Is This Company an Up and Coming Amazon Aggregator?

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

In the e-commerce space, a rush is happening in high tech and software-as-a-service (SaaS), and it’s being fueled by Amazon Inc. AMZN aggregators. The newest one to date is Grove Inc GRVI.

Grove states that it is a global innovator in hemp, health, and wellness. It recently announced the launch of Upexi, its wholly-owned division to acquire promising Amazon e-commerce businesses.

With the launch of Upexi, Grove intends to take direct aim at the Amazon.com aggregation market. Grove plans to enter the market as a desirable entity to which prospective business owners may sell. With Upexi, potential sellers can access Grove’s programmatic ad technology, in-house digital marketing experts, and direct partnerships with a team of expert Amazon PPC buyers who fine-tune listings or start from scratch.

Grove has made a name for itself in the cannabis space competing with the likes of Charlotte's Web Holdings Inc. CWBHF, CV Sciences (OTCMKTS: CVSI), and Neptune Wellness Solutions NEPT and has already begun expanding into other verticals. The company recently acquired Vitamedica, an online nutraceutical company, with a rapidly growing presence in e-commerce and Amazon. Through its in-house team of digital marketers, Grove is now pursuing more companies in the health-wellness-beauty-pet care sector that it can take to the next level.

With more companies coming up as investors in Amazon-based businesses, it’s important to take a look from a broad sense at what investors would potentially be seeking.

What Are Amazon Aggregators Looking For?

Certain definable characteristics make an Amazon business more attractive in the eyes of an aggregator.

• Registered brands: Amazon aggregators are primarily interested in sellers who have their own branded or private-label merchandise or manufacture their own products.
• Profitability: While each aggregator is different, most want to see that the seller made at least $200,000 in annual net profit. On top of that, it’s going to want to see profit margins of at least 15%.
• Number of SKUs: More isn’t always merrier when it comes to SKUs. Aggregators would much rather see $2 million in revenue generated through just 3 or 4 SKUs than $2 million in sales generated through 60 SKUs.
• Percentage of sales placed through Amazon: It’s common for Amazon sellers to list their products across multiple platforms, including eBay Inc. EBAY, Etsy Inc. ETSY, Walmart Inc. WMT, and Shopify Inc. SHOP. And that’s perfectly fine. However, aggregators want to know the percentage of orders placed specifically through Amazon.
• Timeless demand: Amazon aggregators don’t want products that could be considered fads. What it’s really after are businesses with long-term viability. 
• Customer loyalty: Repeat customers are good for business.
• Niche: Most aggregators are specific in terms of what they’re looking for. They’re usually targeting a specific market and as such are searching for niche products within that sector.
• Fulfilled by Amazon (FBA): Several characteristics make FBA appealing to aggregators. For one, it doesn’t want to deal with the hassles of packaging, shipping, and returns. And it wants to qualify for Prime status, which is a lot easier to do if you use FBA.
• Adherence to terms and conditions: Amazon reserves the right to deactivate accounts that violate its terms and conditions. Because of that, aggregators are only interested in merchants who play by the rules. 
• Location: Almost all the biggest sellers are selling in the U.S. market, but many have expanded to other markets as well including Canada, Mexico, the U.K., and E.U. countries. Most aggregators are happy to acquire brands that have successfully navigated the challenge of selling in multiple marketplaces; a few aggregators are even based abroad.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.