Can’t hold on any longer! Another top Amazon seller faces bankruptcy

In the context of high inflation and cost crisis, consumer demand in the e-commerce market has declined significantly, and Amazon's brand aggregators have also been affected.

Recently, another top Amazon brand aggregator is facing huge financial difficulties and is on the verge of bankruptcy.

Olsam is facing financial crisis! Applying for bankruptcy administration

It is understood that Olsam, the largest Amazon brand aggregator in the UK, is currently facing a serious financial crisis and is applying for bankruptcy management.

Olsam is a technology-driven consumer products company that acquires and operates Amazon brands worldwide, founded in 2020. The company was founded by a former Amazon team that has extensive operational experience managing thousands of international FBA brands, including some of the largest sellers in the UK and EU.

Olsam has become a leader in the industry because its core competitiveness lies in brand building. The company is very good at customizing brands and will repackage the brands to enhance their market competitiveness. In addition, Olsam also attaches great importance to investment in digital operations, including supply chain and inventory monitoring, advertising, etc. Through these investments, the brand is promoted to a higher level.

At the beginning of the company, Olsam designed his own acquisition logic, including evaluating the quality of Amazon brands, store ratings, financial status, and the performance of other important indicators of Amazon. The company not only acquires brands, but also uses its own experience and funds to continue to invest in its own operating platform and enhance existing brands by tracking millions of real-time data points in the market.

Olsam completed six acquisitions within a year of its founding, with transaction sizes ranging from £1 million to £3 million, covering a number of categories including travel, kitchenware and sports.

In 2021, Olsam completed a $165 million Series A financing. As for the use of this fund, Olsam stated that it will be used to expand the acquisition of high-quality Amazon FBA stores (brands) and assist in expanding its platform and staffing.

In this year, Olsam completed the acquisition of the assets of Flywheel Commerce, a US e-commerce aggregator. This acquisition allowed Olsam to further expand its global business, especially in the North American market.

In April 2022, Olsam acquired its US competitor Marketfleet, taking over 11 brands owned by Marketfleet that focus on outdoor products. Through this acquisition, Olsam expanded the company's business in the United States and consolidated the US market.

During the same period, Olsam acquired Colapz, a British camping equipment brand. The brand has its own patented products and sells them on the Amazon platform. This acquisition is an important move for Olsam in the field of Amazon brand aggregation. By acquiring brands with intellectual property rights and market potential, the company further expands its influence in the global e-commerce market.

With the rapid expansion of its business, Olsam has also become a first-tier company among Amazon’s brand aggregators.

However, in the post-epidemic era, with the recovery of offline consumption, online shopping among European and American consumers has returned to normal levels. The sudden change in market demand has also caused Olsam's bubble to burst, causing it to fall into operational difficulties and face bankruptcy.

Sigh! Many well-known Amazon brand aggregators went bankrupt

In addition to Olsam, several other Amazon aggregators are also having a hard time.

In February 2024, Thrasio , Amazon's leading brand aggregator , announced that it had filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code .

Thrasio was founded in 2018. The company pioneered a new business model of "capital acquisition + brand operation" and is a leader in this field. The company has been deeply involved in the Amazon platform for a long time, committed to acquiring potential brands and operating and fully empowering the acquired brands.

Thrasio's CEO Greg Greeley once said that Thrasio is one of the largest third-party sellers on the entire Amazon platform, and that products from several of its brands have been included in Amazon's small category BS list. Logically, there is no problem with its profitability.

Thrasio eventually went bankrupt, and industry insiders believed that there were many problems within the company.

First, in order to expand rapidly, Thrasio acquired many brands at a high premium, which increased its financial burden. Second, in order to meet the rapidly growing demand, Thrasio stockpiled a large amount of inventory, which caused serious inventory backlogs and led to a tight capital chain. Finally, the global supply chain disruption in the past two years also severely impacted Thrasio's profitability.

In August 2023, Benitago, a well-known Amazon aggregator, filed for bankruptcy.

It is reported that Benitago Group was founded in 2016 and is headquartered in New York, USA. Its main business is to acquire small third-party sellers on the Amazon platform, and then operate them efficiently, continuously enrich product lines, and expand other operating channels.

Benitago co-founder and CEO Santiago Nestares Lampo said in a filing with the bankruptcy court that consumer preferences changed when quarantine ended in the late stages of the pandemic. Since then, the company has experienced a rapid and dramatic reversal of fortunes due to macroeconomic factors, with the e-commerce industry shrinking significantly over the past two years and continuing to decline.

Summarizing the reasons why these leading Amazon aggregators fell from the peak of the industry to the bottom, we can find that in addition to changes in the online market, it may also be related to the fact that some aggregators chose to borrow a large amount of funds through debt financing during the low interest rate period and acquired Amazon brands with high leverage. With the increase in interest rates and the slowdown in economic growth, these debts cannot be borne.

In the early stages of their development, many aggregators would hire operations teams from around the world to take charge of the Amazon accounts they acquired, but as competition on the Amazon platform intensified, problems with supply chain management and financial management arose. Moreover, these aggregators were very dependent on a single channel, and once business growth slowed and revenue declined, it became very difficult to repay debts.

It is worth noting that the mutual acquisition and merger between Amazon aggregators has also become a new trend. At the beginning of last year, two US aggregators, Suma and D1 Brands, merged, and the merged company is now called Ambr Group. In April last year, Razor Group acquired German aggregator Stryze. In May last year, SellerX acquired the US aggregator Elevate Brands. The acquired brand portfolio includes more than 80 Amazon-owned consumer brands in the fields of sports and outdoor, home kitchen, mobile accessories, pets and consumer products.

Affected by the market environment, many Amazon aggregators have fallen into growth bottlenecks and have even been sued ...

Last September, Amazon aggregator Acquco was sued by lenders in the New York Supreme Court for defaulting on loans. In 2022, aggregator SellerX was sued for failing to fulfill a contract with a brand and failing to promote a brand it acquired.

The industry is turbulent, and Amazon aggregators will become more cautious in their expansion and operations in the future. How to reverse the downward trend and turn danger into safety has also become a difficult problem they must face.

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