E-Commerce Aggregators Continue to Consolidate Amidst Thrasio’s Bankruptcy
Just days after the bankruptcy of Thrasio, another significant player in the world of e-commerce aggregators has merged with U.S.-based Perch and raised an additional $100 million in funding. Berlin’s Razor Group has acquired Perch, and the combined business now has an enterprise value of $1.7 billion.
The Merger and Funding
Razor Group has raised just over $100 million led by Presight Capital, with other undisclosed investors participating in the deal. This new investment brings the total funding to $200 million, with about $400 million of debt on its books that is not due to come up for payback for at least another four years. The debt restructuring was part of the new terms of the deal.
The acquisition and funding round are the latest developments in a wider consolidation taking place in the e-commerce aggregation world. Perch had been looking for a buyer for the better part of a year, while Razor has been gradually buying up smaller aggregators like Stryze and Factory 14. Others are also on the M&A path.
Thrasio’s Bankruptcy
The news comes less than a week after Thrasio filed for Chapter 11 protection, despite having raised some $3 billion in funding to fuel its business buying up and consolidating retailers that sold goods on Amazon’s Marketplace. According to people close to the deal, Perch and Razor claim that they were not aware of Thrasio’s troubles and did not see it coming.
"I didn’t know the equity investors would actually let it go all the way to Chapter 11," one source told TechCrunch, citing the billions raised and the value that would get wiped out as a result of the filing. Perch and Razor do happen to have some investors in common, such as Victory Park Capital, which may well have been central to the negotiations between the two.
The Business Model
The business model behind e-commerce aggregation has always looked strong on paper: There are millions of retailers selling on marketplace’s like Amazon’s, leaning on the e-commerce giant’s storefront, algorithms and logistics and fulfillment operations. Bringing together these retailers under one umbrella can provide significant cost savings and increased bargaining power.
However, as seen with Thrasio’s bankruptcy, the model is not without its challenges. Acquiring and integrating smaller businesses can be complex and costly, while also facing increasing competition from larger players like Amazon and Walmart.
Razor Group’s Strategy
Razor Group has been actively buying up smaller aggregators to expand its portfolio and increase its market share. By acquiring Perch, the company is now one of the largest e-commerce aggregators in the world.
"We are excited to join forces with Razor Group," said a spokesperson for Perch. "Together, we will be able to offer our retailers even more resources and support, while also increasing our market reach and competitiveness."
The Future of E-Commerce Aggregators
As the industry continues to consolidate, it remains to be seen how this new landscape will play out. With Thrasio’s bankruptcy serving as a cautionary tale, companies like Razor Group and Perch will need to carefully navigate the complexities of e-commerce aggregation.
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