Rise and fall of Amazon aggregators
On Amazon, aggregators acquire seller businesses. Third-party sellers have gained higher relevance in the Amazon marketplace strategy and proved to be very profitable businesses in 2021, due to the e-commerce surge induced by the COVID-19 pandemic. The intense e-commerce activity was mirrored by brand aggregators’ revenue, catching investors’ attention. As a result, global funding peaked at 6.17 billion U.S. dollars in 2021, opening opportunities for a plethora of brand acquirers.In 2022, the e-commerce crunch sharply reduced the investment flow and aggregators scaled back their brand acquisitions. One of them – Benitago – even shut down, declaring bankruptcy in 2023. Fulfilled-by-Amazon (FBA) sellers and their aggregators struggled in the changed scenario, as brands selling outside of Amazon also did. A glance at the direct-to-consumer market in the United States in 2022 confirms that digitally native brands underwent a milder growth compared with more established ones.
What next?
The ranking of Amazon aggregators still sees e-commerce unicorn Thrasio trashing other competitors, with 3.4 billion U.S. dollars of capital raised as of 2023. At lower positions are other European startups like Razor Group, a German aggregator that closed two funding rounds at the beginning of 2023. What usually happens in a crowded market losing profitability is consolidation. Surviving companies are acquiring other Amazon aggregators to manage a bigger brand portfolio and stay in the market. In 2023, Stryze Group merged with Razor Group, and SellerX acquired competitor Elevate Brands.In addition to that, the aggregators' strategy became more cautious. Surveys from 2022 suggested that most DTC and FBA aggregators envisaged not more than ten brand acquisitions in the following year. They also prioritized niche brands that might have lower competition in the online market. Their focus included wellness and beauty, pet care, and homeware products. In turn, apparel was the least targeted product category.
