Amazon Aggregators Could Make You Wealthy 

If your vision for your ecommerce business involves getting bought up, you’re in luck. As we covered in a recent post, groups of ecommerce investors known as “Amazon aggregators” are acquiring profitable ecommerce operations and scaling them into digital superstores. 

For this article, we’re diving deeper into the nuts and bolts of these mysterious ecommerce conglomerates. Many of these investor pools have raised north of $1B in capital, and the trend has caught on in both North American and European ecommerce markets.  

Let’s dig into some of the critical questions to ask yourself about the prospects and process of getting acquired by an aggregator.

 

Why Would I Want To Sell To An Aggregator?

 

The obvious answer to this question, of course, is money. But let’s go deeper than that because that’s a pretty weak qualification. Anyone looking to buy you up will have some capital to play with. 

Why would you want to sell to an aggregator in particular, when there are plenty of other ways to sell an ecommerce operation profitably?

  • They have less red tape around financing: Most of the time, aggregators have very deep pockets and don’t need third-party funding to conduct their deals. This makes selling to them way easier and faster than other companies.
  • Aggregators are extremely picky: Aggregators only want the best of the best when it comes to their acquisitions. This is because aiming for strict quality control upfront makes it 10X easier for them to scale as quickly as they want to once they’ve made a purchase. 
  • They’re often internationally established: Many aggregators have invested considerably in international markets. This can play to your advantage. In some cases, ecommerce owners will stay on in various capacities after their business gets bought up. If your deal gets structured that way, you could be part of an internationally successful operation.

Now that you know a bit more about why you should aim to be bought up by an aggregator, it’s time to ask yourself a fundamental question.

What Will Make My Business Attractive To Aggregators? 

 

Keep in mind that aggregators look for much more than just high profits. These are large and, in many cases, internationally successful companies. They have strict selection criteria, including: 

  • Business entity: For the most part, aggregators won’t consider acquiring a seller unless they’re listed in the Amazon brand directory. They prioritize private sellers who sell and market their own products.
  • Fulfillment logistics: Companies leveraging the fulfillment by Amazon (FBA) model are extremely attractive to aggregators. An FBA setup removes a massive portion of all the usual ecommerce hassles and headaches. 
  • Enticing margins: Although there are no hard and fast rules around this, the norm is for aggregators to seek out margins of at least 10-15%. However, some high rollers might be hunting for 18-20% or even higher. How do you stack up in the marketplace?
  • Very selective about SKUs: Best practices around SKUs are a matter of quality over quantity. Aggregators are looking for sellers with a low volume, high margin approach to their SKUs. In other words, you should be highly selective in this area.
  • Highly niched, evergreen markets: In the business and marketing culture of the ’60s and ’70s, everything became about satisfying the customer at all costs. This customer-centered business philosophy has stuck around for the long haul, with most businesses aiming for very particular groups of customers. They’re also looking for evergreen markets, meaning product segments that have consistent demand rather than falling in and out of style.
  • Squeaky clean Amazon standing: Unsurprisingly, you’ll also be expected to maintain a practically perfect Amazon standing to get acquired. But it’s also worth noting that ecommerce diversification is essential as well. Never put all your eggs in one basket.

Now let’s look at aggregators’ unique problems and how you can help solve them.

ByteStand for Shopify

How Can I Address Aggregators’ Pain Points? 

 

In almost all acquisition cases, it can be tempting for the acquired party to assume a more submissive posture. After all, the other company is much larger and has much deeper pockets: they must have it all figured out, right? You’d be wrong if you decided to make this your default mindset. Very, very wrong.

Here’s a secret. No matter how large a company is and how many years of combined experience its executives have, it’s still just a group of people trying to get something done. 

And here’s one more secret, free of charge. Problems exist in the business landscape like trees and rocks along a hiking trail. Bottlenecks and dozens of inconveniences are still an indisputable fact of life, even for the most affluent companies. 

This is fantastic news for you. You’ll instantly become a more attractive acquisition target if you can solve aggregators’ problems for them. What are some of the major issues aggregators can use some help with, and how can you be of service? 

  • Make it clear you’re not a hassle: it’s not uncommon for large aggregators to acquire several businesses on a monthly basis. Migrating all of these businesses to their new centralized setup and fielding the myriad inconveniences and snares that the process entails can be an endless headache. Make it known that you’re empathetic to their position and willing to work with them to make life as easy as possible.
  • Accuracy, accuracy, accuracy: for the love of god, do everything you can to be 100% accurate about your inventory. One of the biggest problems that aggregators face is miscalculations around inventory and the considerable impact that can have on profits. 
  • A little data goes a long way: transparency around sales and marketing is just as crucial to aggregators as inventory accuracy. Why, exactly? It’s simple. The hard figures around sales and marketing help companies gauge consumer demand. Without that data, it’s tough to know if a highly successful seller has long-term potential or is just a quick burn about to flare out. Being able to furnish detailed data for aggregators will show them that you’re an excellent long-term investment.

Your goal is to make yourself the natural choice for an acquisition because you’re more than a profitable target. Buying you up will solve real problems for the aggregator. 

 

Ecommerce Solutions For The Pros

ByteStand offers a full suite of ecommerce apps that can help you stand out from the crowd. And if you missed our previous post about Amazon aggregators, check it out here

Sell More Be Happy

Make sure to be in the know with the latest updates and features for all the apps at ByteStand

You have Successfully Subscribed!