Amazon's top seller can't hold up! It may go bankrupt and reorganize

In an environment of high inflation and cost crisis, consumer demand in the e-commerce market has shrunk significantly, and Amazon's sales have also been affected.

Recently, another top Amazon brand aggregator is facing huge financial difficulties and may be restructuring and going bankrupt .

Thrasio faces huge financial difficulties! Bankruptcy restructuring may be required

It is understood that in order to solve financial problems, Amazon's top brand aggregator Thrasio is actively exploring restructuring plans. In addition, the company has begun discussing various solutions with consultants and lawyers, including the possibility of filing for bankruptcy.

It is regrettable that Thrasio, as Amazon's leading brand aggregator, has come to its current situation.

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.

At present, Thrasio has acquired more than 150 projects, more than 200 brands, and more than 22,000 best-selling products. At the same time, Thrasio's products are sold well in more than 150 countries around the world, and the company has developed into one of the top 5 sellers on the Amazon platform.

In 2020, Thrasio turned its attention to other regional markets outside the United States, opening Thrasio GK in Japan and two new offices in the United Kingdom and Germany.

In May 2021, Thrasio announced that it had established a dedicated team in China and invested US$500 million to develop the Chinese market.

From continuous financing to large-scale layoffs, Thrasio has suffered a huge impact!

Thrasio's ability to continuously expand into new markets is inseparable from the strong capital support behind it.

In July 2020, Thrasio completed its Series C financing round led by Advent International. The company’s valuation has reached US$1 billion within just two years of its establishment.

In April 2021, Thrasio received an investment of US$100 million and completed its Series C financing.

In September 2021, Thrasio received a $650 million debt round .

In October 2021, Thrasio received another US$1 billion in Series D financing.

After several years of rapid development, Thrasio has accumulated a lot of funds, and its valuation in 2021 has reached 5 billion to 10 billion US dollars. So, Thrasio started a crazy acquisition.

In April 2021, Thrasio announced that the company was considering a public listing, hoping to raise more funds for business expansion through an IPO or SPAC.

By the summer of 2021, the company intended to go public through SPAC.

However, in early October 2021, it was revealed that Thrasio's SPAC listing plan would be postponed, with reports saying that there were problems with the company's financial audit.

It is understood that there were investors in the domestic cross-border circle who wanted to invest at that time, but they felt that Thrasio's valuation was too high and chose to give up.

In April 2022, an email about the plummeting valuation of Thrasio began to circulate in the circle, mentioning that Thrasio's valuation had dropped to US$2.7 billion and was looking for investment.

Thrasio declined to comment on whether the email information was true .

At the beginning of the outbreak, many consumers turned to online shopping, which led to explosive growth for Amazon aggregators and attracted a lot of capital.

However , starting from 2022, as more and more consumers returned to offline, the sales of e-commerce platforms were also directly affected, which caused the revenue and net profit of many Amazon aggregators to plummet.

This direct shift in consumer trends has also made investors cautious about investing in Amazon aggregators, and Thrasio has also been directly affected by the market shock.

In order to cope with the market difficulties, Thrasio experienced large-scale layoffs in 2022, laying off about 20% of the company's employees and even replacing the company's CEO. Former Amazon executive Greg Greeley succeeded the company's founder Carlos Cashman as the new CEO.

The company hinted in a letter to employees that it had grown too fast and too large, so it decided to reduce the size of the team. At the same time, the company needs to take time to digest the acquired business while evaluating its future operating strategy, and the company is currently looking for the best growth areas to re-expand the team.

Bankruptcy, being sued ...Are Amazon's brand acquisitions no longer attractive?

What has attracted much attention is that Benitago Group, one of Thrasio’s main competitors, officially filed for bankruptcy in August this year.

Benitago Group has formally sought protection from creditors in U.S. Bankruptcy Court in Manhattan, listing assets and liabilities ranging from $50 million to $100 million, according to people familiar with the matter.

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.

Court documents show that Benitago plans to restructure its debt and may sell part of its bankrupt business, including 15 branded stores and more than 300 products in categories including health supplements, office supplies and beauty products.

It is worth noting that this giant had just raised a huge amount of funds of over US$300 million less than two years ago, but it was still difficult to save the company's decline.

In November 2021, Benitago said it had received $325 million in funding led by CoVenture, a technology venture capital and debt financing company. At that time, Benitago already had dozens of brands covering hundreds of product categories.

However, since mid-2022, as the popularity of e-commerce has declined, aggregators' acquisition business has also slowed down.

According to a research report released this year by business analysis company CB Insights, financing for Amazon brand aggregators fell by 88% in 2022. This shows that investors have become more cautious about investing in Amazon aggregators.

In addition to Benitago, several other Amazon aggregators are also having a hard time and have even been sued.

In September this year , Acquco was sued by its lender in the New York Supreme Court for defaulting on its loans.

In 2022, SellerX was sued for failing to fulfill its contract with the brand and for not promoting a brand it had acquired.

Due to changes in the market environment, many aggregators were unable to deliver on their promised performance rewards, and their performance plummeted.

It is worth noting that acquisitions and mergers between Amazon aggregators have also become a new trend.

Earlier this year, two US aggregators, Suma and D1 Brands, merged and the combined entity is now called Ambr Group.

In April this year , the Razor Group acquired German aggregator Stryze.

In May this 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.

In general, affected by the market environment, many Amazon aggregators have fallen into a growth bottleneck, and even went bankrupt, reorganized, and were sued ... How to reverse the downward trend and turn danger into safety in the future has become a difficult problem that Amazon aggregators must face.

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