The Amazon Marketplace Roll-Up Trend Gains Momentum

The consolidation of third-party sellers on the Amazon Marketplace is progressing rapidly. Thrasio, a prominent early participant in this trend – aiming to provide enhanced economies of scale for managing and expanding these businesses – has recently secured an additional $750 million in funding.

Funding Details and Investors

The investment round was spearheaded by current investors Oaktree and Advent, with contributions from previous, unnamed stakeholders. Notable past backers include Peak6, Western Technology Investment, and Jason Finger, a co-founder of the food delivery service Seamless.

Strategic Use of Funds

Thrasio intends to utilize these funds to accelerate its acquisition of third-party sellers within the Amazon FBA ecosystem. This refers to smaller merchants leveraging Amazon’s “Fulfilment By Amazon” service for sales and distribution.

Rapid Acquisition Pace

According to Joshua Silberstein, co-founder and co-leader of Thrasio, the company is experiencing substantial growth. He stated that they have been acquiring businesses generating $1.5 million in revenue daily over the last two months. Currently, Thrasio is finalizing two to three acquisitions each week.

Acquisition Statistics and Market Size

To date, Thrasio has acquired nearly 100 FBA businesses, following an evaluation process of 6,000 potential companies and 14,000 category-leading products.

Exponential Growth of Amazon Sellers

While 6,000 companies represent a significant number, estimates suggest there are approximately 5 million third-party sellers on Amazon. This figure is experiencing exponential growth, with over 1 million new sellers joining the platform last year.

Opportunity and Economies of Scale

The substantial market opportunity, combined with the potential for economies of scale within e-commerce, is driving the emergence of numerous startups focused on rolling up these smaller sellers.

Valuation and Funding Structure

Thrasio’s $750 million fundraise is structured as an all-equity venture round. Although the company has not disclosed its precise valuation, it was previously valued at $3 billion in January during a $500 million debt round.

Potential Valuation Range

Considering the debt round and the new equity injection, a reasonable valuation estimate falls between $3 billion and $4 billion, and potentially higher. This is influenced by the current competitive landscape within the e-commerce sector.

Emergence of Competitors

The news of Thrasio’s funding arrived shortly after the launch of Branded, a new roll-up business backed by $150 million in funding and the European VC firm Target Global.

Growing Competition in the Roll-Up Space

Several other companies, including Berlin Brands Group, SellerX, Heyday, Heroes, and Perch, are actively engaged in similar efforts, collectively raising over $1 billion to acquire promising third-party merchants.

Shareholder Dilution and Total Funding

Thrasio reports that the recent funding round resulted in a 11.1% dilution for existing shareholders. The company has now raised a total of $1.75 million in equity and debt.

Branding Strategy and Future Outlook

Currently, Thrasio products do not feature Thrasio branding. However, it is anticipated that the company and its competitors may increasingly emphasize branding to convey higher quality and reliability.

Portfolio of Brands

Thrasio’s portfolio includes brands such as Vybe Percussion (deep tissue massage guns), Circadian Optics (bright light therapy lamps), and Sdara Skincare.

Competitive Advantage Through Analytics

Thrasio asserts that its marketing and analytics capabilities enable its acquired brands to effectively compete with established household names and become trusted choices for consumers.

Potential for a Market Bubble

The rapid pace of fundraising in the FBA roll-up sector raises concerns about a potential market bubble, as none of these companies have yet definitively demonstrated the long-term profitability of their consolidation strategy.

Alternative Business Models

Berlin Brands Group, which claims profitability, has achieved this through organic growth and building brands from the ground up, rather than acquiring existing sellers with potential legacy issues.

Thrasio’s Position and Future Strategy

Founded in 2018, Thrasio is among the oldest and most established players in this emerging wave of roll-up businesses. The company is pursuing an aggressive growth strategy fueled by substantial funding.

Vision for the Future of Retail

Carlos Cashman stated that Thrasio’s financial resources are designed to capitalize on the evolving retail landscape and the accelerating opportunities within the consumer products ecosystem.

Updated with more detail on valuation, company comment.