The Multitudinous Expanse of Amazon Brands
During the pandemic, budding entrepreneurs thrived on Amazon. Consumers flooded online marketplaces looking for a safe way to shop for necessary goods and morale boosters alike, making e-commerce surge. For sellers, the ability to rent Amazon’s high-traffic marketplace and robust fulfillment infrastructure gave small business owners with limited capital the chance to follow consumers to where they were now shopping. Amazon, meanwhile, made it relatively easy for small newcomers to get their feet wet in the wild waves of e-commerce.
But with this expanded market came growing pains. Scaling to meet demand requires a daunting investment for the small business owner. Investing in production facilities, logistics infrastructure, and raw materials at scale, all while expanding into international marketplaces requires the kind of capital an individual entrepreneur or a mom-and-pop operation doesn’t usually have access to.
Even if these small businesses had enough asset liquidity to pull it off, each aspect in the scaling process requires vast expertise beyond what most small business owners possess. Without access to experts in each area, they’re shooting for the moon in a rocket ship held together with duct tape.
But that rocket ship still took time, effort, and resources to build. What, then, are the options for small companies who have reached their production limit and still have plenty of demand for more?
Many young companies find the solution lies in the hands of brand aggregators.
What are Brand Aggregators?
Brand aggregators are companies that specialize in building a portfolio of brands within their specific expertise. They can infuse:
- expertise at scale
- and combine similar efforts across multiple brands for added efficiency
When the pandemic hit, suddenly these qualities were required to help small businesses meet the growing demands of the market and do more than they could on their own. While COVID may have escalated the aggregator revolution, this trend shows no signs of slowing down any time soon.
Will Aggregators Buy My Brand?
If you’re looking to potentially sell your Amazon FBA business, the first thing you must ask yourself is, “what do I have to offer if I sell my Amazon business?” For aggregators to have the best chance at success, they must build a curated and specialized portfolio. Successful aggregators collect brands with unrealized potential the brand’s owners won’t be able to realize on their own. They make this investment knowing a certain percentage of these brands could skyrocket above the rest. In the end, though, it’s the consumers that decide which brands will soar.
Questions Aggregators Ask Before They Buy a Brand
determine if your brand might be of interest to aggregators, simply think like an aggregator. Pierre Poignant and Michael Ronen of Branded make acquisition decisions every day and that’s why we sat down to talk with them about the factors that drive those choices. Here are the big questions aggregators ask of your brand when deciding whether to invest:
Do they have a product that consumers love and enjoy?
A brand without significant consumer interest is not a sound investment. The ideal products have untapped potential for growth that brand owners either don’t have the ability to tap or haven’t identified. Like all endeavors, the creator is often too close to the process and the product to realize there’s more meat on the bone.
Is the brand part of the categories we specialize in?
Each Amazon category has its own unique challenges. A portfolio of automotive supplies won’t do much to tackle the needs of supplement regulations, unique supply chain needs, or customers. Not all aggregators have a category focus, but aggregators look for businesses in which they have experience affecting the most positive change.
Will our existing processes and experts have an immediate impact?
On their own, each brand must reinvent the wheel, building their own production process, supply chain, hiring designers and lawyers, and implementing marketing strategies. Aggregators look for brands that could benefit from the systems they already have in place. This minimizes the need for expansion of their existing ecosystem while capitalizing on all it already has to offer.
Can we impact more than just cost savings?
A company merely in need of a cash infusion needs a loan, not an aggregator. Aggregation is for brands with potential whose current efforts at expansion are leading them down the rabbit hole of jack-of-all-trades-master-of-none.
Aggregators, on the other hand, can afford to employ specialists in product development, production, creative, marketing, optimization, logistics, compliance, legal, and more. They apply this expertise across several brands, honing their vast network of skills even further. Small businesses simply cannot achieve this level of specialization without prohibitive cost and time investment. Aggregators want brands that will thrive under their umbrella of expertise beyond merely saving on costs.
Would we be a good manager of this brand at scale?
Even without the continued momentum of the pandemic surge, once a new normal is established, e-commerce will continue to grow. While e-commerce lost some market share in 2021, this isn’t true for every category. Consumables such as grocery have managed to maintain growth numbers. The e-commerce boom is here to stay and small business owners need to be able to match it.
As we’ve already outlined, it’s not easy to operate all the elements required of an Amazon business once a brand outgrows its initial systems. Scale amplifies everything – more opportunities for success also means more potential for failure. Aggregators aren’t just looking for brands that are a perfect fit right now, they want to ensure they are the right solution for your brand at their maximum potential.
Is this brand on the right platform?
Sell where your customers are shopping. Amazon’s 41% market share is immensely impressive, but if your brand’s audience is part of the 59% shopping elsewhere, Amazon is not the right platform for you. Some aggregators have the ability to help a brand diversify across other platforms, such as Walmart, Target+, eBay, Etsy, Kroger, direct-to-consumer (DTC) sites, and beyond.
Introducing your product into a diverse array of marketplaces is not always feasible for smaller organizations. This diversification power of aggregators makes it possible for brands to be seen in markets they would have had no other way to reach.
Should I Sell My Amazon Business?
There is a lot of pride in hatching a thriving enterprise from a seed of thought and growing a business from the ground up. That said, sometimes you must come to terms with the fact that your budding creation has grown beyond your expertise and needs to be nurtured and cultivated by more experienced hands to reach its fullest potential.
The expertise and capital of the right aggregator can potentially scale your company to greater heights in a shorter amount of time than if you were to attempt to build the same empire on your own. For many entrepreneurs, scale management has never been an aspiration. Instead, selling to an aggregator provides the seller the opportunity to gain profit from their creation and allows the brand flourish among new audiences, platforms, and countries.
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