Boom in Amazon Marketplace seller acquisitions

In 2020, nearly US $1 billion has been committed to businesses looking to buy Amazon marketplace sellers and brands. This year has seen a surge in such acquisitions due to the pandemic, an Amazon-native brand called Anker going public and Thrasio raising hundreds of millions of dollars.

Amongst other highlights, Thrasio raised $260 million and had a valuation of $1bn, while Heyday raised $175m to buy a number of Amazon businesses. Several such $100 million-plus acquisitions have taken place.

The capital in question has been raised as a mix of equity and debt. Accel Club, Acquco, Alpha Rock Capital, Boosted Commerce, Cap Hill Brands, Centro Brands, Dragonfly, Flywheel Commerce, GOJA, Heyday, Inflection Brands, Perch, Recombrands, Suma Brands, and Thrasio operate in the U.S. Brands United, Razor Group, Thirstii, SellerX, Zeelos, and Orange Brands operate in Germany. The United Kingdom has Heroes.

Sales figures on Amazon have been astounding. Some $200 billion worth of products were sold on Amazon Marketplace in 2019 and this has grown considerably in 2020 (though no figures have been released). If the marketplace was a country it would have the 50th biggest economy in the world, bigger than Qatar’s GDP.

The marketplace sellers thrive on the data-rich environment in Amazon and use tools like Jungle Scout and Helium 10 to optimise sales.

Where it comes to companies targeted for acquisition, private-label sellers that use Amazon as their main source of distribution are the most popular. There is no demand for resellers.

The buyer businesses are starting to differentiate and modularise their business processes. Instead of a brand taking on everything from sourcing to selling, the acquiring companies have modularised their businesses into specialist units with each unit handling specific processes such as sourcing, importing, financial planning and marketing. This improves the competitiveness of the brands on the Amazon algorithm.

Such acquisitions are set to grow in numbers and value as the marketplace evolves. This could lead to a boom in sellers’ market value and this could well increase interest from investors.