PE firm that buys Amazon sellers?
I've seen a couple of these pop up, and am interested to hear your guys thoughts on PE firms that are looking to buy Amazon businesses?
More info on the Amazon business model.
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latest roll up trend. low hanging fruit gone soon
Completely stupid. Anyone who has been in eCommerce with significant experience knows how stupid it is too. Thrasio is the biggest but they're not just buying up Amazon sellers. I can go on and on about this but it's incredibly dumb because there's no upside.
We have a co in our portfolio that does ~$10M - $12M a year and Amazon basically forced us to sell to them. It worked out for us but ONLY because it's incredibly complex on the manufacturing/ops side.
If you do well either:
a) Your margins get compressed by competitors and you have no data moat. You don't own competitors.
b) Amazon forces you to sell to them.
c) Amazon copies your product exactly and fucks you.
I probably get pitched by someone with room temp IQ pushing Amazon heavy co's every two weeks or so. Not real businesses lol
So what is thrasio doing differently? Reading online looks like they're buying folks with private label products on amazon. Would love to hear a more detailed take. Thanks
Hyper systematized and basically buying in a way where FCF pays them back really fast. They have a set up that allows them to get very cheap debt (non-recourse) relative to what you'd expect given the size of companies they are buying. The founders are really brilliant hardcore eCommerce guys. There's more to it as well.
Those guys are completely different from anyone I've talked to that thinks they are clever for buying a bunch of Amazon businesses though and I think I've talked to almost all of the larger guys doing it.
obviously it's going to differ based on the business, but in general, any idea how thrasio / others value amazon FBA businesses?
Depends on EBITDA range. The amount of morons out there willing to use PG'd SBA debt to buy an FBA business seem to be infinite.
Are you saying that amazon forces you to sell them your business? Do they threaten to shut you out of their site otherwise? If so, that’s an incredibly aggressive move by them. I’ve seen them copy products blatantly and lie to congress about it, but at least there you can make the grocery store PL argument...
Yea I think that probably runs afoul of anti trust rules.. tho may be my naivety talking here
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