With so many new aggregators in the marketplace, it’s interesting to get a look behind the curtain at what it takes to build a roll up company.
- Amazon aggregators, which gobble up third-party sellers, have raised $13.5 billion since March 2020.
- Victory Park Capital has nine Amazon aggregators in its portfolio and reviewed over 125.
- The most successful aggregators focus on building out the right team, one Victory Park partner said.
Amazon aggregators are booming.
Aggregators, also called Amazon roll-ups, buy third-party sellers operating on Amazon. The idea is to buy up successful sellers, scale them up, and maintain them under one parent company, a strategy similar to that of conglomerates like P&G or Unilever.
There are about 89 active Amazon aggregators competing to identify and buy popular Amazon brands selling everything from weighted blankets to beauty products. The most attractive acquisition targets rely on Amazon’s infrastructure to store, process, and ship out their products, a service known as Fulfilled by Amazon.
Making a profit isn’t just about increasing prices
Roll-ups have collectively raised $13.5 billion since March 2020, according to Marketplace Pulse. It’s a gold rush, but not everyone will get rich.
The Chicago debt provider Victory Park Capital has nine aggregators in its portfolio and has reviewed over 125 similar businesses.
“It’s definitely harder to do at scale than people appreciate,” Tom Welch, a partner at the firm, told Insider. It’s not as simple as buying a successful Amazon seller, raising prices to increase margins, and expecting profit. Roll-ups need to think about operational improvements, too.
“It’s hard and it’s complicated,” Welch said.
The US firm Thrasio, one of the biggest and best-known aggregators, was founded in 2018 and is sometimes regarded as the first roll-up. It was actually just the first to get it right at scale, Welch has previously said.