Technology

Begin-ups herald billions, give away Teslas to purchase Amazon sellers

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Amazon aggregators are in the middle of a buying frenzy. They try to attract sellers with successful brands on Amazon with incentives like Tesla giveaways and exclusive parties.

Some of the largest Amazon aggregators, Thrasio and Perch, have billions in reviews. In July, they were among the many companies in the industry to attend the Prosper Show, a popular conference for Amazon sellers.

The marketing and recruiting money flowed in trying to lure salespeople into joining them.

Performers entertain Amazon sellers at an exclusive after party hosted by Amazon aggregator Thrasio on July 14, 2021 at the Bellagio in Las Vegas, Nevada.

Chris McCabe

“The people who give away a Tesla only talk a lot about the commissions when you can get a deal, and to be honest, it’s like the talk of the town,” said Casey Gauss, vice president at Thrasio since its inception in the year Raised $ 1.75 billion in 2018 and acquired more than 125 Amazon brands.

CNBC has placed Thrasio, whose investors include Oaktree Capital and Upper90 Capital, 22nd on the Disruptor 50 list in 2021.

Following the success of Thrasio and others, the number of aggregators has grown rapidly in recent months. According to Marketplace Pulse, there are now at least 69 Amazon aggregators based in at least 12 countries, and they have raised more than $ 7 billion in total since April 2020.

“Micro-brands have been around for a long time and I think it has reached this tipping point,” said Chris Bell, who founded Perch in 2019. Perch has raised $ 900 million from investors such as Spark Capital and Tectonic Ventures, and has acquired more than 70 brands.

Bell sees some likely reasons why the momentum has increased so dramatically.

“I think there was a confluence of Amazon’s marketplace that matured and, if you will, hardened at the edges to make it more trustworthy,” he said. “And then the pandemic and I think a lot of people realized this was possible and come after that.”

Aggregators give venture capitalists a hold in the mom-and-pop world of Amazon sellers, which until now has been largely dominated by sole proprietorships and brands. Typically, the aggregator buys out the seller and then tries to drive sales with large-scale marketing and software solutions.

“The brands we acquire don’t have experts in literally every field we can: from [search engine optimization] on copywriting and creative, “said Gauss.” We’re able to go through this checklist to review all of these brands and make sure we’re optimizing them much better than the average salesperson. “

Some aggregators like Heyday focus on a smaller number of high potential acquisitions. Heyday has raised $ 250 million and acquired 16 brands. Supporters are Desjardins Capital and Innovobot.

“We don’t want to buy 100 brands,” said Chas Woodward, Heyday’s head of business development. “We want to increase our brands tenfold. We believe that an attractive statistic is the ability to identify, draw, and acquire the brands already in existence, and then really drive growth and improvement. “

Amazon admits that a new trend is afoot, but the company still sees a prominent role for the entrepreneur.

“We assume that the majority of sellers and brands will remain independent and will continue to use our shop because of its size and reach,” an Amazon spokesman said in a statement to CNBC.

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