Amazon Aggregators have become increasingly popular in the last couple of years, mainly because they are a profitable strategy for FBA sellers looking for an exit from their business.
All of these companies are searching for successful eCommerce brands and products on Amazon to invest their capital, and they are raising a significant amount of funds to invest.
In this article, we’ll take a deep dive into what Amazon Aggregators do.
So, if you’ve been thinking about selling your Amazon business, read on!
What Is an Amazon Aggregator?
As we mentioned before, the goal of Amazon aggregators is to scale the Amazon brands they acquire to gain revenue for their investors. So, they’re looking for innovative partnerships with entrepreneurs to incubate ecommerce brands.
According to JungleScout, Foundry Brands has $100M in debt-free equity capital; and Boosted Commerce has raised $380M. That means that all funding combined reaches billions of dollars in capital to invest.
On Amazon, aggregators can find sellers they consider to have great sales potential to operate and consolidate an ecommerce businesses portfolio.
As an Amazon seller with a healthy business, you might consider moving on to the next step and sell your FBA business to an Amazon aggregator. It is a safe way to secure the funds for your upcoming projects.
Related content: Should You Buy an FBA Business?
It is almost a guarantee you’ll find an aggregator that fits your criteria, because there are many investors focusing on acquiring hundreds of brands under a single umbrella. Aggregators have been successful in other sectors and Amazon FBA is following the same trend.
Aggregators are also a great opportunity for companies with less than $1 million in revenue per year. Most of the investments are small and they can help these brands compete with sales giants by providing the marketing and operations expertise needed to help them build up supply chains, diversify product portfolios, and eventually become attractive to larger companies.
Brands should expect most, if not all of their cash at closing time, although some deals do include stability payment, an element of an earnout, or profit-share that can be paid when the brand reaches a specific milestone over the years.
What Kinds of Amazon Business Models are Aggregators looking for?
Amazon aggregators are mainly interested in the three most common types of FBA businesses models: Private Label, Wholesale, and Proprietary Products.
However, it is important to mention that aggregators tend to choose private label brands over wholesale brands, due to the fact that they continuously look for businesses with a solid sales history.
Brand recognition also plays an important role.
Proprietary products are also an attractive option for them as long as they have strong profits and good reviews. Customers wouldn’t be able to get these products anywhere else and aggregators know that.
Watch this video to learn more about Amazon Business Models:
What are Amazon Aggregators Interested In?
As a rule of thumb, aggregators are generally going after Amazon businesses that reach a valuation range of $800,000 to $1 million. It is up to the business to decide which aggregator to choose.
There are many out there and each of them is different, but most of them will require the following general criteria from your business:
Like we mentioned above, aggregators are really interested in brands selling their own products and/or manufacturing them.
Most of the time, aggregators focus on purchasing Fulfillment by Amazon businesses. Why? Simple; they don’t want to deal with logistics. Plus, the Prime Label is a great perk.
According to Practical Ecommerce, sixty-six percent of the top 10,000 Amazon sellers use FBA.
Most aggregators interested in acquiring your business will require a minimum between $200k and $500k annual net profit, and a minimum of 15% to 10% net margins. That’s the lowest they’ll go.
They prefer businesses with fewer SKUs, but higher revenues.
Sales through Amazon
This factor will depend mostly on the acquirer.
Some of them ask for a minimum of 80% of sales through Amazon, while others will accept a minimum of 30%.
A loyal customer base is seen as a great advantage by the aggregators.
Since each acquirer is different, you should find one that specializes in your line of business to actually take advantage of their expertise.
Aggregators focus on the long term. They don’t want businesses that will be a fad.
Sources: MyAmazonGuy and JungleScout
What Questions You Should Ask Amazon Aggregators Looking to Buy Your Business?
Yes, Amazon Aggregators mean a great opportunity to Amazon sellers ready for their next venture, but it is also true that exiting Amazon can become a little confusing.
Keep in mind that you worked hard to position yourself in the market.
So, the least you can do is make sure you leave it in the hands of someone with experience and great values.
In the episode “Amazon Aggregators – What Questions To Ask When Selling Your Amazon Business,” of the “Amazing FBA” Podcast, Jeremy Bell, Chief M&A Officer of Elevate Brands, mentioned some very valuable questions/statements Amazon sellers should ask/say when interviewing Amazon aggregators:
- “Talk me through your experience operating these types of businesses…”
- “What type of Hazmat (or any other SPECIFIC) issues do businesses like mine encounter throughout their selling journey?”
- “I would like to meet the team who will be managing my business…”
- “How much experience does your company have buying FBA businesses?
- “Can you show me the due diligence scheme that you will be following?”
- “Do you have the funding in place?”…”How will you finance this transaction?”
Listen to the full episode here.
Amazon Aggregators: What Are Your Options?
Merama – Mexico City, MX
This company provides ecommerce businesses around Latin America with services to accelerate their growth and obtain profits strategically and with proprietary technology. As stated on their website, here’s how they operate:
- 1. They invest in your company, acquiring a stake but not 100% of your business.
- 2. You receive cash-out for the portion of the shares sold, maintaining governance and running your business
- 3. With their “Future exit” option, they work to grow your business to 1B + USD, offering you exit options of 3 to 5 years.
Elevate Brands – New York, NY
This company has raised a capital of $ 372 million. And they are in charge of designing a tailor-made exit for Amazon sellers.
This is a review by one of their clients, which can be found on their website:
“The Elevate team quickly identified that my business was a good fit, made an offer, and followed through, all in under 30 days. I enjoyed the professional and friendly communication throughout the process and am looking forward to seeing my business rise to the next level.”
Boosted Commerce – Los Angeles, CA
They focus on acquiring Amazon and Shopify-based brands and private-label FBA businesses.
Boosted Commerce requires a minimum annual SDE of $500K, and mostly works with any category, except electronics and apparel. They boast $137 Million in funding, over the 30 brands they’ve acquired, and they make sure to maintain the integrity of your brand and they have a highly qualified team of ecommerce experts.
SellerX – Berlin, DE
SellerX pays attention to the success record of brands that sell on Amazon, identifying the opportunities to grow through expansion initiatives or optimization.
They also look for Amazon businesses that have authentic reviews with more than 4.3 stars, and prefer product categories with a long-term demand that is sustainable, and avoid products with a temporary nature.
SellerX normally acquires business with an approximate revenue of 1M with a yearly growth of 30% and a strong margin profile (≥20% contribution margins).
Perch – Boston, MA
This Amazon acquirer allows a seamless integration to operate different brands through their platform. They have raised $775 million so far, and acquired over 70+ brands, making them one of the most trusted Amazon Aggregators out there.
They’re interested in brands who have a solid customer base, good reviews, and sell high-quality products. Their portfolio includes products in home and kitchen, health and wellness, apparel and beauty, etc.
They require a minimum revenue of $1M or $200k seller’s discretionary earnings (SDE).
Foundry – Austin, TX
They have the capital structure to consider brands of any size and provide their clients with different options. They consider the forecast value to decide whether they want to take part of or take over a brand, and look for enduring brands and businesses with a solid list of fundamentals.
Additional sources: Jungle Scout, My Amazon Guy, and Amazing FBA
These are only a few options of all the ones out there, but this short list can give you a general idea on what Amazon Aggregators can do for your business and what their requirements are. Weigh your options and don’t forget to do some deep research before selling your FBA business.