Amazon marketplace sellers are becoming retail giants
Thrasio, the largest aggregator of third-party Amazon.com marketplace sellers, last week announced its three largest acquisitions ever and more deals in the works.
“We take beloved products, invest the resources to solidify their category leadership on Amazon, and then we increase their sales footprint through international expansion and other channels,” said Carlos Cashman, co-CEO, in a statement.
In February, Thrasio earned a $3 billion valuation in a funding round as money keeps pouring into the space. A total of 38 Amazon aggregators have raised nearly $9 billion in capital since April 2020, according to Marketplace Pulse.
Trasio’s news comes following last week’s announcement from Packable, the parent of Pharmapacks and the top Amazon third-party marketplace seller based on reviews, that it plans to go public. Anker, an Amazon-native brand, went public last August.
The aggregators promise to leverage their platform listing, marketing and selling expertise, economies of scale and data analytics to take mom and pops to the next level.
Some recent articles, however, have questioned their high valuations as online growth slows amid store re-openings. Their reliance on Amazon has long been cited as a risk.
Financial Times columnist John Thornhill wrote, “[Amazon] entices as many sellers as possible onto its platform to sharpen price competition. It can modify its listing fees or tweak its recommendation algorithms in unknowable ways to promote or demote sellers. It can spot emerging trends in its sales data and launch rival own-brand products.”
“Amazon-dependency is both the most significant risk and the fuel that powers those firms,” wrote Marketplace Pulse in its recent analysis. “But there are dozens of additional challenges yet to be resolved. For example: transferring the scrappiness of a one-person seller to an employee of a firm, long-term risk of brands on Amazon, building a brand vs. being operationally efficient, buying brands vs. building brands in-house, avoiding suspensions and others.”
Amazon, which often praises the entrepreneurial spirit of marketplace sellers, doesn’t see a threat from the trend. The platform told CNBC last month, “We expect the majority of sellers and brands will remain independent and continue to use our store for its scale and reach.”
- Thrasio Announces Its Three Largest Acquisitions Ever, with a Combined Value in Excess of $100 Million – Thrasio/PRNewsire
- Amazon ‘roll-up’ businesses raise billions in fight for ascendancy – Financial Times
- Amazon aggregators are walking into the dragon’s cave – Financial Times
- Companies Acquiring Amazon Businesses – Marketplace Pulse
- Amazon aggregators like Thrasio and Perch are raising billions of dollars to buy mom-and-pop sellers in a crowded market – CNBC
- Packable, a Leading Technology-Led E-Commerce Marketplace Enablement Platform, Announces Merger With Highland Transcend Partners I Corp. – Packable/Business Wire
- Are huge marketplace seller aggregators a good thing for Amazon and retail? – RetailWire
DISCUSSION QUESTIONS: Do you see the trend toward third-party Amazon marketplace roll-ups gaining more momentum, slowing or imploding in the coming year? Should Amazon welcome the aggregators?