Crazy! Capital spent over 600 million yuan to acquire an Amazon seller brand

“Why are there so many sponsors recently?”

"All the people around me who are doing well have been contacted by a German capital."

"I'm such a low-key loser seller, but I'm the one who came to me."

…

Even with Amazon's massive account bans, the pace of capital acquisition of Amazon stores (brands) has not stopped. Even now, some domestic companies are quickly gathering capital and rushing into this track.

On one hand, Amazon is banning accounts on a large scale, and on the other hand, capital is aggressively acquiring stores (brands). Will you choose to cash out and leave, or fight to the end?

Capital spent more than $100 million to acquire Amazon's best-selling WDD

Some sellers say that whether to sell a store (brand) depends mainly on whether the money is paid. If capital is offered to buy the store at a price that is more than 1 times the annual revenue, would you be tempted?

It is reported that the American capital side Perch recently completed a large-scale acquisition with the acquisition amount ranging from US$100 million to US$200 million (approximately RMB 650 million to RMB 1.3 billion).

The acquired party is Web Deals Direct (hereinafter referred to as "WDD"), a well-known Amazon seller , which owns 30 brands, annual revenue of US$80 million, and its own warehouses.

WDD's product categories include home goods, sporting goods, arts and crafts, pet supplies and office supplies. Perch's vice president of acquisitions, Nate Jackson, said Perch was interested in WDD because it is one of Amazon's more successful sellers.

In a marketplace where visibility depends on buyer engagement with your product, WDD has garnered around 110,000 reviews and 2.3 million users.

At the same time, many WDD products have also obtained the Amazon's Choice logo, and buyers generally have high evaluations of its products. In a reusable ice pack product, a buyer commented: "I bought it and put it in my son's lunch bag. It can keep everything cold when he returns home in 6 hours, so I highly recommend it."

Perch currently counts about 70 brands, covering the same categories as WDD. For WDD, joining Perch will enable it to target more customers and bring better analysis using insights and sales from Perch's other brands.

“We grew our business from zero to $80 million in sales in just five years, and with Perch we see the growth possibilities over the next five years to be equally exciting,” WDD CEO Adam Feinberg said in a statement. “I am confident their long-term vision will lead our business into the next phase of growth. ”

Capital is competing for acquisitions, and the value of Amazon stores has nearly doubled in one year

In addition to Perch mentioned above , Elevate Brands, Thrasio, Heyday, SellerX, Branded, Razor Group and other investors are seizing the opportunity to acquire stores (brands) on Amazon.

These investors usually look for brands that are launched by one or two people and have annual sales of more than $1 million. But according to some investors, it is becoming increasingly difficult to find suitable sellers.

Although there are about 2 million independent sellers selling on Amazon , few meet the criteria, and many would rather start their own business than sell. And those who do want to sell are asking increasingly expensive prices.

Mark Daoust, head of brokerage firm Quiet Light, said Amazon brands that sold for $3 million last year are now selling for as much as $5 million. If there is a bidding war, the price can be even higher. A typical deal handled by his firm attracts about five capital bids.

Therefore, in order to attract talent, various capitals have used a variety of means.

Recently, at the Prosper Show, the largest Amazon seller conference in the United States , the staff of the capital side Acquco distributed T-shirts and flyers that read: "Recommend a seller and get a Tesla for free."

To date, Acquco has raised more than $165 million in equity and debt to acquire Amazon stores and plans to make $200 million in profit from the acquisition.

The competitive bidding of capital parties indicates that the market is heating up. In order to achieve operational synergy and better economies of scale, their pace of acquisition will become faster and faster, and the competition among capital parties will become more intense in the future.

Domestic capital joins the battle, and this track is becoming more and more lively

As we all know, Chinese sellers are a major force on Amazon. According to data from the beginning of 2021, about 46% of sellers in Amazon's global market are headquartered in China. In addition, 63% of Amazon's top sellers are also from China, one-third of which are in Shenzhen.

Therefore, capital brought the successful acquisition model in the United States, Europe, and Southeast Asia to China, and listed China as a key expansion market.

For example, Thrasio , the world's largest investor in Amazon's third-party brands, recently announced that it has established a dedicated team in China and invested $500 million to develop the Chinese market.

Alan Lim, president of Thrasio China, said: "If you want to build a truly groundbreaking global consumer products company, China must be an important part of the map. Thrasio has already established a Chinese branch in Shenzhen and plans to set up a Shanghai team this year."

While foreign capital has set its sights on Chinese sellers, some domestic capital that has smelled business opportunities has also acted quickly, gathering funds to join the battle.

In 2020, Nebula, founded in Shenzhen, launched a third-party brand acquisition business. It is the first Chinese company to adopt the "aggregation + operation" model for brand acquisition on Amazon.

Recently, the editor found that some domestic funds have also begun to test the waters of this new track. "We started to pay attention to it this year and have been looking at the targets recently. Generally speaking, we still want to find a good team first." said a relevant person in charge of a fund.

In addition to capital, some acquisition brokerage companies (i.e. acquisition intermediaries) have also emerged in China. For example, after selling his two brands for US$5 million in 2020, Shenzhen seller Neo Zheng established a company and began to act as a middleman between potential buyers and sellers on Amazon.

Chinese brands have been banned one after another, and the review of investors has become stricter

“There was another wave of blockades yesterday, and two big sellers were affected again.” said an Amazon seller.

At the same time, some sellers said directly that since around May and June, various big sellers have been blocked one after another, and many competitors have occupied the market and used ultra-low price discounts, causing the top sellers to also cut prices for promotions. The CPC has increased threefold, and the financial statements in the past few months have been so ugly that they are questioning their life.

In recent months, similar news of account blocking has emerged one after another, sellers' profits have been squeezed, pressure has increased sharply, and at the same time, their sense of insecurity has increased, and they are worried that their accounts will be blocked one day.

Now, with Amazon banning accounts on a large scale, capital has become more stringent in its review of Amazon.

"It is certain that the audit has become more cautious and strict. After all, a clean data asset is very important." A domestic capital official told the editor.

The person in charge of the above-mentioned brokerage company also said that everyone knows that domestic sellers often use black technology to operate, so investors have always been strict in reviewing Chinese projects. Now seeing the news of account closures, they will be more cautious. "However, for good projects, most investors are still willing to spend money."

Under the iron-blooded ban of Amazon, do you choose to cash out and leave or fight to the end? The editor found that sellers have different choices when facing this problem:

Seller A: "I'm always worried, so I'll just sell it, where's the capital?" |

Seller B: "It's better to be careful. The company that approached me before has cancelled its official website and public account."

Seller C: "Since it's profitable, wouldn't it be nice to do it yourself?"

In conclusion: According to reports, Perch has a 230,000 square foot warehouse in California and is looking to acquire more warehouse space in the eastern United States . These moves indicate that capital may be considering taking on more of the shipping process itself to increase profit margins.

After completing the acquisition, the investors, who have the financial advantage, will certainly integrate and operate the brands in their hands. With the implementation of their series of operational actions, the competitive landscape of the category will be broken, the acquired brands will further occupy the category market share, and the survival space of sellers in the same category will be squeezed.

Therefore, sellers now face not only the issue of whether or not to sell their brands amid widespread bans, but also have to consider how to develop in the future after capital enters the market.

Acquire Amazon Stores