Amazon seller acquisitions saw a significant drop in 2022 and 2023, valuations dipped and the secondaries of one of the largest Amazon FBA aggregators are trading at an 80%+ discount. Let’s take a closer look at the e-com rollercoaster š¢
š 2022 Acquisitions & Multiples: A Sharp Decrease
The number of acquisitions has declined 20%+ compared to 2021. Valuations went from 4-5x SDE in 2021 to 3-4x in 2022 to currently 2-3x.
š¤ More Buyers, Fewer Aggregators
While some Amazon aggregators paused buying, other players entered the market. This diversification includes strategic players and private equity funds investing in online native brands.
š°ļø Longer Buying Process
Buyers became more selective and cautious, resulting in longer due diligence processes. Some performance earn-outs were not paid due to the aggregator’s inability to grow the acquired business.
šø Funding Craze Calms Down
In 2022, aggregators raised $2.7 billion, a 78% drop from $12.3 billion in 2021. Most of this capital came in the form of debt, with much of it yet to be deployed.
š¤·āāļø Aggregator Consolidation Yet to Happen
Despite some aggregators seeking acquisitions (e.g. SellerX + KW Commerce) or looking to acquire smaller players, consolidation hasn’t materialized. Economies of scale and better financing terms are potential benefits.
š® 2023 Outlook: The Landscape Continues to Evolve
Amazon FBA businesses as an asset class retain their potential for long-term value, despite huge fluctuations. I’ll expect a strong rebound as soon as macroeconomic indicators improve.
As a strategic buyer, now might be the perfect opportunity to enter the space with multiples at a historic low.
Fueled by GPT, e-commerce companies with a true tech-enabled approach – not only claim – will maximize returns in this ever-evolving space. š