Amazon Aggregators: 2021 State of the Union

About two years ago, I was on the phone speaking with a supplement manufacturer for a client, discussing some details about the launch of their new product line. I’d been working with this manufacturer for years and always valued her insight on various industry-related topics. During that conversation, out of left field, she asked me, “So what do you think about these Amazon aggregators? They look like they’re going to be coming into the Amazon space with force.”?

My response: “WTF is an Amazon aggregator?”

She elaborated. It turned out I was aware of these particular companies acquiring and operating a portfolio of brands by leveraging their capital, standardizing methods of how they sell on Amazon, and utilizing advanced software solutions. All of these strategies were meant to not only give them an “edge” that most other companies didn’t have but also to replace a percentage of the work typically done by humans. I just had never heard that term before.?

What did I think about an influx of these three-comma cowboys? To be honest, not much. I knew they were no threat to anything that I was involved in. There was no reason to have any feelings about them at all. I did, however, find the general aggregator business model extremely intriguing. Having been engulfed in the world of Amazon sellers for 10 years at that point, it’s safe to say I had a good understanding of the most common obstacles third-party sellers faced and what factors ultimately caused their downfalls.?

Platform Domination or Absolute Flops?

I heard the saying “Capital is King” and I learned "The Golden Rule" when I was a young teenager. As I got older, I realized just how true this philosophy really is. Without a doubt, the abundance of funding these companies had access to at their fingertips would open up opportunities and allow them to make moves that most sellers could not. Furthermore, this excess capital gave aggregators the option to hold their breath for longer than most sellers could ever afford to during bumpy times while continuing to invest in their brands.?

On the other side of the coin, there were different factors to be considered.?

Having the ability to build strong teams capable of operating a portfolio of accounts with many brands is obviously an effective strategy, but I wondered how much “soul” would be lost in this process. How much of that “X” factor would be lost when the founders of a successful Amazon brand cashed out and passed over their passion to the “Navy Seals” of Amazon? Hundreds of SOPs are effective -- to a certain extent. But what might happen when a potential buyer of, for example, a particular style of compression socks, wrote to the new operators seeking their expert insight about which model would be best for them??

"Do these socks help with circulation? If so, how? For a middle-aged woman, do you recommend a graduated or an anti-embolism-focused model? What is the difference between the socks that cover a person's ankle vs extend all the way up to a person's knee? Are your products made in America? What material are they made of? I tried a pair of "Brand XYZ's" socks and did not like them at all. How are your compression socks better than theirs?

How could a “Customer Obsession Associate” possibly be prepared to emulate the type of service and insight that a brand owner would be able to offer for not just one new brand, but an entire portfolio of new brands?

Furthermore, I wondered who was actually going to be operating these seller accounts and maintaining all of the essential tasks required to make sure a profitable brand remains successful. If you’re an Amazon seller, you know damn well that the first few years of selling on this platform are The School of Hard Knocks Sneak Peaks and Low Blows. A person/group/company/hedge fund/whatever cannot just dive headfirst into selling on Amazon and have any reasonable expectation of being successful. In fact, they should expect to get slapped around.?

They should know that they are either going to overorder or run out of stock countless times before they have the ability to place the most efficient orders. They should know that they are going to wake up to an email on more than one occasion informing them that their kitchen cutting board has been flagged as a pesticide and taken off of the Amazon marketplace. They should know that simply creating great products, great packaging, taking all of the proper safety precautions, and accounting for so many other details to finally get a product live on the platform most certainly does not mean that this product is going to sell. Were they aware of these things, and if so, what was their plan to address these rather significant factors??

I had no clue what the answers were. Fast forward two years - add in some research, ASIN-monitoring, and careful analysis: It is abundantly clear that despite their overwhelming confidence, some of these companies did not have a clue, either.?

Some aggregators did blast into this space thoroughly prepared, though. We decided to conduct this study because although we weren’t sure what the data would tell us, we were confident that it would be fascinating, to say the least.?

Let's face it - the Amazon aggregator model, from a general standpoint, is an experiment. If you have a thorough understanding of this platform, it’s hard to not wonder how these mammoth companies are performing -- if they’re even performing well at all. When the wind is blowing their sails in a favorable direction, they are all too eager to put out five press releases about it, share it across every social media platform, and then have their employees reshare it. When hypothetically speaking, a company acquires a brand for $3.8 million dollars and just nine days later has every review deleted from the brand’s product listings in addition to having the Brand Registered seller account suspended and slammed with a “final word”, they don’t exactly make it their mission to share the news with the world.?

If somebody were to ask me just a few days ago how successful these aggregators really are, I wouldn’t have been able to give an answer with any true depth or weight. After 10 years in this industry, I can certainly pick out a few from the top 10% who are executing impeccably. In addition to that, the bottom 10% wishing that they never left Goldman Sachs is clearly facing the consequences of entering a jungle they knew nothing about. Besides that, though, there is no data out there to reference.?Let's jump into some data.

In the spirit of full disclosure and to answer the inevitable question of, “Why do you and the rest of your weirdo team track the brands and products of all of these aggregators…”, the answer is simple. We built software that we utilize to provide the right type of aggregator a unique service. In order to identify which aggregators would be the right ones to partner with, we needed to first gather as many of their brands and ASINs as possible to analyze and monitor. That’s a story for another day. I do not write articles with the sheisty intention of tossing in some corny pitch. If I intend on sharing data that came from 285 unique seller accounts, I’m not sure how else to quickly breeze over an explanation as to why we would ever place so much time and energy into continuously monitoring these products. None of the ASINs included in the dataset are from any companies that we have agreements with.

Here’s the bottom line: We have the ASINs. We have the data. We broke it down to finally get an accurate and truthful idea of what’s really going on with these aggregators.

The Verdict

It's not pretty for a notable amount of these aggregators. There is an abundance of metrics that we gathered and analyzed to come to this conclusion, which I will place a link to below. When having to choose the most telling and genuine metric to reference in order to gain an understanding of how a newly acquired brand's products are performing, I decided to utilize the average difference in the Best Seller Ranks from the current day and 90 days prior. While Amazon's BSR metric is relative to all other products in the categories, we all know that it gives a very good idea of how well a product is performing. For the purposes of this study and answering the initial question, I do not believe that there is a more eye-opening metric.

First, let's make sure that we understand what's going on in this extremely telling graph below. All 29 aggregators are accounted for. There are positive values as well as negative values. It is universally understood that an "improvement" in BSR is when the number value decreases. That is not what is being displayed here.

The best way to explain the values would be to give an example on an individual product level: Let's say that ASIN's B00XAMZ123 best seller rank is currently 1,000 and was 700 90 days ago. The difference in the BSR would amount to -300, indicating that the product's performance has declined. The values being displayed are the AVERAGE DIFFERENCES in BSR for the current day vs. 90 days of all of the aggregators' products. A value of zero would indicate that the product has neither improved nor declined in performance. A value of 200,000 present on the chart represents the average of how much a particular product's BSR improved from 90 days prior. This would be a major leap in improvement.

Why This Chart is Worse Than it Looks

The answer to the question "How Well are Amazon Aggregators Performing" is they are varying drastically. First, it’s important to acknowledge the 5-6 companies that are tearing the platform up. The data shows that there are several companies purchasing brands, carrying out their processes for improving and scaling, and executing. What they have accomplished, and are continuing to accomplish, is certainly deserving of a hat tip.?

As for the rest of these aggregators: If the average difference in current BSR vs. 90 day BSR is a negative value, you have failed. That’s right, I said it - and it’s true. Let's summarize the aggregator model once more, in more basic terms. A massive company/venture capitalist/etc. dives into the Amazon seller space. They utilize their funds to approach successful brand owners, essentially saying to them, “Listen - we came across your brand - we like the ideas and concepts - you did a good job with what you had to work with - our ‘Data-Driven A.I. Quantum Computing Machine Learning Predictive Modeling Spaceship’ approach, among other factors, places us in a position to build your brand far better than you - We’d like to offer you a fat check to let us take it from here - deal?”?

If an aggregator purchases a brand and is not even capable of maintaining the sales that the original brand owner had already built up, something is not right. Deep in the fundamental model of aggregators is the presumption that extreme growth is going to happen. The question should never be whether or not a brand has grown since its acquisition. The question should always be, “How much have we scaled each brand since we acquired it?”?

With all the borrowed money in the world, access to the best talent money can buy, the capital to ensure products are always in stock, and the best technology, tools, or software solutions. Without a doubt, these certainly provide a major edge. So if an aggregator is still unable to take a brand that was built from the ground up by a husband and wife and make it flourish with these small armies and countless resources, I would say that now would be a good time to begin worrying. Maintaining the sales volume the brand owner left as a jump-off point should be easy. Aggregators, if you are not even able to maintain the sales volume that the brand owner left you with, I would highly recommend hightailing it back to Wall Street as quickly as possible.?

Final Word

? of the aggregators came to the Amazon marketplace ready to rumble, and are making Amazon history on a daily basis. This is a remarkable accomplishment, and I have a ton of respect for the ones making it work.?

? of these aggregators are at a sink-or-swim point. They are not acquiring brands and thriving, but they haven’t choked yet. It will be interesting to see who finds their rhythm, fine-tunes their procedures, and joins the other successful aggregators. Inevitably, this will not be the case for all of them - it will not even be the case for half of them. The remaining companies will join the bottom ?. These boys bit off far more than they could chew, and now they’re panicking. I don’t ever hope for others to fail, but it’s hard to find sympathy for any company that popped up out of nowhere, had little to no experience selling on the Amazon platform, carried themselves with no humility, and assumed they were going to conquer the world.?

A common trait that’s undoubtedly present among the aggregators in the top ? is humility. The aggregators currently succeeding had the wisdom to know what they don’t know. By leveraging their capital resources and having the foresight to bring in experienced industry veterans to fill in the inevitable gaps, they have exploded into Amazon marketplace powerhouses.

Here is a link to all of the data that was used in this study.