Who are the aggregators, and will they buy your business?

If you’re in the e-commerce space, it is nigh-on impossible that you will have failed to notice that a new breed of e-commerce company has been making headlines in recent years. These companies, known as e-commerce aggregators, are large corporations that are consolidating smaller e-commerce businesses. Their funding comes from a combination of equity and debt provided by private equity firms, family offices, and wealthy individuals.

The business model during the aggregators’ first coming (2018-2021) was essentially “cash-flow arbitrage.” In other words, they bought profitable e-commerce businesses at a low multiple regardless of brand quality and sold them later when it became more lucrative for them (or planned on going public). However, this changed drastically with an environment where strong brands are now needed to sell one’s own existing ecom business – a genuine brand identity needs to be present in order not only to receive purchase offers from buyers but also to continue operating successfully long-term!

In this blog post, we’ll take a closer look at the rise of e-commerce aggregators and what it means for your business.

What is an Ecommerce Aggregator?

An e-commerce aggregator is a large corporation that buys up smaller e-commerce businesses. Their goal is to consolidate these businesses under one umbrella in order to achieve economies of scale and increase efficiency. E-commerce aggregators typically have a lot of capital backing them, which they use to buy up small businesses. Once they own a portfolio of businesses, they can then sell them later at a higher multiple (or go public).

The first wave of e-commerce aggregators began appearing in 2018 and quickly gained momentum in 2019-2021. These companies were funded by private equity firms, family offices, and wealthy individuals who saw an opportunity to buy up profitable e-commerce businesses at a low multiple and sell them later at a higher multiple.

Then in 2022, it all changed. No longer could you sell a pretty shabby Amazon account selling a variety of private label nick-nacks for big bucks.

Aggregators and their investors went through a period of self-reflection and came to realise it wasn’t all about cash-flow arbitrage. This was big boy real business.

Now, in order to sell your e-commerce business to an aggregator, you now need to have a strong brand. A genuine brand that looks, feels and behaves like a “legit” CPG* brand. This is a dramatic change from just a few years ago when the focus was on cash flow arbitrage regardless of brand quality.

So what does this mean for your business?

If you’re thinking about selling your e-commerce business to an aggregator, you need to make sure that you have a strong brand that looks, feels and behaves like a big-boy ‘real’ brand. This means investing in branding and marketing so that your business looks professional and appealing to potential buyers.

Put simply – how do your favourite brands look, feel and behave? Do that.

Check out this episode of Ecom Made Easy where I shared why brand matters, especially in Q4.

Conclusion

The rise of e-commerce aggregators is changing the landscape of the industry. If you’re thinking about selling your business to an aggregator, you need to make sure that you have a strong brand that can compete with other CPG brands. This means investing in branding and marketing so that your business looks professional and appealing to potential buyers. By doing this, you’ll be able to position your business as a valuable asset that is worth more than just its cash flow.

*CPG – Consumer packaged goods (CPGs) is an industry term for merchandise that customers use up and replace on a frequent basis.  (Source: https://www.hcltech.com/technology-qa/what-are-consumer-packaged-goods)

Ready to sell your business for the best possible price? Start by clicking the link below! No obligation, no hard sell. Just solid, professional advice.