it is the right time. These aggregators have a lot at stake, so they can often make mistakes in their decision under pressure.
In conclusion, the Amazon aggregator market is increasing its attractiveness. These businesses are looking forward to finding new opportunities to expand in the competitive market. The aggregator market is also facing high saturation due to large competitors aiming to acquire potential businesses. To add the right business to the aggregator brand portfolio, there is a need to make careful considerations to ensure that profitable choices have been made.