By Chris Shipferling
At present, online and Amazon-based businesses are experiencing a digital renaissance; e-commerce operators are thriving, and new investment capital is flowing into the space. The resulting increase in M&A deal flow has presented sellers with unprecedented opportunities to execute high-value transactions.
The Amazon Marketplace in particular represents a unique proposition for acquirers. As the 32nd largest economy in the world, it offers the infrastructure to quickly scale a portfolio of successful brands. Many new funds, private equity firms, and corporate strategies have dedicated significant resources to expanding their presence on Amazon.
And for sellers, this means there is plenty of money to be had from a strategic exit. Increased competition in the space has created tougher barriers to entry, so new entrants are willing to pay premium valuations to acquire well-established FBA businesses. Then, it’s simply a matter of leveraging data science to identify growth opportunities and deploy capital accordingly.
Successful Amazon brands are in high demand and many sellers have already achieved 7 and 8-figure exits. But for those who are not yet ready to pursue a high-value M&A transaction, the influx of new investment capital translates to increased competitive pressure. This poses a significant obstacle, as most third-party sellers cannot match the resources of a fund or firm.
FBA aggregators, roll-up companies, and traditional blue-chip investors are capable of injecting massive amounts of capital to drive short-term ROI. Their expertise and resources are limited only by the funds they are able to raise, whereas independent operators do not possess the same access to capital and thus cannot compete at the same level.
Consider Thras.io, an early entrant in the space that acquired Angry Orange for $1.4 million back in 2018. Within two years, the firm was able to grow topline revenue to $30 million. It would be incredibly difficult, if not impossible, for an independent seller to achieve the same results on their own. Fortunately, there’s a solution.
E-commerce financing can help operators defend against encroaching funds and firms seeking to capture market share through aggressive arbitrage. Moreover, we anticipate lending will play a substantial role in the success of third-party Amazon brands as the marketplace becomes increasingly complex.
Access to capital empowers e-commerce operators to keep up with demand and pursue short-term growth initiatives that increase the value of their businesses. With over $1.2 trillion across corporate balance sheets and premium valuations reserved for top-tier assets, it’s critical to grow and scale a brand with a potential transaction in mind to ensure the business attracts the most suitable acquirers.
In the interim, financing can work to a seller’s advantage by lessening the competitive divide and facilitating access to the same caliber of resources commonly found within funds and PE firms. E-commerce lending is a powerful tool that unlocks strategies that would otherwise be cost-prohibitive for all but the largest operators, thus creating a more level playing field.
Mitigating competitive pressure allows operators to focus on continuing to expand their foothold or even begin positioning the company for a high-value M&A transaction. In either case, securing funding the seller would not otherwise have is an integral component of accomplishing their long-term goals.
To remain competitive, it’s important for sellers to find a dependable, non-predatory lending partner to help them fund inventory, advertising, and growth strategy. Working capital allows operators to achieve sustainable growth in today’s increasingly complex digital economy and without it, businesses may become stagnant or begin to decline.
The ideal lending partner understands that a comprehensive solution to the problems e-commerce sellers face cannot be developed without first acknowledging the continuously evolving digital landscape they operate within. They must be dedicated to tackling issues that many traditional institutions may not even fully grasp.
Global Wired Advisors has found that SellersFi is the best partner in terms of securing working capital to inject into growing e-commerce businesses. They are true lending experts who understand the complexities of operating a business in an increasingly complex digital marketplace. We are happy to recommend their services to our clients, and anyone who owns an online or Amazon-based business.
Let SellersFi help you scale your business with our easy and straightforward solutions.
About the Author
Chris Shipferling is a managing partner at Global Wired Advisors, an M&A Investment Bank headquartered in Charlotte, North Carolina. Chris oversees business development and serves as the firm’s liaison with prospective clients. He draws on 20+ years of corporate executive and institutional investing experience to help business owners successfully exit their online or digitally native businesses.
LinkedIn bio here.
