The news has spread and every seller wants to know…
Is the e-commerce aggregator market finally cooling?
And if so, what’s going to happen to booming stores when they’re ready to sell? Will there be any aggregators left to buy? How will sellers know which aggregators to lock arms with?
We hate to burst your bubble (no pun intended) — but yes, the e-commerce market is cooling. And the aggregator market is cooling right along with it.
But for merchants with solid strategies and operations, it may not be as bad as it sounds.
If you’re ready to learn more about what a slower market might mean for your e-commerce business, stick around. In today’s article, we’re separating the facts from the fiction to help growing sellers like you understand how these shifts might affect your game plan.
We’ll also let you know what to look for when thinking about selling your store to an aggregator in the future, and which key factors aggregators will consider before buying your store.
Ready to discover more? Here’s what we’ll cover.
The Scoop on the E-commerce Aggregator Market
- Why is the e-commerce aggregator market cooling?
- What does the current aggregator market mean for sellers looking to sell their stores?
- How to position your business so it’s attractive to aggregators
- 5 practical signs to look out for when choosing an aggregator
- How to approach the new e-commerce aggregator market
Not sure what else to expect from the aggregator market? Check out our update on the 3 Ways Aggregators Are Changing Ecommerce for Good.
Why is the e-commerce aggregator market cooling?
Less than a year ago, aggregators were boasting about their promises to find and buy the best Amazon brands. But lately, things are changing.
The e-commerce aggregator market is feeling the pain from supply chain disruptions, increased seller valuations, and general growth struggles.
And now, with interest rates rising and e-commerce growth slowing, some aggregators are having difficulty getting the capital they need to buy businesses.
In other words, the Amazon ecosystem has become more challenging.
“Most parts of the Amazon ecosystem have become more difficult. Post-2020, ecommerce businesses saw huge gains and record demand — but supply chain crunches led to out-of-stocks, while platforms like Amazon raised their fees.” –Jason Lee, co-founder of FBAFlipper, which connects Chinese Amazon sellers with acquisition companies
All of this and more has inevitably led to less aggressive bids for sellers.
Your plan for exiting your business is just as important as your plan for growing it. Don’t miss our free e-book all about Exit Strategies When Selling to an Aggregator.
What does the current aggregator market mean for sellers looking to sell their stores?
With the ongoing readjustment and some aggregators pausing acquisitions, what does the current aggregator market mean for sellers looking to sell their stores?
Well, you might be surprised, but these market changes are actually a good thing.
Yes, you read that right. In fact, we invited some of e-commerce’s top aggregators to a discussion panel to hash this out.
Here’s what our experts had to say about the state of e-commerce aggregators:
“The change isn’t because of the market. The change is because of who we have become. So, how do we not lose the magic sauce from one skew to the next? How do we do it at scale?” —Walter B. Gonzalez, President, Founder, and CEO of GOJA, says the changes we’re currently seeing aren’t due to the market — but rather because of size:
In other words, the question isn’t how to work with market changes, but rather how can sellers grow sustainably to succeed as a store and become attractive to aggregators.
Here’s some more good news for you. “The opportunity will still be there — it’s just going to be a little less dramatic.” —Erik Davidek, Business Development Manager from our very own SellersFunding,
Erik emphasizes says that regardless of what’s happening in the market, the opportunity to create a store that sells will still be there. The only difference? You may not read countless headlines about it.
“It’s putting the emphasis back where it needed to be. If you’re a really good operator, you’re going to be okay. If you’re not a good operator, it’s a tough environment.” –Walter B. Gonzalez, President, Founder, and CEO of GOJA,
Walter elaborates by explaining that market changes are putting the emphasis back where it needs to be. The most positive benefit we’re seeing as a result of market changes is a shift in priorities.
“The current environment is forcing sellers to become better operators in general. If I’m going to become a valuable asset, what am I really doing to drive value?” –Chris Shipferling, Managing Partner at Global Wired Advisors.
Chris stresses that while countless sellers saw success during the peak of the pandemic, the dips in the market have proven which ones were there for the hype — and which ones were there for long-term growth.
How to Position Your Business So It’s Attractive to Aggregators
If you’ve made it this far, then you know that you still have a chance at selling your business to an aggregator.
The only thing you need to focus on now?
Make sure you present yourself as a sophisticated operator — not just a great product.
“The cream really does rise to the top. Aggregators now more than ever have the tools and experience to look deeper into brands — to take an appraisal there. Despite some of the corrections in the market, I think top sellers and top brands are seeing significant progress and performance, so there’s a fantastic opportunity for them.” –Rowan Lawson, Head of UK Acquisitions at Heroes.
So, how do you position your brand so it’s attractive to aggregators?
Here’s what to focus on:
- Long-Term Growth Potential: One of the top factors aggregators want to know is how sustainable your business is long-term. According to experts like Rowan, if you’ve weathered the storm over the last couple of years while managing supply chain nightmares at the same time, you may well be onto something.
- Product Specialization: While best-sellers might’ve been a priority for a while, aggregators are now interested in stores that specialize in unique products. For instance, are you one of the only stores that offer tech gadgets from the 90s? Do you specialize in selling doll clothing for toy makers in Australia? Whatever it is, be sure to highlight the products that stand out.
- Product Expansion: And speaking of products, is there a potential to develop your products further? Could an aggregator innovate your products to appeal to new markets? Presenting potential product development ideas may inspire hungry aggregators to take a bite.
- Competition Differentiators: Aggregators want stores that are competitive. So, how does your store stack up against the competition? What’s your secret magic sauce that no other store has?
- Operational Performance: If you’re serious about wanting to sell to an aggregator one day, having pristine operations is a must.
When presenting your store, be sure to provide an overview of each core process you have, why it’s important, and why it’s efficient. Bonus points if you have the stats to prove that you have high operational performance.
Thinking about selling your store? Find out how Sellers Signals can help you track operations and optimize your store for the best offers.
5 Practical Signs to Look for When Choosing an Aggregator
From creating products that sell to mitigating supply chain issues, you’ve poured everything into your store. So it’s only natural to want to be choosy about the aggregator you pick.
Money is great, but what about how the aggregator plans on moving your business forward? How are they going to scale? What product innovations do they have in mind? Why should you choose them over another aggregator?
To ensure you choose an aggregator you genuinely align with, be on the lookout for the following signs:
- Shared Value System: Are you a customer-first business? Do you donate a part of your revenue to charity? Is human-centered communication a must? Be sure your aggregator mirrors the same value system.
- Strong Long-Term Vision: How does the aggregator plan to grow your business over the next year? What about the next two, five, and 10 years?
- Solid Operational Structure and Processes: Operational performance is the lifeblood of every successful e-commerce business. A simple way to see if an aggregator has pristine operations in place? Ask if they have a high percentage of human resources invested in operations.
- Established Customer Base: How long has the aggregator been around? Do they have a loyal and extensive customer base?
- Steady Revenue, Margins, and ROI: What do the aggregator’s financials look like? Low-debt? High profit? Good margins? If not, they may not be the right choice.
How to Approach the New E-commerce Aggregator Market
While the e-commerce aggregator market is changing, there’s still a ton of opportunity for stores that are committed to doing business right.
The bottom line? If you want to sell your store one day, it’s time to make sure it’s up to par.
Now’s the time to fix operational kinks/ If you have product development challenges you need to smooth out, this is your chance.
As long as your top value is becoming a great operator, everything else will take care of itself.
Or as Walter puts it: “We’re going back to an operator/customer/product-focused environment. Everything else is just noise.”