How Amazon E-commerce Accelerators Can Enhance or Displace Brand Aggregators in 2022
By Raj Sapru, Chief Operating Officer, Netrush
According to many, 2021 was the “year of the brand aggregator,” and what a year it was. Led by market leader Thrasio, which may have a $10 billion valuation today, companies like Heroes, Olsam and Perch have raised billions of dollars to buy and scale third-party brands on Amazon.
But 2022 might need a different name: “The Year of the Brand Accelerator.” The difference between the two is subtle but important. Aggregators are typically purchase-focused. They tend to be relatively new companies that invest in Amazon-focused brands and then apply a wide range of strategies to grow them.
Brand accelerators, by contrast, tend to be more mature companies. They have focused, sometimes for more than a decade, on mastering leading commerce platforms, and notably Amazon (Amazon 3P).
Rather than purchasing brands, they tend to forge partnerships with them, trading their proprietary data, supply chain know-how, and product development expertise for a share of profits.
Accelerators and aggregators are not competitors; some work together on the same brand, using their unique advantages to compound growth. But to understand exactly what accelerators bring to the equation, and why the approach may be the more enduring one, it’s worth looking at what they do when they do things right:
They Meet Brands Where They Are
The small, fast-growing brands that attract aggregators and accelerators have all grown organically over time and are in various stages of development and maturity. Some have fairly sophisticated e-commerce operations, while others are shipping their products out of a glorified garage.
Regardless of their strengths or weaknesses, however, good aggregators have experience with their particular circumstances and help them find the right next step to take.
They Fill Gaps Efficiently
As small brands grow, they tend to develop different ad hoc needs at different times. With their core teams focused on product development and marketing, they can hire consultants, which can be a costly and time-consuming process. Accelerators can easily fill this void, supplying dedicated, competent teams to help with tasks that range from operations and logistics to scaling in HR.
They Balance Action and Transaction Data
Brands typically are data-poor, with little insight outside of their customer base. Accelerators can help by providing a deep understanding of two major types of data: action and transaction.
Thanks to their work with multiple clients, aggregators have typically amassed proprietary data on the Amazon ecosystem, which enables their partner brands to track the actions they take and assess the sales, or transactions that result.
This is also not a one-and-done activity. Rather, accelerators can also help their partners continually optimize their investments. The goal is to drive a flywheel effect: preserving existing strengths and momentum while identifying new areas for growth.
They Deepen Understanding of Customer Lifetime Value
Small brands tend to be highly tactical with their marketing investments, while larger companies have the luxury of understanding the value of repeat purchases and can adjust their strategies to suit it.
Accelerators can help their partners bridge the gap between one-off metrics and the lifetime value of a customer, which is a much more accurate indicator of the long-term growth and success of a brand. This can enable their partner brands to become much more strategic about both short-term investments and longer-term product development.
They Inform Product Innovation
Most small brands grow by expanding their product portfolios, but knowing exactly where and how to do so can be tricky. By looking at similar customers and buying patterns across their portfolios, accelerators can determine the products and categories that will be most receptive to the brand and that offer the best prospects for long-term growth. This takes some of the guesswork out of product innovation and helps chart a path for the brand to the future.
So, while brand aggregators are getting most of the headlines — not to mention the investment — these days, e-commerce accelerators are often doing the hard work of helping brands grow on Amazon and beyond. They bring the data and operational know-how to identify and capitalize on opportunities and the experience to help overcome common difficulties.
As a result, brand aggregators and accelerators are not competitors but different approaches to the same goal: sustained growth for brands. And with all the aggregation that has already occurred in the past few years, perhaps acceleration will be the mandate for 2022 and beyond.