🐟 FBA Businesses - A Shark and its Remoras
The lockdown took ecommerce to 40% of total addressable retail (Benedict Evans). Amazon is the obvious winner, but also many small businesses earned millions. Investors saw the opportunity and committed nearly $1B in startups purchasing Amazon sellers and brands (Marketplace Pulse).
So the FBA frenzy began.
Thrasio, Heroes, Heyday and SellerX are some of the startups specialized in the acquisition of Fulfillment by Amazon businesses (tech.eu). Most of them came out of stealth after summer, one has already reached unicorn status after targeting Top Amazon Sellers for 2 years.
The targeted businesses are often private-label sellers that use Amazon as their primary distribution sources. Better if top-reviewed. Perfect if they are selling products that are evergreen and not hyped by a specific trend (sifted). Resellers and other marketplaces are out of scope.
Are they run by a team of investors? Or rather by a group of e-commerce specialists? It does not matter. They have all adopted the motto “We buy Amazon businesses, we close quickly, we have a smooth process”. It is ideal for amateur small entrepreneurs lacking resources and expertise, who now have the opportunity to exit their business (Forbes).
Once the Fulfilled by Amazon brand is part of the portfolio, the magic happens. At Thrasio, for example, a core team of a half-dozen employees works through a 503-point checklist of best practices in an average of 34 days (Forbes). The result? Operations are streamlined, branding and search are optimized, revenues are boosted.
When Facebook provided game developers with a platform, Zynga emerged. After the launch of App Store and Google Play, dozens of new multi-billion businesses rose. The same network flywheel has now started spinning faster with Amazon. Some questions remain.
Will the multiple of FBA businesses balloon?
Can the businesses consolidate while piggybacking on the behemoth?
Or will they be sentenced to death by AmazonBasics?