Fulfillment by Amazon (FBA) has opened new doors for Amazon sellers who otherwise wouldn’t be able to store and ship their own products. But lately, the surge of interest and activity around FBA is coming from a different source: Amazon FBA acquirers, or roll-ups.
These are companies that buy FBA businesses and fix them up for a profit. It’s the e-commerce equivalent of flipping a house — and it’s a hot market. Over the past year, big-ticket Amazon roll-ups like Thrasio, Heyday, Cap Hill Brands, and Perch have received billions of dollars in financing from institutional investors to grow their portfolio of FBA businesses.
If you’re want to understand how Amazon roll-ups work and who the major (and emerging) players are, you’re in the right place. Let’s dive in.
Table of contents
- How does Fulfillment by Amazon work?
- How much does the average FBA seller make in a year?
- How many people actually succeed in Amazon FBA selling?
- How sustainable is the FBA roll-up strategy?
- How do Amazon roll-ups use PickFu to grow their brands?
- Split test every creative asset before launch
- Top Amazon FBA acquirers and their funding
How does Fulfillment by Amazon work?
With Amazon FBA, sellers send their products to an Amazon fulfillment center for storage. When a customer buys their product, Amazon takes care of packaging, shipping, and delivery.
Because Amazon roll-ups acquire and manage multiple FBA sellers, the economies of scale make it cheaper per business than running it alone. Still, this doesn’t explain how roll-ups turn around floundering businesses to make them profitable. That involves sales expertise, hard data, and, in Thrasio’s case, using PickFu to optimize decisions.
We’ll get to that. First, let’s talk about what it’s really like for an Amazon FBA seller.
How much does the average FBA seller make in a year?
No one knows for sure how much the average FBA seller makes, but a JungleScout report published in January 2021 found that the average annual income for a new Amazon seller — that is, someone who’s been selling for less than 2 years — is around $42,000.
Most Amazon sellers (70%) make a profit of at least $1,000 a month, according to JungleScout.
Even more telling, especially in the context of FBA acquirers, is total lifetime profit. If you’re considering selling your FBA business to a roll-up company, you want to make sure you’re getting your money’s worth. The majority of Amazon sellers (57%) never breach $100,000 in lifetime sales, which helps explain the appeal of selling to a rollup company.
How many people actually succeed in Amazon FBA selling?
Amazon is hands-down the most competitive e-commerce market out there. Sure, online shopping is as popular as it has ever been, but that only brings in more competition. Even experienced Amazon sellers are finding it difficult to compete with younger brands who have bigger budgets.
Success on Amazon, with or without using FBA, depends on a few different criteria.
First and foremost are your products. Unique and hard-to-find items do well on Amazon because there’s less competition. Once you figure out your product sourcing, you then have to think about shipping and logistics, which is why sellers turn to FBA in the first place.
Price is also critical. If you’re selling the same products as other merchants, whoever has the lowest price often gets the sale. This puts even more pressure on sellers to lower their markups and find viable shipping alternatives.
Last, you need to understand digital advertising and e-commerce marketing, especially on Amazon itself. Paid product searches and winning the Buy Box can make or break your success, but there’s a certain skill to it that only comes with practice.
How sustainable is the FBA roll-up strategy?
Much of the recent interest in Amazon FBA roll-ups stems from the increase in online shopping in 2020, although the spike is gradually subsiding.
Still, Amazon is more popular than ever, and there are plenty of young brands with great products that could benefit from a structural makeover.
The biggest threat to FBA roll-up lies in oversaturation. The more roll-up companies invest in Amazon marketing and advertising, the more those costs go up. First, they’ll outprice the mom-and-pop sellers. Eventually, they’ll bankrupt each other.
That scenario is still far off from the current environment, and who’s to say Amazon won’t alter its advertising policies before it becomes a problem. The more pressing and urgent question facing Amazon roll-up companies is the same for any roll-up: can you turn around your acquisitions in time?
For some, the answer lies in PickFu.
How do Amazon roll-ups use PickFu to grow their brands?
Thrasio is the largest Amazon FBA acquirer, with $1.7 billion in investments. The company takes a data-driven approach to rollups. Poke around its website and you’ll see how it puts its funding to good use through data analytics, logistical planning, and user testing.
Take Thrasio’s rebranding of Angry Orange, a pet odor-eliminating spray. It’s a quality product, but the original packaging design was unimpressive.
“Amazon is an exceptionally visual medium,” said John Hefter, Thrasio’s senior vice president of creative and brand strategy. “We buy with our eyes first. When you scroll down the page, what makes your eye stop? Where does your mouse cursor just stop?”
Like all Amazon sellers, Hefter wanted concrete answers to these questions.
After acquiring Angry Orange, Hefter’s team at Thrasio tested new product designs using PickFu. They ran a series of polls asking 800 consumers for feedback on bottle variants. The results helped them understand what people liked and didn’t like about the new orange color and bottle design so they could optimize the packaging accordingly.
Thrasio even created a new spray-on Angry Orange product, thanks to feedback from PickFu’s respondent panel.
“[PickFu] was exactly what I needed because I had no way to take my quantifiable ideas and attach it to some quantifiable outcomes that could be useful for our investment team,” Hefter said.
When Thrasio launched the new product images on Amazon, the data from the PickFu polls rang true. Almost overnight, the unit session rate for Angry Orange increased from 35% to 42%, and the average units sold per day increased to a high of 160.
All in all, sales of Angry Orange are up 912% compared to before the acquisition.
Split test every creative asset before launch
Thrasio continues to use PickFu to optimize product images and product descriptions. That’s the beauty of split testing — you can evaluate almost any decision, including screen layouts, call-to-action text, and even product names.
Other top-funded FBA acquirers who use PickFu’s instant polling platform include Elevate Brands, Berlin Brands Group, and Boosted Commerce.
If you’re going to invest in acquiring an Amazon FBA business, you need to ensure you’re making the right decisions to turn it around. With PickFu, you can gather quantitative data from your target customers to confirm that your rollup is headed in the right direction.
Top Amazon FBA acquirers and their funding
You have an idea of what Amazon roll-ups do. So who’s who in the market? We’ve listed them alphabetically below with their current funding, if known or disclosed.
- Accel Club. Founded in 2020, based in Delaware.
- Acquco ($160 million). NYC-based founders are Cornell University grads.
- aim.group. Belgian company specializing in acquisition of family businesses.
- Alpha Rock Capital ($138k). Started in 2017, based in Delaware.
- Amazing Brands Group (undisclosed). Tech-driven team based in Cologne, Germany.
- Aterian, formerly Mohawk Group. Tech-enabled NYC-based firm with 12 brands and six offices worldwide. Founded in 2014.
- Benitago Group ($55 million). Founders were Dartmouth College classmates who started by selling a back pillow on Amazon.
- Berlin Brands Group ($542 million*). Founded in 2005, one of Germany’s top digital companies with 14 direct-to-consumer brands across 28 countries.
- Boopos. Based in Madrid, Spain, offers a revenue-based financing model for sellers.
- Boosted Commerce ($137 million). L.A-based acquirer of Amazon and Shopify brands and private-label FBA businesses.
- Branded ($150 million). Generated $150 million in gross revenue since launching in 2020 in Paris.
- Cap Hill Brands ($150 million). Seattle consumer products firm founded in 2020 by two former Zulily executives.
- Centro Brands. Based in Austin, Texas. Team includes former Amazon execs.
- D1 Brands. NYC-based firm launched in 2020.
- Diverge Group. U.K.-based company focused on UK-based consumer businesses.
- Dragonfly ($29 million). Founded in 2019, headquartered in Boston.
- Dwarfs.io ($9 million). Dutch firm with an interest in European marketplace brands selling outdoor, home improvement, sports, household, and pet goods.
- eBrands. Finland-based acquirer of small- and medium-sized Amazon brands.
- Elevate Brands, formerly Recom Brands ($67.5 million). Founded in 2017, the NYC-based company notched an additional $12.5 million in April 2021.
- EnCap33. Ohio private equity firm specializing in merging e-commerce brands.
- Excite Foundry. U.K.-based digital brands aggregator.
- factory14 ($200 million). Luxembourg-based startup acquires smaller successful niche brands.
- Foundry. Launched in March 2021 in Austin, Texas by a team of former Amazon execs and operators.
- Flummox. Based in Switzerland with a focus on Amazon FBA and Shopify brands.
- Flywheel Commerce. NYC-based firm targets sellers with $1-5 million annual revenue.
- Forum Brands. NYC-based acquirer of consumer brands selling everyday products.
- GOJA (undisclosed). Launched in 2009 in Miami, grew from e-commerce retailer to software developer.
- Greenhaus. NYC-based firm opened in 2020.
- Growve ($175 million). Founded in 2018, Florida-based company specializes in acquiring health, wellness, and beauty brands.
- Heroes ($65 million). London-based firm with a focus on high-performing brands, led by brothers Alessio and Riccardo Bruni.
- Heyday ($250 million). San Francisco-based company launched in August 2020 and raised $175 million in Series A funding 3 months later.
- Inflection Brands. Acquisition firm based in Raleigh, N.C. that prioritizes business experience.
- Intrinsic ($115 million). NYC firm launched in March 2021, acquires health and wellness brands selling on Amazon.
- Mantaro Capital. Vancouver-based company with down-to-earth values.
- Marketplace PowerBrands. German company launched in 2020 and operates in Planegg.
- Mensa Brands ($50 million). Investment startup, launched in 2021, buys and scales digital brands across India.
- Merama ($160 million). Launched in late 2020 with a focus on select Latin American e-commerce brands.
- Merx. Stuggart, Germany firm has a strong foothold in European e-commerce.
- Moonshot Brands. Oakland, Calif. company founded by Shark Tank/Dragon’s Den contestants, Allan Fisch and CJ Isakow.
- Next Century Capital. Fast-growing U.S.-based firm.
- Olsam Group ($500 million). U.K.-based company led by brothers Ollie and Sam Horbye.
- One Retail Group. Founded in 2013, London-based multinational company has diverse portfolio of lifestyle and consumer goods brands.
- Opontia ($20 million). Dubai firm launched in 2021 to roll up small e-commerce businesses in African and the Middle East.
- Orange Brands. German acquisition firm specializing in European microbrands.
- Perch ($908.8 million). Boston company with a focus on technology as a means of sales optimization.
- Profound Commerce. Founded in 2019 with offices in Austin, Texas and Cebu City, Philippines.
- Rainforest ($36 million). Singapore-based firm interested in the brand longevity of Asia-Pacific Amazon marketplace sellers.
- Razor Group ($435 million). Berlin acquirer leveraging over a decade of e-commerce experience.
- Savitar. Based in Madrid.
- Scythia. U.K.-based firm focused on private-label brands in the U.K., Europe, and U.S.
- SellerX ($148.6 million). Berlin-based startup founded by Harvard Business School alums Malte Horeyseck and Philipp Triebel.
- Sorfeo. Launched in 2020 out of McLean, Va.
- Stryze Group ($100 million). Berlin-based company started in late 2020, acquires existing brands and develops its own.
- Suma Brands. Minneapolis startup founded by team that includes Blue Apron founder Matt Salzberg.
- Tapuya Brands. NYC-based firm launched in 2021.
- TCM Digital ($28 million). Israeli company buys and scales in all marketplaces, from Amazon to Walmart.
- The Fortia Group. Dublin-based group focused on European e-commerce.
- The Mothership. U.K. startup founded in 2021 by four tech and product entrepreneurs.
- Thrasio ($1.7 billion). Founded in 2018, this American company leads the pack in funding. Headquartered in Walpole, Mass.
- UmbrellaFund. Based in Texas, launched in 2019, experienced in digital marketing and e-commerce.
- Una Brands ($40 million). Founded in May 2021, this Singapore firm focuses on multiple e-commerce platforms across the Asia-Pacific region.
- Unybrands ($25 million). Global firm with headquarters in Miami, founded in 2020.
- Valoreo ($50 million). Fast-growing Mexico City-based acquirer with a focus on Latin American brands.
- Win Brands Group ($50 million). NYC-based firm launched in 2017. Interest in customer-focused DTC brands.
- YABA. Barcelona company founded in 2020, seeks category-leading FBA brands
* includes allocations from their own balance sheet