What's behind the big hype and billion-dollar aggregator start-ups buying Amazon seller brands

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What's behind the big hype and billion-dollar aggregator start-ups buying Amazon seller brands

Amazon aggregators have become a hot new trend in the start-up world. Two of them, Thrasio and Perch, have raised billions of dollars to buy up mom-and-pop Amazon sellers. Aggregators then use software and marketing prowess to grow the brands, sometimes with great success. In an effort to woo prospects at a recent Amazon seller conference in Las Vegas, aggregators threw exclusive after parties and offered free Teslas for successful referrals.
Sat, Aug 7 20218:59 AM EDT

From Tesla giveaways to exclusive parties, Amazon aggregators are in the midst of a buying frenzy, pulling out all the stops to woo third-party sellers who've built successful brands on the e-commerce site. There are now at least 69 Amazon aggregators based in at least 12 countries, and they've raised more than $7 billion collectively since April 2020. Some of the biggest Amazon aggregators, Thrasio and Perch, are worth billions of dollars.

"A big part of how entrepreneurs hustle and how they go about their path to success is they monitor their listings hourly and they're constantly watching competitors. And we can do all of that with technology. And a lot of times this technology doesn't make sense for a solo entrepreneur to build, but it does make sense for us to build because we can deploy it across hundreds of brands," said Chris Bell, who founded Perch in 2019. Perch has raised $900 million and acquired more than 70 brands.

Perch was among several aggregators that flocked to the Prosper Show in July, scouring for potential acquisitions at the popular conference for Amazon sellers.

"People giving away a Tesla, just a lot of talk on the commissions if you're able to bring in a deal, and just to be honest, it's like the talk of the town," said Casey Gauss, a vice president at Thrasio, which has raised $1.75 billion and acquired more than 125 Amazon brands since it was founded in 2018. CNBC ranked Thrasio 22nd on the 2021 Disruptor 50 list.

"We are sometimes taking brands that maybe don't have that good of images or decorated product packaging, or we're able to improve product quality so slightly so that we can improve our review rating," Gauss explained.

Some aggregators, like Heyday, have a different strategy. It's raised $250 million and acquired 16 brands.

"We're not looking to acquire 100 brands. We're looking to take our brands and 10x them," said Chas Woodward, head of business development at Heyday.

"We don't believe that the brands we own need to be brought to you by Heyday," he said. "These are brands that have stood on their own for a long time, they've generated very loyal customers, repeat rates, they've done a fantastic job getting from zero to one. And it's our job to get them from one to five, or 10."

When asked about the aggregator trend, an Amazon spokesperson told CNBC, "It's an exciting opportunity for sellers that want liquidity and to exit the business for a new adventure."

Watch the video to hear what's behind the trend from aggregators, sellers, and former Amazon insiders we interviewed at the Prosper Show.