Investors go cold on Amazon Acquirers

Investors go cold on Amazon Acquirers

The FT reports that after investors poured more than $12bn into Amazon Acquirers in 2021, investment has stalled as the industry takes stock and ecommerce growth stalls.

A multitude of Amazon Acquirers sprang up over the past few years, some became giants, others were growing fast, but all with the aim of gobbling up promising product sets which business owners had grown into brands but with the potential to take global and profit from soaring sales.

The types of businesses varied across categories, but often the example of ‘A top five selling kitchen spatula’ was given as an example of an ideal product. Something that had a proven track record of sales but required little or no ongoing development – many Amazon Acquirers shyed away from the likes of consumer electronics as the product roadmap costs were prohibitive. They wanted a product where the supply chain could be streamlined from the factory directly into FBA warehouses around the world and let the sales flood in.

It’s still not easy, and investments weren’t only for acquisitions, teams were put in place with specialist across the board from products manufacture to specialist advertising teams to tailor Sponsored Product and Sponsored Brand advertising to maintain a products sales position.

The FT reports that from the smallest to the largest, Amazon Acquirers have been laying off staff as they consolidate their businesses and the fall from a 2021 $12bn industry wide investment plummets to perhaps $2bn so far in 2022.

One of the major problems that none of the Amazon Acquirers I spoke to could (or would) confidently answer was what their long term goal was. Are they looking to roll up brands into household names that appear in physical retailers, are they looking to group products into sets and float them as separate companies? What’s the end goal? For many, this question is starting to be answered as the industry contracts and the Acquirers themselves get acquired by competitors.

The net result is, that if you were looking to flog your Amazon FBA business, last year was the best year ever for finding a buyer with deep pockets. If you’re looking to sell up in 2022 or 2023, potential acquirers are going to a be a lot more wary and cherry pick the very best of the businesses up for sale and, if that’s you, there will be a whole lot more hoops to jump through than perhaps there were previously.

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