When Amazon aggregators are trying to buy a brand, there are a few requirements that must be met. Any and all brands will not be a good match. It must be a brand with significant growth potential, allowing the Amazon aggregator to focus its resources on growing the business and increasing earnings. Before settling on a brand, aggregators go over the following items on their checklists:
- FBA accelerators are continually on the lookout for Amazon Brand Registry-registered brands, private label brands, and brands that manufacture and sell their own items.
- If a purchaser uses Amazon FBA, it’s a significant benefit because FBA makes qualifying for Prime easier. It also addresses all fulfillment-related difficulties, so Amazon aggregators don’t have to deal with logistics such as storage, packing, or shipping.
- The fewer SKUs there are, the better. This allows Amazon aggregators to concentrate on a small number of brands in order to generate more income.
- Amazon seller aggregators will be fascinated by your brand if your items are in a niche market sector, as many of them target very specialized product niches.
- The brand’s profitability must be consistent and begin at a minimum of $200k in value, with net margins ranging from 10-15%. It’s not simply about the company’s success at the time but also about how the company has performed throughout time and whether profits are increasing.
- Amazon aggregators care about the number of sales you make only on Amazon. Many eCommerce vendors conduct business on platforms other than Amazon, such as eBay, Walmart, Craigslist, and others, and the revenues generated by those sellers may be significant. However, Amazon aggregators are particularly interested in enterprises that have Amazon sales ranging from 30% to 80%.
The business model for Amazon Aggregator
The business plan of an Amazon FBA aggregator is to buy minor Amazon companies that are already profitable and scale them up to increase their size and earnings. Amazon Aggregators are searching for a variety of business strategies, including Private Labels, Proprietary, and Wholesale. As previously said, Amazon aggregators give private label businesses more weight because they are a more consolidated option. If you’re looking for a profitable business, proprietary products or products that fit into a specialized market are an excellent option.
Amazon Aggregators give the Amazon Marketplace a much-needed breath of fresh air, but they should not forget the difficult labor that goes into growing small firms into significant players. The year 2020 was the year of the FBA Amazon aggregators in several ways. According to some calculations, investors spent $1 billion on small enterprises that used Amazon’s Fulfilled by Amazon (FBA) service to build successful businesses. Thrasio, for example, has a worth of above $1 billion, making it a unicorn. Because none of these companies are publicly traded, no one knows how these transactions will turn out. Even if the facts remain a mystery, the acquisitions’ positive impact on the market is undeniable.
Amazon Aggregators, for one thing, encourage entrepreneurship. Vendors could only rely on their own gains as a reward prior to their arrival. They were frequently working out of living areas and garages, which introduced inefficiencies that hampered their ability to expand. Amazon Aggregators are now rewarding them for their efforts by offering them the opportunity to learn new skills.
Amazon Aggregators also serve as a stepping stone to better stuff down the track. Most deals nowadays are modest, involving companies with annual revenues of less than $1 million, creating them unlikely acquisition prospects for FMCG behemoths like P&G or Unilever. Amazon Aggregators can provide marketing and operations experience to assist companies in creating supply chains, broadening brand portfolios, and eventually becoming more appealing to larger corporations.
Amazon Aggregators, however, encounter a number of overlooked challenges. They must quickly establish profitable, long-term companies around an often shockingly diversified portfolio of brands as acquisition costs rise. Furthermore, many are headed by seasoned investors with minimal e-commerce experience who rely on outside professionals to expand their acquisitions. They must perform at least four things to succeed:
- Avoid short-termism:
Small business owners are frequently focused on getting their items to market, which results in high client acquisition expenses and limits their potential to grow their product lines. Amazon Aggregators must invest in dance and the client experience over time to encourage repeat business. These initiatives should also incorporate information product innovation to boost client loyalty and expand their purchasing options.
- Expand your track:
The majority of these small businesses rely solely on Amazon to distribute their goods to clients. While this method has proven to be successful in the short term, it is risky and limits the possible consumer base. Amazon Aggregators must figure out how to extend their brands’ reach to other platforms like Walmart and Target or include their own straightforward platforms. It’s critical to do so deliberately, ensuring that they can completely fight with current items in a marketplace before entering.
- Grow your reach:
Small businesses often rely solely on Amazon search advertising to attract new clients. Amazon Aggregators can expand their customer base by following customers to places where they are most likely to respond to targeted adverts, such as Google, Facebook, or other social media sites. From there, advertisers can direct traffic to Amazon or wherever else they can earn the most money.
- Stay the course:
It’s simple to disrupt things that were previously working after an acquisition. Small business owners are currently using social networking and Amazon Marketplace capabilities in a very inventive way. Although Amazon aggregators have plenty to contribute, they should not overlook the secret sauce that has propelled these brands to their current position. More of the same whilst growing the organization is the best strategy.
B2B Marketplace 250 Report for 2021
Overall, Amazon aggregators give the Amazon Marketplace a much-needed breath of fresh air, but they should not disregard the difficult labor that goes into growing tiny firms into significant players. They start small and gradually expand their new additions from fringe to broad audiences. Many have enlisted the help of the appropriate people to make it possible. Others will need to locate collaborators who can help them fill the gap between their limited knowledge and big goals. It’s unknown how well these organizations and investment companies will do at this time, but we can recognize the significant hurdles and excellent prospects they face.