The relatively unknown brands that hawk products on Amazon’s Marketplace platform now make up the majority of the company’s online retail sales, across categories as disparate as pet products and USB cables and foam head pillows. And as a new report from The New York Times illuminates, these brands — many of them created to sell a singular product on Amazon — are now hot commodities in a fast-moving consolidation trend occurring in the world of e-commerce.
Here’s roughly how it goes down: a savvy entrepreneur wants to use Amazon to sell products, so they do some research, source suppliers, and launch a product line under a new brand name. The product — be it pet deodorizer under the name Angry Orange or a line of hiking accessories sold under the TrailBuddy brand — starts to sell well. That earns five-star reviews and higher brand recognition on Amazon Marketplace, which in turn increases the brand’s visibility in search results and opens up the possibility for additional product lines.
Fast-growing companies like Thrasio are scooping up successful Amazon brands
Then, a larger company, like one called Thrasio that’s comprised of many smaller Amazon brands, comes knocking with an acquisition offer, giving the entrepreneur an exit and some more money to reinvest in their next idea. Thrasio is just one of dozens, The Times reports, designed as a new type of e-commerce conglomerate centered on snatching up Amazon brands that are miles away from being household names but nonetheless do millions in annual sales.
This cycle of brand launching, selling, and acquisitions has fast become the framework of the Amazon Marketplace success story, accelerated by the platform’s massive growth and the ease with which customers can seek out and buy from a brand they’ve never heard of before. The New York Times reports that Amazon Marketplace sellers did $300 billion in sales last year, and these third-party sellers have long surpassed Amazon’s own e-commerce business in terms of product volume and revenue.
The story is a fascinating look at how these products go from conception to a multimillion-dollar acquisition deal, and you should read The New York Times’ report on how this is fast becoming the future of online e-commerce entrepreneurship.