Amazon aggregators say they will “pay anything” for third-party businesses that sell on the ecommerce marketplace.
The number of roll up companies that acquire some of Amazon’s biggest third-party sellers is growing rapidly, with sellers expected to be acquired at an “unprecedented rate” next year according to Business Insider.
A survey conducted by Fortunet, a firm that helps facilitate deals between potential acquirers and the sellers, found that acquisitions are expected to soar next year, with over 1,000 merchants estimated to be snapped up by roll up companies.
The market is so frenzied it’s leading buyers to pay whatever the merchants are asking for.
The survey, conducted in June, asked 42 roll up companies a variety of questions, including preferred seller profiles, popular seller categories, and ideal profit margins of targets.
It found that most of the aggregators have finished a period of raising capital in preparation for the frenzy next year.
“Most aggregators didn’t exist before 2020, and further, they only raised capital over the past 12 months. That capital is only getting deployed now. There will be more acquisitions next year compared to 2021,” Marketplace Pulise chief executive Juozas Kaziukėnas said.
“Most aggregators didn’t exist before 2020, and further, they only raised capital over the past 12 months. That capital is only getting deployed now.
“There will be more acquisitions next year compared to 2021.”
The study found that the majority of the aggregators intend to purchase more than 15 businesses in the next 12 months.
However it is still early, most deals so far have come from about 18 per cent of the biggest aggregators.
There are a large number of roll up companies that have not made any acquisitions yet or have made very few.
Most aggregator companies prefer product categories that are easy to operate and don’t face huge regulatory requirements, such as home and garden, pet supplies, baby products, outdoors gear, and personal care.
This means they steer clear of merchants that sell in categories such as toys, apparel, electronics, supplements, food, and fashion.