UK e-commerce companies swoop on Amazon marketplace brands
British and European e-commerce companies are acquiring Amazon (AMZN) marketplace brands amid a rise of aggregator startups as online shopping continues to boom.
Some $1.1bn (£800m) worth of funding went into Europe’s aggregators on 1 September alone, with the industry drawing large funding rounds from investors.
Aggregators aim to build large e-commerce businesses by snapping up smaller, third party merchants that sell directly to consumers on Amazon and other platforms. Most of the companies depend on Amazon’s “Fulfilled by Amazon” function to store and ship out goods.
There are at least 21 aggregators in Europe, according to Dealroom – 19 of which have launched since 2020. Some of the funding has come from some of the biggest names on Wall Street and Silicon Valley, including JP Morgan (JPM).
Read more: China’s First Amazon Aggregator Nebula Brands Held Their First Business Event
Germany’s Berlin Brands Group (BBG) last Thursday raised $700m, led by Bain Capital, making it Europe’s first aggregator unicorn as it is now valued at more than $1.2bn.
Founded in 2005, BBG has developed a portfolio of 14 online brands, selling goods ranging from sports equipment to home appliances.
It also raised $240m in debt in April to pay for more acquisitions.
“That’s really huge firepower into the company,” chief executive and founder Peter Chaljawski said in a Bloomberg interview. “The speed at which we acquire is accelerating from quarter to quarter.”
While Bain Capital acquired a stake of more than 40% in Berlin Brands, Chaljawski will retain a majority of the company’s shares.
Watch: Amazon CEO unveils 55,000 tech job hiring spree
In the UK, e-commerce businesses Heroes and Oslam Group have raised $200m and $165m respectively.
On Wednesday, Heroes announced its new raise from leading US institutional investor Crayhill Capital Management, which it plans to use to acquire more brands.
The firm, founded by three brothers, operates and scales top-performing Amazon brands.
Since its launch in October 2020, Heroes operates across the UK, Europe, North America and Asia, and is also backed by 360 Capital, Fuel Ventures and Upper90.
It has acquired and scaled e-commerce brands in baby, pets, sports, personal health and home and garden categories, amongst others.
“By adding this significant amount of capital, we now have a high level of flexibility in executing on our growth plans and significantly expand and further diversify our brand portfolio,” said Riccardo Bruni, co-founder of Heroes.
“We look forward to continuing our work with the new wave of outstanding entrepreneurs to give them a fast, seller-friendly and reliable way to sell their business, so they can reap the fruits of the hard work they have put into building their brands.”
Read more: E-commerce boom is here to stay, and digital advertisers are noticing
Meanwhile, Oslam announced it raised $165m in equity and debt financing, from Christian Angermayer’s Apeiron Investment Group and Elevat3 Capital, to buy e-commerce businesses.
The company was co-founded by brothers Ollie and Sam Hörbye, the latter of which has previously worked at Amazon as a team leader at its marketplace arm.
“We’re in the midst of a retail revolution,” said Sam Hörbye. “We feel the Amazon marketplace platform has democratised the playing field of online retail.”
He added: “Small ‘mom and pop’ business owners are taking on the traditional consumer goods giants, building defensible category leading brands which in terms of customer reviews, tower above them.”
Read more: Thousands of businesses launch online shops as lockdown creates digital economy boom
It comes after Amazon’s ecosystem of six million sellers generated over $300bn in sales last year, growing 50% year-on-year. This grew by 61% again in the first three months of 2021.
Firms acquiring successful brands on Amazon have attracted around $7bn in capital over the past 12 months, with almost 3,000 sellers in the UK hitting $1m in turnover.
Globally several companies are aiming to emulate the business model of US-based Thrasio, which was founded in 2018 and has bought up more than 100 Amazon sellers. The company surpassed a $1bn valuation in June last year.
It is estimated that there are now around 40 Amazon aggregator businesses worldwide, with this number still continuing to grow at pace.
Watch: What are SPACs?