Thrasio [Amazon e-commerce roll-ups]

I've been seeing M&A Analysts on Linkedin for an investment platform called Thrasio recently - was curious if anyone had any insights on what it's like to work for Thrasio (specifically on the M&A team) and Thrasio as a business itself.

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Comments (23)

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Apr 18, 2021 - 10:29pm

Have interacted with quite a few people at Perch, Thrasio and a few of the other aggregators/roll up guys. I think I'm missing something big, but I've talked through these companies with a few VC firms well known in DTC/DNVB (investors in Warby Parker, Bonobos, etc) and we couldn't really figure out the play? Bullets for quick & dirty thoughts while on a call...

a) Being Amazon dependent is incredibly risky. We have a company that does 8 figures on Amazon and some of the antics they've pulled with us are ridiculous. They truly do not give a fuck about you as a merchant, nor how big you are. I have friends who do 9 figures on Amazon and still run into business-breaking problems. Do too well and Amazon will cut your throat. When COVID started, Amazon completely screwed FBA sellers.

b) Was not really overly impressed with the people I've met at these firms. There's no way I would turn down a gig at a legitimate private equity or growth equity firm to work at Thrasio. Not much M&A going on. Very very simple to buy an FBA biz compared to what you'll see in true PE. For the co, this is the beauty of being FBA focused. It's so easy any mouth breather can do it.

c) Founders of these aggregators are probably making $$$. Rounds of funding = options for secondary transactions = $$$. 

My guess is that these all blow up spectacularly in 2 - 3 years unless they scale out of Amazon...which is really tough. Paid channel dynamics have become very rough over the last 5 years. 

There are aggregators focused on buying up DTC/DNVBs or transforming traditional retailers into DTCs which is far more interesting to me.... Would probably pursue something there > Thrasio. If you do, CSC Generation is probably the brightest group, have nothing but respect for them. Surprisingly, Tai Lopez's Retail eCommerce Ventures is pretty legit too: https://www.retailecommerceventures.com/  Our thesis is pretty similar to the two I listed but with a focus on companies that are truly vertical & operationally complex. 

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Apr 19, 2021 - 3:59pm

Look at how fast they scaled with min dilution, really hard to do. Same with REV. REV pitching and securing capital from retail investors at ridiculously favorite terms is a 200 IQ move. Why bother sourcing institutional capital when you can do what REV is doing. Never thought I'd be posting about how great Tai Lopez is but you have to give him and the Zoosk guy credit...they've done a lot in a short period of time. Maybe if you have examples of more impressive aggregators you should post them, but they don't exist. Maybe Mohawk but I haven't looked at their filings in a while...

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  • Analyst 1 in IB - Gen
Apr 19, 2021 - 7:29pm

Hey @m_1 - would love to hear some more detailed thoughts on the space. I have been talking to a few people at Thrasio and VC contacts who invested in the space -- I have heard nothing but bullish sentiment from the investors. I am mainly considering these type of firms for a post-banking position. I do not want to go buy side for reference.

a) Thrasio has the former CFO of Amazon on their Board of Directors... and the people at Advent I talked too seemed to think the platform risk of Amazon is overestimated. I read a blog post from another VC that touched on this. Will try to find and link it. 

b) I tend to agree. Not looking at an M&A role here, there are other teams (strategic finance and bus dev) that have much more impressive backgrounds and seem to have better impact on P&L -- I want to stop being a deal monkey anyway...

c) I wonder what the equity payout is going to be like for an employee at a firm like Thrasio or Perch. Am I stupid to be impressed by the fact that they were the fastest unicorn in history? And all the PR reports show strong profitability and growth numbers.

Apr 19, 2021 - 7:38pm

You're not going to get real equity exposure once a company is this large already. Even if it goes up 10x from here. Risk adjusted, not worth it...

Apr 19, 2021 - 10:28pm

I would completely agree with the idea that it is better to buy DTC or B&M brands and bring them onto Amazon, versus buying Amazon-only "brands". I think they will find it very difficult to bring those into other channels successfully.

I also put brands in quotations above because it seems like Thrasio is just buying products in very basic categories. There's almost zero differentiation in the categories and products that Thrasio is pursuing. This is in complete contrast to what an established CPG conglomerate would do, where they really need to find brands that already have some traction with consumers. If we've learned anything from Amazon, it's that they're very successful in disrupting categories where brand matters less.

Apr 19, 2021 - 10:45pm

Exactly, there's no sustainable way to own a marketplace product unless you have a huge ops advantage (something incredibly hard to manufacture) or a tech/IP advantage. 

Apr 19, 2021 - 6:28am

Founder went on Invest Like the Best Podcast - worth a listen 

Array
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Apr 19, 2021 - 5:26pm

I think this is just a hype.
Wrong type of buyers.
On paper those deals might look good but majority of stores are exclusively tied to $AMZN platform which is extremely risky.
Many won't survive because e-comm. asset prices are inflated. I'll say you have pre-covid and covid prices, difficult to do operational improvements within those stores.
I think in the future we might see specialization - a niche vertical integrators will be more successful than those thrasio and cos. jumping from one niche to another.  
 

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