Amazon 'Aggregators' Who Raised $16 Billion Are Now Teetering (bloomberg.com) 20
During the pandemic, Wall Street banks and private equity firms invested billions of dollars in startups rolling up popular brands sold on Amazon.com. The bet was that these upstarts, fueled by an online sales boom, would become the next consumer product conglomerates -- like Procter & Gamble or Unilever. Then the pandemic ended, consumers returned to the stores, and Amazon's sales growth cratered -- erasing almost half of its market value. Now the reckoning has arrived for these so-called brand aggregators. From a report: With names like Thrasio, Razor Group and Perch, the companies aren't widely known but over the past few years have shelled out tens of millions of dollars for tea kettles, foot massagers, peppermint-based jock-itch remedies, medicine balls, magnetic eyeglass holders, air purifiers and more. To finance the buying spree, they raised $16 billion -- mostly debt -- from big names like JPMorgan Chase, Goldman Sachs Group, BlackRock and Bain Capital, as well as smaller investment funds.
Rising interest rates, higher costs and cooling online demand have pushed some of these upstarts to the edge, forcing them to seek debt relief or merge with one another, according to people familiar with the situation. There are so many aggregators and investors speaking with one another it's difficult to predict which companies will emerge intact and which will get washed out. The consolidation could ding some lenders, which might be forced to write down their investments, a hit that could collectively reach billions of dollars. BlackRock said in February that it wrote down the value of Razor Group, contributing to the investment firm's fourth-quarter decline in assets. The alternative to writedowns could be even more painful: businesses that go broke trying to go it alone and can't pay back anything at all.
Rising interest rates, higher costs and cooling online demand have pushed some of these upstarts to the edge, forcing them to seek debt relief or merge with one another, according to people familiar with the situation. There are so many aggregators and investors speaking with one another it's difficult to predict which companies will emerge intact and which will get washed out. The consolidation could ding some lenders, which might be forced to write down their investments, a hit that could collectively reach billions of dollars. BlackRock said in February that it wrote down the value of Razor Group, contributing to the investment firm's fourth-quarter decline in assets. The alternative to writedowns could be even more painful: businesses that go broke trying to go it alone and can't pay back anything at all.
My simple rule (Score:5, Insightful)
If someone is trying to get me excited about something, they're trying to sell me something. The more they try and engage my enthusiasm, the bigger the sales con. Emotion shuts down logic.
How in God's name did anyone think there was anything like brand loyalty for cheap consumer crap? The entire consumer model is chase the cheapest with Amazon and the like making switching as easy as possible.
Stories like this are why people constantly refer to the finance world as gambling.
It's not brand loyalty they're after (Score:3, Informative)
I suspect this was more about making sure nobody upsets that Apple cart. As long as there's very few companies to buy from and no trust busting going on these investors can just jack up prices at their other properties and you have to pay them.
It's like gambling at your own casino. You can't really "lose".
business as usual? (Score:3)
A rather flawed idea that 15 rivals are really going to tell each other their solutions. I guess 'spend less, do actual work' wasn't on a topic that evening. Call this 'expensive dinners that could have been a Slack'.
Re:business as usual? (Score:5, Insightful)
Clearly they lack a sense of irony. These loan-laden self-deemed leaders "convened a private dinner in Las Vegas ... Over rib-eyes and chicken piccata at Scarpetta ... the group brainstormed strategies to weather the slump"
A rather flawed idea that 15 rivals are really going to tell each other their solutions. I guess 'spend less, do actual work' wasn't on a topic that evening. Call this 'expensive dinners that could have been a Slack'.
Are they really rivals? If they're all sitting down to dinner and colluding, that sounds more like a cartel. Bad for the consumer and we should all be glad that some of their imaginary money has evaporated.
5 Years ago. (Score:4, Informative)
People were saying to me, Driving my Prius. Get a Truck Gas Prices are low. While Gas prices were still low, I actually ordered a new EV (which took months to get fulfilled at the time), By the time I got it, Gas Prices were at an all time high, and people are like, How did you get an EV, this Truck is killing me financially, but I can't get a better fuel economy car or EV for months.
I didn't try to Time the market, I just got lucky, But I keep my cars for over 10 years, and Gas Prices will rise and fall. So I try to get the best fuel efficient car that fits my driving and living needs, that I can afford. Because I don't like paying a lot for Fueling. So when energy prices are low, I pay even less, when they are high, I will pay more, but not so much that it becomes a major expense item.
These banks giving out loans, are in it for the short term, they look at the current trends, and just figure they will stay that way, because their basic MBA class in Statistics shows them that. Oh look people are buying deodorant online, the numbers shows it is a growth market, INVEST! Not well lets take a look at the business see how they operate, and why the following condition is causing this growth. It is like "Get a Truck, it is more versatile, gas prices are low, you are an idiot to not get one!"
For these big institutional investors (Score:2, Troll)
You could try starting a business to compete on lower prices, but without anti-trust law they'll just cut their prices just long enough to put you out of business. The banks know this, so they won't loan you any money.
Short of major trust b
Re: (Score:1)
Then you buy all the shelves (Score:3)
I think the problem is that it's hard for regular human beings to comprehend just how much is owned by how few, and just how much power that means those few have.
Chump Change (Score:2)
Remember when $16 Billion was real investment money?
Today that's just 5 guys deciding what to do that's more cerebral than playing poker.
The investors win either way (Score:3, Informative)
someone "won" (Score:2)
If these geniuses lost money buying up microbusinesses, that means the folks selling off said items got paid more than their property was worth. Win!
I'm unclear on something (Score:5, Insightful)
Am I supposed to feel sorry for someone here? Cuz I'm not feeling anything. The big box retailers destroyed all the small local shops a few decades ago, then Amazon started putting the hurt on those big box retailers over the past 15-20 years... and now, on Amazon, things aren't going 100% the way some nebulous group of far-off investors had planned.
Why should I care?
And they're "too big to fail" (Score:2)
"...they raised $16 billion -- mostly debt -- from big names like JPMorgan Chase, Goldman Sachs Group, BlackRock and Bain Capital."
Just look at that list of banksters, grifters and kleptocrats. Does anybody believe US taxpayers won't somehow wind up paying the bill for this? Anybody?
Re: (Score:2)
"...they raised $16 billion -- mostly debt -- from big names like JPMorgan Chase, Goldman Sachs Group, BlackRock and Bain Capital."
Just look at that list of banksters, grifters and kleptocrats. Does anybody believe US taxpayers won't somehow wind up paying the bill for this? Anybody?
At the very least, when it comes to tax time they'll claim that their stupid, stupid choices that are entirely their own fault are "business losses" and weasel out of paying taxes.
What? (Score:2)
"invested billions of dollars in startups rolling up popular brands sold on Amazon"
What does that even mean? What is rolling up popular brands?
peppermint-based jock-itch remedies? (Score:2)
OMG I've got to have it!
Only Amazon (Score:2)
The customer pays Amazon for prime, something that only benefits Amazon not sellers.
Marketplace sellers pay FBA storage fees and delivery fees.
Customer orders item, then claims there is a problem and Amazon refunds
Amazing (Score:1)