👋 I’m Zoe Chew, a product builder. I’ve built multiple apps using the rapid MVP method: sneaker app, personal FAQ, meal kit app, virtual event app, SaaS tracker, food delivery, content app +more
At Venturescale, I’m on a quest to understand the future of the Internet. I analyze profitable industries & biggest players, and how you can compete and monetize—at the intersection of Internet platforms & consumer tech.
Today’s post is about e-commerce acquisition platforms. Read here if you’re interested in the Web3 creators economy, future of social networks, FinTech & wellness tech, or B2C online marketplaces.
The Rise of e-commerce Roll-ups
In the past, roll-ups were mainly proceeded by private equity firms, large conglomerates, and institutional buyers, whereby companies acquire businesses in the same market and merging them under a single entity to scale.
Today, there are new companies that consolidate independent private label brands with decent revenue. They are the aggregators of e-commerce brands. Unlike marketplaces that connect buyers and sellers to acquire or sell off their brands (e.g., Flippa and Exchange Marketplace by Shopify), roll-up platforms are operational and resourceful. They:
- Have a thesis around e-commerce product categories they want to acquire
- Search across marketplaces like Amazon and Shopify
- Find winners and merge these companies
- Operate like a private equity firm, may fund and invest in buyout businesses
- Platform-agnostic or vertical-focused
- Grow them collectively using built-in technology, infrastructure, data analytics, operational expertise, capital, and economies of scale
- (📥 Full version) 3 more specific strategies on how aggregators operate and scale
Key Players Around the World
- Shopify aggregator: OpenStore
- Home living & consumer electronics roll-up: Berlin Brands Group
- Asia-Pacific focused consolidator: Una Brands (raised US$40 million) targets acquisition on Tokopedia, Lazada, Shopee, and Rakuten using a platform-agnostic approach by focusing on Shopify, Magento, or WooCommerce.
- (📥 Full version) 1 more company that focuses on the Amazon platform
- (📥 Full version) 5 more companies from emerging market
What Problems Do They Solve?
- (📥 Full version) 3 more valid problems they are solving that actually make these platforms super profitable. You’ll also learn:
- How do roll-up platforms create values for their clients?
- What are the user pain points in getting a business acquired?
- How do they tackle complexities in selling off businesses?
Business Models
Roll-up companies are running the business using a private-equity model. They act like collaborators, operators, and venture capitalists (VC) at the same time. For example:
- Thrasio acquires third-party sellers on Amazon, focusing on everyday consumer brands, scale the business, and offer exit options for the sellers. In 2020, Thrasio recorded a profit of $100 million on $500 million in revenues.
- Heyday provides tech stack, capital, advice, and insights to help consumer product brands accelerate the next level of growth.
- (📥 Full version) 2 more specific ways to monetize as e-commerce aggregators. You’ll also learn:
- different ways to partner with potential acquisition targets
- different ways to expand your roll-up portfolio
Why Now?
As e-commerce entrepreneurship is exploding, there will be more successful independent merchants who will need to find a way to exit their brands. Here is the market potential snapshot:
- Growing numbers of independent sellers. In 2020, more than 50% of Amazon’s gross merchandise volume (GMV) was coming from third-party, independent sellers.
- (📥 Full version) 3 more market evidence in detail to help you answer the “why now” questions for your investors or partners. You’ll also learn:
- insight from Amazon financial statement
- impact of D2C brands
- insight from the emerging e-commerce markets and why there are untapped opportunities to monetize
Business Opportunities
- one specific product idea in SaaS
- one vertical-focused roll-up platform idea
- a solution to help aggregators find the next acquisition winner
- specific business idea to participate in a roll-up partnership
Want more? Consider the members-only version:
- 🔺 3 more specific strategies on how aggregators operate and scale
- 📝 6 more new market players
- 🧐 3 more valid problems they are solving that actually make these platforms super- profitable
- 🖍 3 more market evidence in detail to help you answer the “why now” questions (most important slide in a pitch deck!) for your investors
- 🚀 4 specific product ideas and business opportunities that are solving problems
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Also Published At: https://whizzoe.substack.com/p/e-commerce-roll-ups-and-the-rise