Who are snapping up Amazon’s third-party sellers and why?

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When I was 10, while on a family trip in Kuala Lumpur, Malaysia, I hounded my parents during a visit to the supermarket for a tube of Hubba Bubba Squeeze Pop Liquid Candy. It was a successful mission.

The hounding wasn’t because I actually wanted it, of course. Upon returning to Singapore, I repackaged the viscous, electric blue stuff into separate squares of cling wrap, twisting either end so each package looked like a piece of hard candy, then sold them in school for 10 cents apiece. Demand grew, but as my supply fell short, I was forced to retire my business before it even began.

I wasn’t a serious seller, of course. But third-party sellers today have way more options to help their enterprises survive. For those who are getting tired of growing their business, cashing out might be a great option.

Ecommerce aggregators, especially those that want to buy off Amazon’s third-party sellers, are booming these days – and now, one Singapore-based player is joining the party.

Today we look at:

• Why more players are acquiring Amazon’s FBA brands
• Singapore Press Holdings’ restructuring plans
• Other newsy highlights such as Vickers Venture getting entangled in a US$740 million nickel trading scam and Monde Nissin Corp’s possible US$1b IPO.

PREMIUM SUMMARY

It’s a roll-up party

We last reported on the trend of ecommerce aggregators, or companies that acquire smaller online sellers to benefit from economies of scale, in March. Well, more startups have since joined the fray – and Singapore-based player Rainforest is one of them.

Its founding team comprises JJ Chai, a former Carousell and Airbnb exec, and Jason Tan, who has held CFO positions at Ovo and Fave.

• Fight club: Yesterday, the startup announced its seed financing round of US$36.5 million to acquire Amazon third-party sellers – or Fulfillment by Amazon (FBA) brands – joining competitors such as Poignant’s Branded Group and the US-based Thrasio.
• Delayed payback: Rainforest’s seed round may be considered a large one for a Southeast Asian startup, but most of the round comprises debt. The business model involves buying up companies with loans and then paying these loans back with the healthy profit margins of the acquirees.
• Macro growth: The growth of microbrands is precisely why more alternative debt capital is flowing into the space. In 2020, sales figures for Amazon’s FBA brands contributed to around 54% of the ecommerce giant’s US$386 billion revenue that year.

Read more: Why these ex-Carousell, Fave execs raised $36.5m to join the global Amazon roll-up frenzy

So long, profitability