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Illustration: Aïda Amer/Axios

A new generation of companies is forming to scoop up Amazon marketplace sellers — and venture capital firms are writing big checks to support the effort.

Why it matters: These e-commerce aggregators are all about data and using it to optimize and turbocharge sales, which means they’re using Amazon’s own playbook.

The big picture: Amazon’s third-party seller marketplace generated between $25 billion and $39 billion in profits in 2020, the company estimates, and experts expect it to only keep growing.

  • One example is China's Anker Innovations, which is best known for its phone chargers and other consumer electronics accessories sold exclusively on Amazon. It's now valued at nearly $56 billion, following an IPO last summer that was hailed as a milestone for third-party Amazon sellers.

How it works: The aggregators target sellers that have found “product-market-fit" but still have a lot of room to grow. Otherwise, what upside would there be to acquiring them?

  • They tend to pick businesses whose products are established and will continue to be popular in their respective category, instead of chasing quick hits or fad-based products like fashion. Aggregators also tend to be generalists instead of focusing on a product vertical or category.
  • They also provide an exit path — and crucially, liquidity — to the entrepreneurs whose businesses they’re buying. For these small-business owners, this is likely the only kind of exit even available for them. Not everyone can have the trajectory of Anker.

Between the lines: Despite Amazon’s size and power, the consolidators don’t seem worried that the retailer could hike its fees or make other changes that would mess with their businesses.

  • In short, they don’t believe it would be in Amazon’s best interest to hurt such a crucial piece of its empire, which would ultimately affect its ability to offer more and better products, at the lowest prices to its customers.
  • “There’s this story out there that Amazon is this big threat,” says Thrasio co-founder Carlos Cashman, whose company raised $850 million earlier this year and is profitable. “Nobody looked at [Simon Property Group] as a competitor to Foot Locker — they’re not. They’re renting Foot Locker space for a store in the mall.”

Meanwhile: Some consolidators are specifically focused on acquiring successful businesses outside of Amazon’s marketplace.

  • OpenStore, quietly founded earlier this year by Atomic’s Jack Abraham and Founders Fund’s Keith Rabois, plans to buy up companies using Shopify’s tools and make their wares available via a “single unified experience,” which Rabois loosely compares to a shopping mall experience.

Look ahead: It’s still early innings, and acquirers will falter if they don't properly manage the sellers they’ve bought. Plus, there's sure to be consolidation among the consolidators.

The bottom line: “It’s an economy on the verge of institutionalization,” Sebastian Rymarz, CEO of aggregator Heyday, tells Axios of the burgeoning sector.

Go deeper

Felix Salmon, author of Capital
Jul 29, 2021 - Economy & Business

Giant earnings growth for the world's largest companies

Illustration: Aïda Amer/Axios

Never in the history of capitalism have the world's biggest companies grown as fast as the tech giants in recent years.

Why it matters: A series of stunning earnings reports this week — with another one likely to arrive Thursday afternoon, from Amazon — has underscored the astonishing growth among a group of companies that were already some of the most profitable of all time.

Scoop: Stephanie Ruhle to replace Brian Williams on MSNBC

Photo: Nathan Congleton/NBCU Photo Bank/NBCUniversal via Getty Images via Getty Images

MSNBC will soon announce plans to move morning anchor Stephanie Ruhle to the 11 pm ET hour that Brian Williams turned into an elite destination, two sources familiar with the move tell Axios.

Details: The 9 am ET hour, currently hosted by Ruhle, will become part of MSNBC's flagship morning show, "Morning Joe," which currently runs from 6 am to 9 am ET.

Oath Keepers leader denied bail on Capitol riot sedition charge

Oath Keepers co-founder Elmer Stewart Rhodes. Photo: Susan Walsh/AP

A federal judge ordered Oath Keepers leader Stewart Rhodes to remain jailed Wednesday until trial on charges stemming from the Capitol riot.

Why it matters: The judge said the most prominent far-right figure charged in the Jan. 6, 2021, insurrection had access to weapons and his alleged "continued advocacy for violence against the federal government" gave credence to prosecutors' view that, if released, Rhodes could endanger others.