WHAT AMAZON AGGREGATORS ARE REALLY LOOKING FOR
Fortunet has conducted a survey among 42 companies (“Aggregators”) that engage in rolling up Amazon Businesses by way of merger and acquisition (“Amazon M&A”). Such aggregators were asked about their investment criteria and other considerations related to their acquisition process, as well as about their plans moving forward.
Some of the key findings:
The most popular categories among the Aggregators include 1. “Home and Garden” (over 88%), 2. Pet Supplies (over 78%), 3. Baby Products (67%), 4. Outdoors (64%), 5. Health and Personal Care (64%).
The respondents excluded the following categories: 1. Apparel (52%), 2. Electronics (44%), 3. Supplements (42)%, 4. Food (42%) or 5. any Fashion product (39%). This is mostly due to the demand for evergreen products that won’t lose popularity over time, won’t require constant innovation or design, and that do not have complex compliance/regulation.
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None of the Buyers polled are looking to acquire solely wholesale businesses. 63% of the respondents indicated that they purchase only private label brands, 30% are buying primarily private labels.
46% of the Buyers assert that they require a minimum operating history of one year only for acquisitions targets, 35% require over 2 years, 17% do not require any minimum operating history.
Although a profit margin of over 20% is typically deemed desirable, over 50% of Buyers said that they require at least 15% SDE profit margin for Amazon FBA businesses.
Preferred structure: Most aggregators offer 70-80% cash up front, with a deferred or stabilization payment, followed by an earn-out.
While many sellers assume that sales via multiple platforms increase their valuation, most aggregators replied that they do not necessarily value additional sales channels unless they drive significant sales.