Brand Aggregator Boom
If you enjoy “following the money” in the news, you probably read about “brand aggregators” and the “aggregator” industry in 2021. In fact, Amazon Brand Aggregators raised 12 BILLION dollars in 2021.[1] What is an “aggregator and what is their strategy? How do they navigate challenges while scaling?
What Is A Brand Aggregator? Why Is This Category Growing So Fast Now?
“An Amazon aggregator is a business that acquires multiple Amazon brands for the purpose of consolidating them under the same roof” and scaling them.[2] Marketplaces such as Amazon have grown so large in terms of annual revenue processing, that companies and brands are built specifically to sell through marketplaces as their primary revenue stream. Through the COVID era, we saw a heightened focus of online B2C purchasing and a recession for big box retail and brick and mortar revenues. As is the case, many brands shot up and pivoted to focus on Amazon as well as other marketplaces.
There is clearly a market for aggregators last year was any indication. According to MarketPlace Pulse, “roll up” businesses as they are called raised over $12B in capital in 2021 and the top 3 largest aggregators in the world raised $1.3B in just one day alone.[3] From a business perspective, these investments are seen as a savvy trend and for good reason. Expanding your selling channels and diversifying your product categories leads to revenue increases at a faster rate. The fact that 76% of Amazon sellers were profitable to start 2022 paired with the global COVID situation is indicating that the future is certainly bright for the aggregator business model.[4] Aggregators are so present that 87% of Amazon’s largest 3rd party sellers plan to sell their business to Amazon aggregators in 2022.[5]
Strategy for Brands:
It makes sense. Getting acquired provides smaller operators with the resources they wouldn’t otherwise have that are necessary to effectively grow their brand. In some scenarios, an acquisition means an early exit with money in hand. From the surface, it seems everybody wins no matter what side of the coin you are on. While it may look like rainbows and sunshine for a brand owner to sell, these owners are certainly leaving money on the table as aggregators have built a cookie cutter model for hyper scale. It can be tough for an owner to sell their brand and then watch it multiply.
Strategy for the Brand Aggregator:
Aggregators thrive because they make smart investments and have a cookie cutter, yet tried and tested, model to scale businesses through global marketplace optimization. Many small business owners do not have the resources to support rapid scale and aggregators know just how to do plus they have the resources to do so. If a brand currently is selling on USA Amazon and Walmart, an aggregator’s strategy to scale this brand may be growing into Canada, UK, and AUS Amazon channels while expanding also to Jet.com, Newegg, launch a Shopify site, partner with a big box retailer, etc. Ultimately, each aggregator has specialize strengths across certain geographies, selling channels, product categories, etc. The business strategy to scale quickly is well defined, but to support such hyper growth, sound business technology systems and processes must be in place.
Challenges at Scale
At a high-level, the goals of a “roll up” business seem simple; acquire various brands, expand your marketplace, sell quality products, rinse and repeat. That might sound fine and dandy, but there’s a multitude of challenges on the horizon as a brand portfolio expands.
Overseeing one brand, let alone 10’s or 100’s is a huge undertaking of itself:
- Tracking & managing multiple product life cycles
- Siloed data and processes managed across various spreadsheets & systems
- New business owners and vendors to navigate
- Lack of visibility surrounding new and complex supply chains
When purchasing new brands, you are not just buying their products. You are acquiring the processes, the systems, and the people. The more brands you acquire the more chaotic it becomes to run the overall business. The common supply chain bottlenecks will multiply and in turn impact your ability to scale efficiently. Scaling too fast without technology in place results in over investment in people and margin impacts. Those who are short sighted and fail to adopt innovative solutions are certain to see bottom line impacts. The top players think ahead about where their business will be and invest wisely in tech solutions.
The GRID: Next Generation Platform for Brand Aggregators
The GRID is an end-to-end supply chain management solution that simplifies complex business operations through real-time collaboration, process automation, visibility, and connectivity.
The innovative platform provides brand aggregators with one place to:
- Centralize internal communication & vendor collaboration
- Store product information & digital assets
- Oversee all projects with real-time status updates
- Complete costing & bidding with vendors
- Manage purchase orders
- Track production, QA, & logistics
- Plan delivery schedules
- Track shipments
The business impacts for “roll up” companies are immense. Having a unified and integrated supply chain platform across all brands leads to faster lead times, improved margins, and reduced operational overhead. Additionally, our team of supply chain experts coupled with the GRID helps renowned global aggregators standardize onboarding of new acquisitions providing a robust supply chain tech and process backbone.
Are you a brand aggregator? Would you like to learn more? Click here
[1] https://www.marketplacepulse.com/articles/amazon-aggregators-raised-over-12-billion-in-2021
[2] https://capforge.com/amazon-aggregators/
[3] https://www.marketplacepulse.com/articles/amazon-aggregators-raised-over-12-billion-in-2021
[4] https://www.globenewswire.com/news-release/2022/02/22/2389523/0/en/Report-76-of-Amazon-Sellers-Profitable-to-Start-2022-Despite-Supply-Chain-Crisis.html
[5] https://www.ecommerceaggregators.com/
