target global leads $150m round for amazon marketplace consolidator branded

The Rise of E-commerce Roll-Ups: Branded Group Secures $150 Million

A significant increase in startup activity has been observed over the past year, centered around the concept of consolidating smaller e-commerce businesses. These operations primarily sell and distribute products through marketplace platforms, such as Amazon. The strategy involves leveraging economies of scale to enhance efficiency in running and expanding these businesses.

Branded Group Emerges with Substantial Funding

Branded Group is the latest entrant in this space, recently emerging from stealth mode with a noteworthy funding round. The company has successfully raised $150 million. Since its quiet launch in mid-2020, it has already acquired 20 startups operating in categories like home goods, leisure, and lifestyle across Europe, the United States, and Asia.

Operational Support for Amazon Sellers

The acquired companies will continue to utilize Amazon’s Fulfillment by Amazon (FBA) service for sales and distribution. Branded Group will provide support in areas such as marketing, financing, operational expertise, and technology. This includes business analytics and intelligence to optimize performance.

Investment Details and Key Players

Target Global is leading the funding round and is described as a “co-founder” of the startup, alongside Pierre Poignant and Michael Ronen, the other two co-founders.

A Broad Range of Investors

Additional investors participating in this round include Declaration Partners, Tiger Global, Kreos Capital, Lurra Capital, Regah Ventures, Kima Ventures, and Vine Ventures. Individual investments were also made by Mark Pincus (Zynga founder), Jon Oringer (Shutterstock founder), Maximilian Bittner (Lazada co-founder), and a dozen other executives from major retail companies like Amazon, Walmart, and Alibaba.

Acquisition Details and Revenue

Branded Group has not disclosed the identities of the 20 acquired companies, but asserts that they include some of the largest sellers of home, leisure, and lifestyle products on Amazon. Collectively, these businesses generate $150 million in gross revenues annually – representing sales before any cost deductions.

Significant Customer Review Volume

The sellers within Branded’s portfolio have collectively amassed an impressive 700,000 customer reviews, a key factor influencing purchasing decisions on platforms like Amazon.

Competitive Landscape and Strategic Considerations

Branded Group is intentionally withholding specific company names to maintain a competitive advantage. The market for roll-up outfits targeting smaller e-commerce businesses is becoming increasingly crowded.

Growing Competition in the Roll-Up Space

Berlin Brands Group recently announced plans to utilize over $300 million to acquire smaller companies. This follows Thrasio’s $500 million debt raise and significant funding rounds for SellerX, Heyday, Heroes, and Perch.

Capital Infusion into the Consolidation Market

Currently, over $1 billion in capital is available among startups aiming to become the leading consolidator of smaller sellers. These sellers have established businesses leveraging efficient marketplace services for marketing, distribution, and logistics, but may lack long-term operational or growth strategies.

Founders’ Expertise and Potential

The founders of Branded Group bring significant experience to the table, contributing to the company’s rapid funding success and potential for growth.

Leveraging Past Successes

Pierre Poignant co-founded Lazada, an Asia-based Amazon competitor backed by Rocket Internet and Alibaba. Michael Ronen previously served as a managing partner at SoftBank’s Vision Fund. Branded Group intends to leverage this expertise to foster growth within its portfolio of sellers and brands.

Branded’s Vision for Growth

“We are excited to leverage our e-commerce and business-building experience to create this next-generation multi-brand platform,” stated Mr. Poignant. “Our team will provide unmatched operations, marketing, business development and supply chain expertise, serving as the partner of choice for entrepreneurs worldwide to scale their consumer brands and delight consumers on Amazon and beyond.”

The Scale of the Opportunity

An estimated 5 million smaller sellers operate on Amazon’s Marketplace, accounting for approximately half of all sales on the platform.

Identifying and Scaling Promising Brands

Branded Group aims to identify and partner with or acquire the most promising of these sellers, helping them operate more efficiently and achieve greater growth.

Impact of the Pandemic on E-commerce

The global health pandemic has accelerated the shift towards online shopping, with consumers increasingly relying on the internet for purchases due to lockdowns and social distancing measures.

Addressing the Needs of Growing Sellers

This surge in online activity has created opportunities for retailers selling on digital platforms. However, some sellers may not be prepared for or interested in managing this level of growth, presenting a potential avenue for startups like Branded Group.

Focus on Proven Demand

By targeting existing and successful sellers, Branded and its competitors aim to leverage proven customer demand as a means of identifying viable businesses.

Challenges Beyond Acquisition

Acquiring companies is only the first step. Branded and its peers will also need to address challenges such as managing supply chains, ensuring consistent product quality, and differentiating themselves in a highly competitive Amazon marketplace.

Investor Confidence in the E-commerce Shift

Despite these challenges, investors remain optimistic about the opportunity, particularly given the growing importance of e-commerce for consumers.

Target Global’s Perspective

“Covid-19 has been a massive accelerator of consumers’ continuing shift to online shopping,” said Ben Kaminski, partner at Target Global. “We see fundamental changes in consumer behavior and purchase decision-making opening an opportunity to build a new type of consumer products leader with a digital-first mindset.”

Expanding Beyond Amazon

While Branded Group’s initial focus is on Amazon, other companies in the space, like Berlin Brands Group, are exploring opportunities beyond Amazon, including other marketplaces and direct-to-consumer brands.

Branded’s Future Outlook

“Thanks to Amazon’s incredible investment in global logistics and leading technology, there are millions of third-party sellers worldwide on the Amazon marketplace,” said Mr. Ronen. “We are facing a generational opportunity to build Branded into the leading, digital-first consumer product goods (CPG) e-commerce platform, distilling the best among the $300 billion in revenue generated by businesses already thriving on Amazon’s marketplace.”