Nebula Brands Emerges as Star to Watch in Global Constellation of Amazon Aggregators

Key Takeaways:

• Nebula Brands has announced a major new fundraising, bolstering its place as China’s top player in an emerging global group of Amazon aggregators
• Company has purchased a number of Chinese brands in Amazon marketplaces since last year, but is likely to sharply accelerate the pace in the run-up to a potential IPO as early as 2025

By Doug Young

China may be the “workshop to the world,” but it’s still a lightweight when it comes to minting global consumer brands like Coca Cola KO, Walmart WMT and Carrefour (CA.PA).

One company that’s trying to change that is Nebula Brands, which is hitching a ride with e-commerce titan Amazon AMZN to try and build up some of China’s most promising but lesser-known online brands targeting global consumers. The company announced on July 27 that it wrapped up its latest funding round, cementing its position as head of the class in China for a booming group known collectively as “Amazon aggregators.”

Such aggregators scour the ecosystem of third-party brands selling their wares on Amazon’s vast network of global marketplaces, and purchase the ones they see as having the best growth potential. The group has collectively soaked up a whopping $15 billion in investor cash since its emergence over the last five years, according to Marketplace Pulse, a market research company focused on e-commerce.

Such aggregators have shot to global prominence on the story of U.S. highflyer Thrasio, which has singlehandedly soaked up $3.4 billion in investor cash to date and was reportedly worth as much as $10 billion last year. But the road for Thrasio has been far from smooth recently, resulting in mass layoffs, a change in its CEO and an aborted IPO, reflecting some of the challenges newer arrivals like Nebula will face as they grow and become major e-commerce forces.

Nebula didn’t disclose the amount in its latest funding, a B+ round, which came from United Arab Emirates sovereign wealth investor Mubadala, according to its announcement. The investment comes just seven months after Nebula raised $50 million in a series B funding led by global consumer brand investor L Catterton. Its other previous investors include Matrix Partners China and Alpha Startups.

No valuation was given for the company after the latest funding. But Marketplace Pulse said the company had previously raised $156 million to date, making it the biggest Chinese company by that measure and the world’s 24th largest Amazon aggregator.

Nebula said it expects to announce another fundraising in the next three months, and that it could make an IPO in the next three to five years.

From our perspective, one of the most interesting things about this company is its positioning as the world’s largest Chinese Amazon aggregator at the center of a global e-commerce universe dominated by Chinese brands and manufacturers. That should give Nebula a major advantage over rivals like Thrasio, Berlin Brands and Razor Group, the top three players by funds raised, which are all based in the west and thus have limited understanding of and access to China-based sellers on Amazon marketplaces.

A staggering 600,000 Chinese brands were active on Amazon’s global marketplaces between 2018 and 2021, generating sales with $135 billion in gross merchandise value (GMV) over that time – more than a third of the total GMV for the U.S. e-commerce giant, according to Nebula’s website. Those Chinese brands are expected to continue taking market share from rivals in other countries, accounting for 45% of all GMV by Amazon third-party brands by 2025, Nebula Brands said.

The company points out its teams are well positioned to do original research on potential Chinese acquisition targets throughout the supply chain, unlike most of its rivals that must often rely on third-party recommendations and consultants to choose their targets. That should give it far more choice for its acquisitions, and also improve its chances for success.

Early days

Nebula Brands was founded in 2019 and made its first acquisitions in 2021, meaning it’s still clearly in its early days. It has made five acquisitions to date, typically targeting brands with $1 million to $30 million in sales. All such aggregators typically target brands with high Amazon rankings, both in terms of quality and sales, and then aim to accelerate their growth by providing additional resources such as technology, managerial and marketing expertise.

Nebula Brands is focused on consumer brands in household areas like furniture, kitchenware, maternal, infant, pet and outdoor products, said co-founder William Wang.

“These are chosen because many products in these categories are durable consumer goods with slower evolution,” Wang said in a recent interview. “After continuous micro-level innovation of original products, they can retain their advantage in the channel.”

Nebula declined to provide data on its revenue, though it said its acquisitions are typically growing at 20% or more annually. Some simple math based on the figures we’ve given would show the company probably currently logs around $100 million in sales. That’s certain to grow exponentially in the next few years as it uses its new cash to acquire more brands in its pursuit of the bigger names like Thrasio, which can own hundreds of brands.

Nebula also declined to comment on its profitability, though company officials said it typically targets Amazon brands with profits of $300,000 or more over the last 12 months and gross profit margins of 20% or higher. The customers they sell to are concentrated in more lucrative western markets, including Europe, North America and Japan.

While the next few years look relatively filled with potential for Nebula Brands, the company will need to be careful not to repeat the recent missteps of Thrasio. The U.S. industry leader also grew at lightning speed following its founding in 2018, benefitting partly from a global boom in e-commerce in the early part of the pandemic when many people significantly boosted their online shopping.

But following a funding peak for Amazon aggregators in 2020, the investment taps started slowing for the group last year. Marketplace Pulse estimated funding for such aggregators fell by more than half to $2.2 billion in the first half of this year from $5.1 billion in the year-ago period.

As sentiment cooled, Thrasio was forced to delay its previous plans for a New York listing last year using a special purpose acquisition company (SPAC). As that happened, the company also changed CEOs and reportedly cut about 20% of its workforce.

Nebula is still in a far earlier stage of development, and thus shouldn’t have to deal with such issues for at least a few years. In the meantime, its latest funding and the potential for more, combined with its unique positioning as a China-based consolidator of Chinese Amazon brands, could make it an interesting company to watch from this fast-emerging sector.