🤝 Amazon roll-ups, explained


July 15, 2021

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The Hustle

Taco lovers, listen up.

McCormick is searching for a Director of Taco Relations. The job comes with a $100k salary and an assortment of seasonings. Responsibilities include:

  • Keeping tabs on taco trends
  • Visiting taco restaurants
  • Ensuring tacos aren’t just eaten on Tuesdays

Best of all, a previous taco job isn’t required. Let’s get those applications moving, people!

The big idea
Amazon storefront

Investors are rolling up Amazon stores. And making a killing.

Remember the last impulse purchase crucial gadget you bought on Amazon? Perhaps it was a deep-tissue massage gun, or a bright light therapy lamp.

You may not remember the brand name, but there’s a good chance it’s owned by an Amazon roll-up — a company that aggregates successful Amazon merchants.

Elevate Brands, one such roll-up, just snagged a cool $250m, per TechCrunch. It’s the latest in a flurry of investment in the space (e.g., $2B for Thrasio, $400m for Razor Group, $70m for Heyday).

Amazon merchants make prime acquisition targets

It’s estimated there are 5m+ sellers on Amazon’s marketplace. As our Trends team reported back in May, there are 3 main reasons investors love them:

  • Amazon itself is deeply entrenched among consumers and is likely to keep growing market share.
  • Amazon handles warehousing and shipping, allowing roll-ups to quickly cut costs and boost profits by consolidating supply lines.
  • With enough brands, a roll-up might be able to negotiate with Amazon for better prices or personalized service.

Elevate started as sellers before joining the roll-up gold rush

This hands-on experience helps them relate to their acquisition targets. It also means they know what it takes to grow an Amazon marketplace brand.

Unlike other roll-ups, Elevate doesn’t focus on specific product categories. With 25 companies under its umbrella, the only common thread is a preference for businesses with patents.

The roll-up market is crowding fast

More bidders mean more competition, leading to bigger deals. This is great news for Amazon merchants, but for roll-ups — not so much. In this context, differentiation will be key.

The bigger question as the roll-up market gains steam: When will we see the first roll-up of roll-ups?

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SNIPPETS

Stop trying to make Fleets happen: Twitter killed its Insta Stories-like feature, Fleets, because people just weren’t using it. #big-tech

Instadaaamn: Facebook is giving influencers $1B through 2022 in ad revenue, bonuses, and funding. Why? To compete with TikTok, YouTube, and other platforms. #big-tech

In 2026, Volkswagen will launch just 1 battery electric vehicle (BEV) platform to use across all its brands, accounting for 40m+ EVs. #emerging-tech

Railsbank nabs $70m to build its platform that would let other companies quickly build their own financial products. #fintech-cryptocurrency

Gaming and high-end fashion? It’s an odd couple that works for brands like “League of Legends” x Louis Vuitton and “Death Stranding” x Acronym. #ecommerce-retail

Microsoft’s new renewable energy strategy involves not just buying clean power, but getting local energy providers to go green, too. #clean-energy

Discord just picked up Sentropy, a company that uses AI to find and boot online harassment and hate speech. #privacy

Home Shopping Network
overhead view of a neighborhood

What Redfin’s learned about building real estate algorithms

AI may be better at finding your dream home than you are.

During VentureBeat’s Transform 2021 conference, Redfin CTO Bridget Frey explained how the real estate brokerage firm uses AI to help sellers net more money in less time.

Its AI learns how prospective buyers look for homes

That means which listings they click, if they schedule tours or make offers, which offers win, and what they buy. Agents across the country are also adding data.

Redfin found:

  • Customers are 2x as likely to click on homes Redfin’s AI recommends vs. ones that surface under their search criteria
  • A quarter of all Redfin website and app traffic is people browsing homes it’s suggested to them

So, what’s the key to Redfin’s AI?

  • Equity. The better the data, the better the algorithms — but not necessarily all data. Per the Fair Housing Act, agents can’t talk about neighborhoods’ demographics or socioeconomic status, so Redfin doesn’t use that data either.
  • Diversity. A team that “reflects the customer base” and can identify problems and solutions.
  • Practicality. Actually talk to the humans who will use the AI — or you might end up building the wrong thing.

While that all sounds reasonable, if Redfin’s AI doesn’t recommend a place with a pool or sauna… we’re questioning its tech.

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Free Resource

How to tackle 2021’s top 8 marketing challenges

To solve a problem, first you need to identify the problem.

It’s never a bad idea to peep other teams’ playbooks. Here’s what a diverse group of 120 marketers say they’re focusing on this year (courtesy of HubSpot).

Covered topics include traffic and lead generation, ROI analysis, website management, team training, and more. We think you’ll find it insightful.

Treat this blog post like a checkup

It’ll pinpoint what needs work. Then provide clear, actionable steps to help you start the right conversations to move your marketing forward.

This free article shares insider facts, expert tactics, and direct links to supplemental resources.

It’s made to support your growth. HubSpot for the dub.

Challenge-tackling drills →
Ungrillievable
Weber grill

With grilling season underway, Weber files to go public

If you ever wake up and think, “I really should know the ins and outs of a grill company,” Weber’s IPO prospectus is the document to read.

It details Weber’s success at throwing the business equivalent of a lit Fourth of July backyard BBQ.

And the numbers don’t lie

Weber’s YoY revenue jumped 62% to $963.3m for the 6 months ended March 31.

The pandemic clearly helped spark the flame. Weber cites a study that found 85% of grill owners plan on grilling as or more often post pandemic.

Weber also says its 2020 sales at Ace Hardware, The Home Depot, and Lowes represented 52%, 39%, and 32% of sales in each retailer’s grilling category.

Weber is innovating BBQ

The company’s founder, George Stephen Sr., invented the charcoal grill in 1952. In 2020, DTC and ecommerce made up 20% of Weber’s revenue.

Today, Weber boasts an installed base of 30m grills in the US and 50m globally.

That’s just ungrillievable.

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Meme of the day
Amazon box meme

Source: IMGFlip

Giveaway
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