The Rise of E-commerce Roll-ups & New Business Opportunities

👋 I’m Zoe Chew, a product builder. I’ve built multiple apps using the rapid MVP method: sneaker app, personal FAQ, meal kit app, virtual event app, SaaS tracker, food delivery, content app +more

At Venturescale, I’m on a quest to understand the future of the Internet. I analyze profitable industries & biggest players, and how you can compete and monetize—at the intersection of Internet platforms & consumer tech.

Today’s post is about e-commerce acquisition platforms. Read here if you’re interested in the Web3 creators economy, future of social networks, FinTech & wellness tech, or B2C online marketplaces.

The Rise of e-commerce Roll-ups

In the past, roll-ups were mainly proceeded by private equity firms, large conglomerates, and institutional buyers, whereby companies acquire businesses in the same market and merging them under a single entity to scale.

Today, there are new companies that consolidate independent private label brands with decent revenue. They are the aggregators of e-commerce brands. Unlike marketplaces that connect buyers and sellers to acquire or sell off their brands (e.g., Flippa and Exchange Marketplace by Shopify), roll-up platforms are operational and resourceful. They:

• Have a thesis around e-commerce product categories they want to acquire
• Search across marketplaces like Amazon and Shopify
• Find winners and merge these companies
• Operate like a private equity firm, may fund and invest in buyout businesses
• Platform-agnostic or vertical-focused
• Grow them collectively using built-in technology, infrastructure, data analytics, operational expertise, capital, and economies of scale
• (📥 Full version) 3 more specific strategies on how aggregators operate and scale

Key Players Around the World

• Shopify aggregator: OpenStore
• Home living & consumer electronics roll-up: Berlin Brands Group
• Asia-Pacific focused consolidator: Una Brands (raised US$40 million) targets acquisition on Tokopedia, Lazada, Shopee, and Rakuten using a platform-agnostic approach by focusing on Shopify, Magento, or WooCommerce.
• (📥 Full version) 1 more company that focuses on the Amazon platform
• (📥 Full version) 5 more companies from emerging market

What Problems Do They Solve?

• (📥 Full version) 3 more valid problems they are solving that actually make these platforms super profitable. You’ll also learn:
• How do roll-up platforms create values for their clients?
• What are the user pain points in getting a business acquired?
• How do they tackle complexities in selling off businesses?

Business Models

Roll-up companies are running the business using a private-equity model. They act like collaborators, operators, and venture capitalists (VC) at the same time. For example:

• Thrasio acquires third-party sellers on Amazon, focusing on everyday consumer brands, scale the business, and offer exit options for the sellers. In 2020, Thrasio recorded a profit of $100 million on $500 million in revenues.
• Heyday provides tech stack, capital, advice, and insights to help consumer product brands accelerate the next level of growth.

• (📥 Full version) 2 more specific ways to monetize as e-commerce aggregators. You’ll also learn:
• different ways to partner with potential acquisition targets
• different ways to expand your roll-up portfolio

Why Now?

As e-commerce entrepreneurship is exploding, there will be more successful independent merchants who will need to find a way to exit their brands. Here is the market potential snapshot:

• Growing numbers of independent sellers. In 2020, more than 50% of Amazon’s gross merchandise volume (GMV) was coming from third-party, independent sellers.
• (📥 Full version) 3 more market evidence in detail to help you answer the “why now” questions for your investors or partners. You’ll also learn:
• insight from Amazon financial statement
• impact of D2C brands
• insight from the emerging e-commerce markets and why there are untapped opportunities to monetize

Business Opportunities

• one specific product idea in SaaS
• one vertical-focused roll-up platform idea
• a solution to help aggregators find the next acquisition winner
• specific business idea to participate in a roll-up partnership

Want more? Consider the members-only version:

• 🔺 3 more specific strategies on how aggregators operate and scale
• 📝 6 more new market players
• 🧐 3 more valid problems they are solving that actually make these platforms super- profitable
• 🖍 3 more market evidence in detail to help you answer the “why now” questions (most important slide in a pitch deck!) for your investors
• 🚀 4 specific product ideas and business opportunities that are solving problems

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Also Published At: https://whizzoe.substack.com/p/e-commerce-roll-ups-and-the-rise