Team eCommerce Next interviewed Wiley Zhang from Acquco to get more insights on Aggregator industry and supply chain crisis. Following is our interview with him:
What is an aggregator and how do you fit into the Amazon marketplace?
Amazon aggregators, also known as acquirers or consolidators, are searching for businesses / brands on Amazon which they can acquire and scale to gain revenue. These aggregators are quickly becoming a necessary part of the Amazon ecosystem because:
1) They give Amazon sellers the opportunity to exit their business and get multiple years of profit up front
2) They provide the resources and experience to help transform these businesses into successful global brands, leading to better products / prices for shoppers
Why is the aggregator industry booming right now?
The demand for buying Amazon brands reflects the maturation of the e-commerce giant’s third-party marketplace, which accounts for more than half of all products sold on the site. The web store has grown so large that deep-pocketed investors can prospect for tomorrow’s big hit among the millions of merchants competing on the site. “The emergence of these companies reflects how selling with Amazon oﬀers small businesses powerful opportunities to build their brands and reach millions of customers,” said an Amazon spokesperson in an email.
As the supply chain crisis continues, how can ecommerce retailers ensure they are meeting customer demand?
Ecommerce retailers can ensure they are meeting customer demand by:
1) Expanding sale dates and strong marketing before holidays to avoid sellouts or delay during peak weeks.
2) Strategically allocate inventory in the near term – such as focus more on higher margin inventory or continuing to pull levers such as prioritizing markets for inventory deployment and ensuring promotional plans align with the pipeline of available and expected inventory can help retailers mitigate immediate disruptions and shore up resilience through the holiday season.
3) Optimize and prioritize purchase-order flows by mode: To ensure that critical inventory is available when needed, retailers should prioritize purchase-order flows accordingly – for example, by front-loading floor-set and peak-season orders. Alternative transport modes (such as air freight) should also be considered even if they have traditionally been more costly.
Do you expect the supply chain crisis to continue well into 2022?
Yes, the boom in demand has overwhelmed the supply chain since the pandemic began in 2020. Transportation has struggled to keep up as rising demand collided with COVID-19 shutdowns, labor shortages and historic weather occurrences, causing a lack of shipping containers and supplies, alongside major price hikes. The logistics industry still expects disruption in 2022. Low vaccination rates in key developing countries will likely lead to additional shortages of raw materials and components similar to those that continue to impact automakers, apparel manufacturers and homebuilders.
Transportation cost and material cost increases will be passed on to the consumer. One of the biggest disruptors during the pandemic has been and continues to be the loss of shipping capacity on commercial jets, which typically deliver some cargo on international flights. There has been a large number of aircraft sitting on the ground in deserts and that has pushed more goods to ports or to the alternate air services.
What are three trends in ecommerce for 2022?
1) More Supply Chain Issues
Most brands are experiencing severe supply chain constraints heading into this holiday season, spanning issues with manufacturing, importing, fulfillment center constraints, and more. Further exasperating the issue is holiday shopping. As the media is hyping out of stocks and shortages going into the holiday shopping season, shoppers are starting earlier, which exacerbates out of stocks. As a result of the dreaded “domino eﬀect,” companies are getting further behind in Q4 2021 and will have to “dig out” of the hole going forward into 2022.
2) Price Changes Due to Inflation
In 2021, 53% of the brands on Amazon implemented price increases. For 2022, that number will increase to 93% of the brands. Price hikes happen for various reasons but major culprits include inflation – which is growing much faster at the factory level than the consumer level, which is not a great sign. So far, the price increase per product is averaging 6%, and consumers can expect more price changes in 2022. Most companies including Amazon have incurred incremental costs this quarter due to macroeconomic pressures with labor, raw materials, and transportation. This is also why we are seeing inflation which in turn causes manufacturing to have to increase their prices.
3) Travel and Entertainment Product Boost
With weekend travel bookings in the U.S. finally surpassing pre-COVID levels this month, and with every country on the planet having opened up or opening up soon – with the notable exceptions of China and North Korea – expect anything travel / outdoor related to be hot next year.
About Wiley Zhang
Wiley Zhang is the co-founder and COO of Acquco. He is the former COO across four international Amazon-focused businesses and has unique execution expertise in supply chain optimization, and product and research
development processes. Wiley has a deep relationships across sellers and manufacturing providers in China and
Asia. He has also built multiple cross-border operations and processes for multi-regional eCommerce businesses to increase growth.
Acquco acquires and accelerates top Amazon brands. Acquco uses a highly measured approach to identify and evaluate each brand and scale it globally using proprietary technology and operating expertise. With in-depth due diligence, flexible deal structures, and a commitment to transparency, sellers can exit their businesses quickly and earn substantial payouts. Acquco’s unmatched Amazon operator expertise assures sellers that their businesses will see substantial brand growth post-acquisition. Acquco is headquartered in NYC. For more information, please visit www.acqu.co.