Amazon’s third-party marketplace has exploded. According to Oppenheimer equity research from February 2021, in 2020, third-party gross merchandise value (GMV) on Amazon was $336B – an increase of 65% over 2019. In spite of a slowdown in 2021, Amazon Net Revenues still grew +22% vs. the previous year, proving that the pandemic fundamentally changed how (and where) people shop. Amazon also surpassed Walmart as the biggest online retailer outside China in August 2021 as reported by Business Insider.
Many entrepreneurs reach a point where their business has grown to such an extent that it outstrips their limited resources and they contemplate selling. Choosing to sell is a big decision and should be approached carefully and thoughtfully. Usually the most important question you will ask is ‘how much will I be paid for my business?’ Often equally important is ‘what will happen to my brand? And who will protect and build it?’ As you begin to evaluate various Amazon ”Aggregators” in the market, it’s important to do your homework. Here are six important attributes that we believe entrepreneurs should look for in a potential acquirer of their business.
1. Do you see eye-to-eye on my brand’s potential?
After potentially years of hard work and countless resources, you will already know your business’ ethos and objectives. You will also have an idea of what the future goals of your business should be. Making sure that the partner that you choose for your business aligns closely with these goals and understands your vision is essential to creating a successful and productive acquisition partnership. It is very important that you feel you can trust a buyer to continue the hard work you’ve done, and you have faith in them to take your business to the next level.
What do you see as the 6 month / 12 month / 3-year scalable goals for my company? What resources will be utilized to meet these targets?
We are always proud of the fact that we fully understand that every entrepreneur and business is unique, and we value this highly. We build custom business plans based on evaluating market trends & a realistic approach to growth – you can stay on and participate in the growth of your brand, but also the growth of the broader company. At BRANDED we encourage our brand founders to stay onboard, working on the parts of the business they love alongside our expert teams who help catapult your brand to new levels. When you become part of the BRANDED family, you know your business is in safe hands.
At BRANDED we look for powerhouses in their category – true challenger brands with potential to become $100M dollar businesses. If that matches who you are, we’re a good fit for you!
2. What’s your depth in resources – both financial and operational?
You want to make sure that your acquisition partner not only has a deep understanding of global consumer markets, but that they are also well-funded. You want to make sure they not only have the capital to close your transaction and grow your brand well into the future. In addition to deep pockets, you also want to make sure the partner has a deep bench of skilled team members who understand the industry you’re in and the markets you’re targeting. Get beyond the acquisition team in your initial conversations – it’s important that you know who you’re working with and how they will partner with you. If you are looking at a market outside the U.S., it’s important to find an acquisition partner that has a global orientation around sourcing and supply-chain optimization. With the right partner, you can immediately hit the ground running.
How much capital have you raised and how much capital do you have to deploy at this time? Can I meet the brand manager or general manager internally that would be working with my company? I am interested in expanding my brand into Europe. Do you understand these markets and what resources and infrastructure do you have there?
With over $250M in capital raised to date and a team of brand managers with experience across leading CPG companies such as P&G, L’Oreal, Mars and more, BRANDED has both the capital and expertise to grow brands. We were founded as a global company from day one. With key executives and professionals in the U.S., France, the U.K., China and beyond, we not only understand the nuances of each individual market, but have the resources and connections available to accelerate your brand immediately.
3. What is the intention for growth beyond Amazon?
While success on Amazon is an important first step, you should also carefully consider what markets you will want to expand to next. With over 300 million users, Amazon provides a wide customer base but also a lot of competition. Any business plan should include diversification of your sales channels through other e-commerce streams, in-store options, and social media selling. This will allow you to drive sales from multiple avenues without being faced down by 100s of similar products directly competing for the same customers.
Do you have a team that deals with sales channels outside of Amazon and where would you focus any expansion efforts?
BRANDED believes that an omnichannel strategy leads to success. Diversification allows a business to target new customer bases and our extensive experience in investing in strong brand identities allows for effective business development outside of Amazon. Our teams are built to take your brand on a cross-platform journey, growing your business beyond anything you imagined possible.
4. Does your leadership team have proven e-commerce and operational experience?
If your goal is to supercharge your brand, you really need a partner who understands the industry. The market is getting more competitive over time. Entrepreneurs who have been able to growth-hack Amazon will likely find it harder to compete with larger, well-capitalized, and more sophisticated sellers employing proprietary software and tools to compete. There are many Aggregators in the market today who have raised a lot of capital but don’t have meaningful e-commerce or operating expertise; they are fundamentally private equity firms looking for quick financial returns. The best partners are operators with proven track records of scaling businesses.
Like many other industries, the Amazon marketplace is becoming more competitive and technology-driven. Trading on Wall Street is dominated by computers and in the very near future we believe pricing and other seller operations on Amazon will be handled similarly. As a brand owner, it’s important that you partner with an operator that is creating a technology platform that will allow your brand to grow in the ever-changing competitive environment.
How is your operational team structured? What is your approach to scaling your organization and platform? What are you going to do to fundamentally accelerate my business in ways that I can’t today?
We’re entrepreneurs, too! We were founded for sellers by sellers. We don’t consider ourselves an Aggregator, but rather a strategic acquirer of digitally-native brands. Our team’s experience spans multiple e-commerce giants, including Amazon, Walmart and Alibaba/Lazada – we know what it takes to compete and win on e-commerce marketplaces globally.
Our core team built and scaled Lazada, a $12B+ GMV third party marketplace in Asia which was bought by Alibaba for over $4B. We’re using that experience and even more powerful tools to accelerate our brands on Amazon and beyond.
5. What is your approach during the valuation and negotiation process?
Trust is a prerequisite for any successful partnership. Reputations are built over years and decades but can be destroyed in an instant. Without honesty there is no trust, and without trust, there is no partnership. No matter what acquisition partner you work with, it’s crucial that they have a reputation for integrity and honesty. You need to ask yourself some searching questions before your journey with a partner evolves. How do you see your involvement with your business post-acquisition? Are you looking for an immediate exit? Do you want to share in the profits as your brand accelerates? Your acquisition partner should be prepared to work through the answers to these considerations with you as your relationship progresses.
What is your reputation in the marketplace? Can I speak with a recent seller who sold you their business?
At BRANDED we believe that our reputation is one of our most valuable assets. Our reputation for integrity and transparency has been built one interaction and one transaction at a time. We take a long-term view in building our business, our brands and our relationships with consumers, sellers, employees and partners. We know there are no shortcuts on the path to success and that our reputation must be re-earned every day in the marketplace. We fearlessly take a revolutionary partnership mentality to our brands and with flexible deal structures, we encourage collaboration. At each stage of our relationship you can expect honesty and professionalism from us.
6. Why my brand? How does it fit into your company strategy?
There are many aggregators out there, and each has a different approach to acquisition. Some are category agnostic, some have specific categories in which they have expertise. You may prefer the idea of an aggregator who has a wide variety of brands under their umbrella so your brand can lead the charge into new areas, or you may want to sell to a partner who is focused on your company’s specific category and views that category as strategic to their business. This will translate into a partner that understands your brand’s product/market fit, consumer behavior in your specific category and how to drive long-term product growth.
How does my brand fit into your existing portfolio? How do you decide if a brand is a good fit?
At BRANDED, we are focused on “brand-able” product categories, including Beauty & Personal Care, Health & Nutrition, and Home & Hobbies — all categories in which consumers have a passion for the products they use and brands really matter. We take our reputation in the marketplace extremely seriously. BRANDED’s reputation as an honest, strategic partner and our proprietary technology ensures success for our brands. As a global team, we also have the international infrastructure to scale your specific brand category in the U.S. and beyond.