From record-breaking fundraising to hot acquisitions, 2021 was a milestone year for the e-commerce aggregator market. And with over $13.6 billion already invested into marketplace aggregators, growth in this area shows no sign of slowing.🔥
Yet the way in which aggregators operate hasn’t gone unnoticed either.
While some e-commerce owners aspire to sell their business to an aggregator, others aren’t thrilled with their influence in the market. But one thing’s for sure, whether you love them or hate them, aggregators will have a major impact on how you scale your e-commerce business.
In this article, we’ll expose the core trends aggregators are introducing into the ecommerce market to help you understand their impact and plan your next steps. We’ll also share actionable tactics to help you use these shifts to your advantage as a fast-growing e-commerce business.
The Scoop on Aggregators
- What is an aggregator? And why is it such a huge deal?
- How to stand out in an aggregator-led market
- Position your store to win
Understand your store’s worth before the aggregators come knocking. Track your KPIs with Sellers Signals.
What is an e-commerce aggregator? And why are they such a huge deal?
An aggregator — A.K.A. a ‘roll-up company’ — is exactly what it sounds like. It’s a holding or investment company that gathers a group of developing brands under one umbrella.
By buying up brands with huge growth potential, aggregators can use their experience, accumulated data, road-tested strategies, and large-scale operations to grow the acquired stores faster.
And they’re making a pretty massive impact on the e-commerce industry as a whole.
For example, Amazon aggregators Thrasio and Elevated Brands scooped up a jaw-dropping $1 billion and $55 million in capital respectively during their last fundraisers. Even a relative newcomer in the aggregator space, Ecommerce Brands, secured $40 million highlighting the lighting-speed at which this industry is growing.
With so much capital under their belts, aggregators are tough competition for high-growth sellers. As your brand continues to come up against these deep-pocketed competitors, you’ll need to get creative with how you carve out and cement your place in the market.
You may also find yourself needing to increase your investment in core areas of your business, including:
- Product development
- Supply chain operations
Knowledge is power. Gain a clear understanding of your store’s performance with Sellers Signals.
3 Trends Sweeping the E-commerce Aggregator Market
The aggregator niche is changing fast and will shape how you approach online selling in the coming months and years. It’s critical to get a head start. Let’s dig into some developing trends that could impact your business.
1. Aggregators are going multichannel.
No longer tied to competing online, aggregators aren’t only joining forces, they’re also eyeing up physical stores as a way to diversify their income streams and enter more niches.
Take venture capitalist Keith Rabois for example. He partnered with Atomic co-founder Jack Abraham to create a roll-up online store OpenStore to purchase e-commerce businesses at scale.
2. Amazon brands hold the top spot.
Amazon brands are hogging the limelight when it comes to getting attention from aggregators. And this trend looks set to continue with industry experts predicting high-ROI Amazon brands as being first in line for acquisitions.
For example, CEO of The Fortia Group Emmett Kilduff said, “potentially there could be 1,000 Amazon FBA brands sold next year.”
It’s easy to see why Amazon brands are positioned for great results. In just a couple of years, experts like Marketplace Pulse have estimated that the Amazon seller aggregators niche has grown to 89 companies, with 30 of them securing at least $100 million in their funding rounds.
3. Aggregators are going global.
From Singapore to the US, aggregators have popped up all around the world.
This trend will make it easier for brands to partner with, or sell to, companies that understand their local market and customs. If your brand engages in cross-border e-commerce and you hope to sell someday, it pays to shop around in the international aggregator market to find the best fit. 🌍
How to Stand Out in an Aggregator-led Market
Whether you’re eager to sell your e-commerce business or are just hoping to keep pace in an aggregator-led market, it’s important to structure your brand in a way that helps it stand out in a sea of other stores.
But the question is “how?”
Go ahead and show off a little.
In life, there are few occasions when it’s ok to brag — promoting your e-commerce wins is one of them.
Think of aggregators as exclusive clubs. Spots are only reserved for the most successful, high-growth companies. Use your brand’s stellar performance to gain their attention.
Here are some ways you can amplify your brand’s wins:
- Do interviews with popular podcasts, blogs, and YouTube channels
- Create and promote press releases
- Hire a public relations company
Get your supply chain ducks in a row. 📦
Aggregators love brands that are easy to plug and play.
The more organized and efficient your brand is, the more your store will stand out and the higher the price it’ll fetch. These days, much of that potential attraction comes down to your ability to stay resilient among endless supply chain challenges.
Invest time in optimizing each element in your supply chain regularly. Set benchmarks and key performance indicators (KPIs) to ensure your store is constantly improving and ahead of its competitors.
Some areas to focus on include:
- Supplier relationships
- Supply chain management technology
- Inventory management processes
- 3PL and warehousing
- Shipping and carrier contracts
Study the aggregators you admire.
To get in an aggregator’s good books, you’ll need to know what they value and require from potential store investments.
Find out what appeals to the aggregators you admire, then optimize your store and pitch to match. The characteristics aggregators look for can vary greatly, but some of the most common indicators include:
- Product/market fit: Established products that match your target aggregator’s portfolio or growth goals.
- High growth: Your business should be scaling fast with high revenue and have an upward growth prediction for the next few years.
- Scalability: Your business should have room to expand, whether it’s through entering new niches, markets, or products.
- Customer happiness: Your customer satisfaction should be high with customer referrals driving sales in your business.
Level up your store’s customer lifetime value (LTV).
The amount of money customers spend in your store over time will directly impact its revenue and profitability.
It’s much easier and cheaper (5 times cheaper to be exact) to convert sales from existing customers than it is to find new ones. Work on improving your customer lifetime value (LTV) to catch the eye of top aggregators.
To give you a head start, here are some ways you can improve your LTV:
- Build upsells and cross-sells into your sales funnels (especially at checkout).
- Wow shoppers with a personalized customer experience.
- Update your top sellers to keep them relevant.
- Launch new products to keep your portfolio fresh.
- Invest in your marketing, focusing on building strong relationships with existing customers as well as new leads.
Improve your cash flow and business valuation.
Cash is the lifeblood of every e-commerce business and it’s essential to prove your brand can hold its own with sales and cash flow.
If you’re actively working on boosting your revenue and cash flow with an eye to one day sell your store, you may want to seek out flexible e-commerce funding like a working capital line of credit to stabilize your finances.
Just be sure to also monitor your store’s valuation over time to ensure your actions are producing the desired growth and enable you to course correct along the way. Trust us, the right aggregators will take note.
The good news is, you don’t have to spend hours calculating your business valuation with manual formulas and Excel sheets. Instead, use a business valuation tool like Sellers Signals to do the heavy lifting for you.
Position your Store to Win
Aggregators have changed the e-commerce landscape for good. No matter what your business goals are, learning how aggregators work is a must. Keep up with changes in the aggregator market and mimic successful strategies to take your own store to new heights.
For lasting results, think outside of the box to find ways to connect with shoppers, capture their attention, and boost sales. Soon you’ll have ecommerce wins you can brag about to help sell your store, secure partnerships, and uplevel your growth.