Season 1, Episode 11

Aggregators

The hot new thing in the Amazon space is Aggregators. About 55, venture-backed aggregators have popped into the Amazon space, looking to buy up Seller accounts. We’re huge advocates of doing your due diligence, and in this episode we’re talking about why that’s so important on both sides of buying and selling Amazon Seller Accounts

Show Notes

Transcript

Chris : [00:00:07] Hi, everybody. Welcome back to another episode of Seller Performance Solutions. This is Chris McCabe of ecommerceChris. I’m a former Amazonian and Amazon seller consultant, helping people with their account and listing suspension issues, but lots of other wonderful topics as well that confront everyday sellers.
I’m here with Leah McHugh.    Leah is a consultant and an ecommerce expert. And she likes discussing things like what we’re talking about today. Like the aggregator, the hot button aggregator topic, right?
Yeah. I mean, we discuss it anyway, so we may as well record it.
Exactly. We were just having a long conversation about this because we’ve interacted with different aggregators. We’ve had a lot of questions from sellers, some of whom might be thinking about selling their brand or their business and others that, maybe can’t yet sell because they’ve got some performance notifications they haven’t resolved.
Right. Or they have some listing suspensions or policy warnings. And there they’re afraid that an aggregator might reject them, I guess, because they haven’t run a tight ship. Is that what you would say?

Leah: [00:01:16] Yeah. And we’ve also been hearing from sellers who  are speaking to somebody about selling their business. And part of the agreement is that they need to get those cleared before the business is sold.

Chris : [00:01:27] Yeah. So it might not even be a product that they care about reinstating, but the potential buyer wants a clean slate. So they say, go get that reinstated or the flip side, like I said, a moment ago, policy violations and warnings for things like reviews, abuse, or for things like listing compliance, abuse, product detail page abuse, or any kind of violation of listing compliance rules gets the buyer worried that they might be acquiring something that could in the near term be suspended. Right?

Leah: [00:01:59] Yeah. And even in the case where the seller hasn’t necessarily done anything wrong,   I’ve heard of it from a few clients that the buyer won’t purchase the account until the approvals have been done for all of the categories that are requesting documentation right now. So they want to get that cleared before they’ll actually buy the business. So that’s not a case of a seller doing anything incorrect. It’s just, Amazon’s changed that process, and whoever’s buying the account wants that process completed before they buy it.

Chris : [00:02:26] Right. Proper due diligence. And full disclosure for any sellers or companies listening, we’ve been doing some risk assessment work and some due diligence for the occasional aggregator that comes to us, looking for help, trying to figure out, should I buy this business? Should I not? Are there warning signs? How bad are they? Doing those kinds of assessments. It’s not always 100% crystal clear what the risk is of a new purchase, but we try to clarify that as much as possible for people and Leah and I have been helping aggregators understand the marketplace a bit better, which brings me to my next topic.  Which is some of the people we’ve been talking to don’t understand Amazon from beginning to end.

Leah: [00:03:07] Yeah. And I think that’s maybe a misconception that the media has,  that,  all of these aggregators are experts in this.  I mean, certainly there are some who do have a strong team of Amazon specific knowledge and, or e-commerce specific knowledge, but we’ve also spoken with some that really have no experience in e-commerce and they’re not hiring people with any experience. So they’re really starting from the ground up. Which, that’s like a lot of money to be playing with, without any experience.

Chris : [00:03:38] Right. And,  just to give you an example, we talked to one company that I think they were buying numerous new accounts. And I started asking myself wondering, are they going to buy 20, 30, 40 companies that have Amazon businesses only hoping that three or four hit it big or 10 or 11 hit a big out of that group, knowing that they’re going to have a couple dozen or one dozen that, that don’t go anywhere beyond where they are today.

Leah: [00:04:05] Well, I think, you know, all of these sorts of businesses, it’s a numbers game, so yeah. They don’t expect all of the accounts to necessarily be huge hits. But I think what was maybe more concerning to me was that, you know, you’re, you’re relating all of these accounts to each other, potentially. So if you have people who don’t know what they’re doing, possibly one account gets suspended for whatever reason. And then you have the risk of all of those accounts going down for being related to that suspended account.

Chris : [00:04:36] Exactly. You don’t want a Domino’s situation. It’s the same as working with anyone that goes into different accounts. You don’t want to work with an aggregator or anyone who is signing in and out of all these accounts, and one of them gets suspended and those sign-ins haven’t been done using best practices. Haven’t been handled properly and you get associated with a business you’re not even tied to any more that you sold two years ago.

Leah: [00:05:00] Right. So like, if you’re ever planning on selling on Amazon again with a new account , you’re still going to be tied to that old account potentially. So if somebody is managing it poorly,and get suspended, now your new business is potentially getting suspended for something that you sold years ago.

Chris : [00:05:17] Exactly. And we’ve seen that. We saw that last fall. There were people who were suspended in October, November, even December during the peak. Due to relations to an account that they sold in like 2016, 2017, or they severed  a partnership back then. One partner bought the other one out and they were shocked that something from 2017 was affecting them in 2020. That shocked us too. But this is kind of the change up that Amazon threw everyone in terms of how they assess relations in their tools. And it’s a little scary to think about so just make sure you do best practices.

Leah: [00:05:47] I think it’s important to do due diligence on both sides. So certainly if you’re buying a business, you want to be doing due diligence into what it is that you’re buying. But also if you’re selling a business that can potentially have ramifications for a new business on Amazon, you also want to be doing your due diligence into who it is that you’re selling it to.

Chris : [00:06:06] Yeah, it’s interesting. Some of these companies have only been sellers are selling for two years or a year, and they’re already being eyeballed for. You know, I think this is kind of like an IPO craze, to an extent. The aggregators are looking for these brands that might not even be. I understand that, trying to catch something on the way up. I mean, that’s not a foreign concept to me, but at the same time, you know, is there a there, there, before they put some money down and buy it, it just reminds me of like, Silicon Valley IPO crazes where startups that might not take flight are being looked over. So not all of these brands are going to fly.

Leah: [00:06:40] Yeah, well, they got, you know, they have venture capital that they have to use or they’re gonna lose it.

Chris : [00:06:45] Use it or lose it. Right. Where it gets interesting. And there’s just more and more aggregators. I mean the different, you mentioned the media stories, the different ones I’ve read, say that there’s 50, 60, 70 companies out there doing this here in Boston to meet up, we had, we used to have aggregators coming just to talk to brands and figure out who was on the way up.

Leah: [00:07:04] Well, and that’s the thing. This isn’t necessarily a new thing. It’s just a new craze. So we’ve, you know, we’ve been speaking to aggregators for years who are very experienced in this, but they’re just like suddenly all of these new ones popping up.

Chris : [00:07:18] Yeah.

Leah: [00:07:19] Post pandemic.

Chris : [00:07:19] And hopefully.

Leah: [00:07:20] Mid pandemic, I guess.

Chris : [00:07:21] Right. And hopefully for them just to set expectations, they’re fine tuning their due diligence and making sure that they understand their way around seller central or their way around even performance notifications. Because some of the conversations we’ve had with people, they didn’t understand the meaning of the warnings in there or the meanings of ASIN suspensions, and maybe not even the understanding of an at-risk account. Obviously, it’s easy to see red, yellow, green. Okay. It’s green. You’re in good health. But how quickly can you go from green to yellow?

Leah: [00:07:52] Well, and honestly, I mean, we know the account health dashboard isn’t necessarily accurate. It’s a good place to start, but you pretty much always need to be doing more digging because I mean, we’ve worked on plenty of accounts that had good standing that were then suspended the next day.  That’s not necessarily the main indicator, particularly if you know, the offense is something that  Amazon can’t afford to warn for. If it’s a safety issue, they can’t just wait around and see.

Chris : [00:08:20] Or counterfeit.

Leah: [00:08:20] It’s just going to go straight into blocked.

Chris : [00:08:23] Right. Major compliance issues, potential safety issues or authenticity issues. They reserve the right to do something suddenly. I mean, most sellers understand that in this day and age, and I hope most aggregators understand they have to look into those details. They’re not just looking eyeballing account health quickly. Hey, this account looks pretty good. They’ve been around for a few years. I’ve seen what kind of money they’re making. They’re obviously doing something right. People will understand either the easy way or the hard way you can’t make those assumptions.

Leah: [00:08:51] Yeah, and even deeper than that, what accounts is that account already related to? You know, you could have a perfectly healthy account again, that gets taken down by another account being related to it. So who has been signing into that account? Were their former business partners? Has this account been sold before? These are all questions that need to be asked before you..

Chris : [00:09:11] And also, did they manage the account themselves or did they hire out somebody and have little to no idea what those people were doing?

Leah: [00:09:18] Right.

Chris : [00:09:19] Which we frighteningly still hear those stories and we understand that some people aren’t planning on managing their own amazon account. And they’ve got other parts of their business they’re focused on, but be careful who you hand the keys to for driving your car, because you definitely don’t want them taking that account off a cliff somewhere. I mean, that’s like a major risk and to an aggregator, that’s a risk they won’t want to take on. So it’s something to think about.

Leah: [00:09:44] Absolutely.

Chris : [00:09:45] Yeah. All right, Leah, thanks for joining me for this topic. And we know this is a big conversation and a lot of groups and sellers are interested in, so feel free to reach out to us. If you have any questions about this, or even just share a story with us, if you’re thinking of selling your business in the near future, we’d love to hear from you.

Leah: [00:10:02] Thanks, Chris.

Chris : [00:10:02] Thanks.

Hosts & Guests

Chris McCabe

Leah McHugh

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