This article gives a great overview of what aggregation looks like to the everyday business person – and shares some ideas about where Amazon FBA aggregators are going next. Here’s a hint: It sounds like multichannel businesses will be the name of the game before you know it!
- Amazon’s size has spawned a sub-economy of aggregators that buy its biggest sellers.
- These Amazon rollups have raised $5.7 billion in the US and Europe in the first 11 months of 2021.
- Investors wanting to get into the sector are paying up to 30x earnings, sources say.
Next time you make a purchase from Amazon from a seemingly independent seller, you may not be buying products from a man with a shed, but a new type of 21st-century conglomerate.
Buy a weighted blanket from Slaapkalm or a Moroccan lantern from Gadgy, and you’ve really bought from well-funded Dutch company Dwarfs without knowing it.
Their game plan is to acquire the most successful third-party brands that rely on Amazon infrastructure to store, process, and ship out their products, a service known as Fulfilled by Amazon (FBA).
These independent brands are then managed under a single parent company — not unlike Unilever or P&G — which helps them scale up and yield bigger profits over time.
The mushroom-like growth of aggregators is indicative of how Amazon has been able to spawn entirely new industries. The retail giant recorded $332 billion in net revenue for the first nine months of 2021, up 28% year on year. Revenue from third-party sellers listing and using its warehouses, which is where aggregators sit, was up 38% to $73 billion.
“Amazon is no longer a marketplace, Amazon has become the market,” Heroes cofounder Riccardo Bruni previously told Insider.