Foundry is promising to help merchants expand beyond Amazon onto other popular online marketplaces around the world and ultimately get on shelves in physical stores, where most shopping still happens.
“Amazon is the point of departure, not the point of arrival,” said Vaid, who most recently was Pizza Hut’s chief customer officer and is now Foundry’s CEO.
The competition to snap up online brands will be on full display this week at the Prosper Show, an annual gathering in Las Vegas where Amazon sellers swap tricks of their trade. The show usually attracts software companies and advertising firms that help online merchants boost their sales.
New this year will be exhibition booths and penthouse parties hosted by aggregators eager to stand out in an increasingly crowded market. Those that have raised the most money, including Thrasio and Perch, are each hosting private events. Another aggregator, Boosted Commerce, plans to have branded shuttles driving people from the event to the downtown casino strip.
Aggregators typically look for businesses launched by one or two people that have reached more than $1 million in sales on Amazon. But finding suitable candidates is getting harder all the time. Though some two million independent merchants ply their trade on Amazon—accounting for more than half of goods sold on the site -- few meet the criteria and many would rather hang on to what they built. The ones that do want to sell are getting more expensive.
Typical deals attract five offers
Mark Daoust, whose Quiet Light brokerage expects to close more than 100 deals this year, says Amazon brands that sold for $3 million last year now fetch as much as $5 million—and even more if there’s a bidding war. Typical deals overseen by his firm attract about five offers.
“There are still not enough businesses for sale to satisfy all of the aggregators,” Daoust said.
Many aggregators are trying to bypass brokers and deal with promising Amazon brands directly to pitch more of a long-term partnership than a one-and-done deal. That’s how Foundry approached former school teacher Lisa Abel when it purchased her educational poster business Motivation Without Borders.
Sales of her posters, including U.S. and world maps, took off during the pandemic as parents scrambled for instructional aides to help their children learn from home. Now Abel is working for Foundry in product development and is no longer sidetracked with logistical issues and other headaches that became constant distractions when she ran the business on her own. She had several buyers to pick from and chose Foundry for its extensive Amazon expertise.
“Every single Amazon seller comes to this pivotal moment,” said Abel, of Suffern, New York. “‘I love this brand. Can I keep growing it alone or do I need a team to continue?’ It made sense to grow it with a team.”