Amazon FBA Roll-up

July 20, 2021

by a searcher from College of William and Mary in Sarasota, FL, USA

Does anyone have experience looking into Amazon FBA businesses? I am working with a backer with a significant balance sheet looking to begin rolling these up in Q4 and hoping to connect with some experts on search funder.

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Reply by an intermediary
from University of Western Australia in London, UK

Thanks Luke for the tag. Our firm is an intermediary in this space. I would agree with many of the commenters above that it is a competitive space, but that doesn't mean it can't be done. You won't be able to find "bargains" though - you will have to pay market rate. Originating deals is key, and you need good Amazon operational expertise. If you have all of the pieces of the puzzle (good proprietary dealflow, a convincing offering, sufficient capital to pay market rate, specific Amazon operational expertise to integrate and grow the businesses post-acquisition) you will have enough to get the model working. In our experience there are quite a few acquirers who haven't been able to make it work. But the ones who do make it work benefit from enormous multiple arbitrage, as some of the other commenters above also mentioned. A full up to date list of Amazon-FBA acquiring firms is here: https://www.hahnbeck.com/fba-acquirers

Reply by a searcher
in Portland, OR, USA

^redacted‌ The large players (Thrasio, Perch, etc) are extremely well capitalized and regardless of their PR and the story they tell around building the next P&G, the reality is its mostly a multiple arbitrage play with public markets offering the only reasonable return on exit. We purchased an FBA last year and since then multiples have moved up from an avg of 2.6x to 4.5x (as of right now). It feels really frothy right now, however I also don't see this trend disappearing, there are lots of macro tailwinds driving a larger ecommerce acquisition boom. I think there are still untapped strategies for consolidating FBA's and ecomms in general and realizing value through economies of scale and operational excellence among other things. Multiple appreciation is just the cherry...

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