The Amazon-Seller Roll-Up Race Rolls On

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One of the more notable trends that we’ve started tracking is what we call the “great eCommerce rollup.” This reflects the emerging business model to buy up disparate third-party Amazon marketplace sellers — otherwise know as FBA’s (or fulfilled by Amazon) — and get them on the same system.

The thought is that there’s aggregate long-tail value in these smaller operations. So companies are emerging for the sole purpose of rolling them up to apply common standards, marketing, and economies of scale. This often involves getting sellers on one platform to federate all of these standards and scale advantages.

After we first covered the trend, we continue to see companies emerging to replicate the model. And there’s ample headroom considering the sheer volume of five million FBAs. We’re also beginning to see some that zero in on geographies and verticals so they can double down on the standardization perks above.

What’s Behind the Great eCommerce Rollup?

Rolling Up the Rollups

To chronicle this ongoing trend and identify the latest entrants, we’ve documented several launches, funding and other milestones over the past few months. The most notable market events are assembled below for Localogy Insider readers. That’s right, it’s a rollup of rollups…

– After raising a whopping $775 million earlier this year, FBA rollup platform Perch is putting a chunk of that money in play. It’s swallowing smaller rollup platform Web Deals Direct for an undisclosed sum to accelerate its growth and scale. This specifically brings Perch 30 additional ecommerce brands that total $80 million in annual revenue. Given that FBA rollups are all about economies of scale – and a quickly-escalating race for market share – we should see more acquisitions like this.

– New York and Austin-based Elevate brands has raised $250 million to accelerate its roll-up activity. It already has 25 brands under its belt and will use the latest funding to continue its acquisition spree… as it often goes for FBA rollups. The deal size and structure (mix of equity and debt) says a lot about the capital intensive yet non-dilutive financing structure that’s beginning to appear common for FBA rollups.

– Forum Brands has raised $27 million in equity funding for its FBA roll-up platform. Rather than a vertical or volume-sales focus, the company has a data-driven approach to vetting potential acquirees. It’s algorithms evaluate more than 60 million data points to evaluate and score brands that could be best suited for its platform. Based on the quickly-crowding FBA-rollup space, this is hoped to create an algorithmic edge.

– Dubai-based Opontia has raised $20 million to bring the FBA roll-up model to the Middle East and Africa. The company stresses a hands-off approach, where it can take rote operational functions off the hands of acquired e-tailers, while letting them focus on what they do best. It focuses on consumer goods e-tailers with $10K+ in monthly revenue.

– After raising $50 million in debt & equity earlier this year, Mexico-City-based Valoreo has closed a $30 million Series A funding round. The company’s mission is to bring the FBA rollup model to Latin America, including brands and products that meet unique market needs of its consumer profiles. It specifically focuses on e-tailer acquisitions (which are undisclosed in number) in the beauty, fitness and home goods verticals.

– Luxembourg-based factory14 has raised $200M for its FBA roll-up play. But unlike some rollups that shoot for volume, it’s more selective. It opts for a fewer number of alread-established and high-volume sellers. For example, its latest acquisition is Pro Bike Tool, a popular seller of bike accessories. That was its fourth acquisition and more will sureley follow.

Walmart Revs Up its RaaS Engine, Part II: Delivery

Putting the E in eCommerce

In terms of timing, it’s clear that the accelerated FBA roll-up trend is covid-driven. Ecommerce inflections seen at the height of the pandemic have lifted all boats in the eCommerce realm. But as the world (eventually) returns to normal, the thought is that eCommerce won’t dip back down to pre-Covid levels.

That notion continues to drive ample eCommerce investment and innovation. And when we say eCommerce, we mean any application the “e” in eCommerce. That means online shopping but also any digitally-infused commerce, including local delivery or pickup… which have likewise inflected in the last 16 months.

Meanwhile, giants like Amazon aren’t just benefiting from elevated eCommerce levels, but as retail tech platforms. The ongoing retail as a service (RaaS) trend continues, including Amazon and Walmart’s continued moves to spin out internal tech and logistical tools to enable third-party retailers, SaaS-style.

The fate of these moves will hinge on the above question of eCommerce’s post-Covid levels. It won’t go back to pre-Covid levels, as noted, but it also won’t sustain at Covid-era levels. Where it settles will determine the outcome of many of the above efforts. Meanwhile, eCommerce leaders continue to place their chips.

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