Chinese Amazon Sellers in High Demand for VCs and Ecommerce Roll-ups – TechCrunch
Chinese merchants selling on Amazon are having a moment. Sloppy exporters are used to roaming suburban industrial areas and dealing with constant pressure on cash flow, but suddenly find themselves having coffee with China’s top VCs and reps. investment giants of the Internet, who come with big checks to hunt down the next Shein. or Anker. While venture capitalists can provide them with the cash to scale quickly, many lack the expertise to help them strategically.
This is where brand aggregators can leverage their retail know-how. Also called roll-ups, these companies go around the acquisition of promising e-commerce brands for operational synergies. After taking off in the United States, Europe and most recently in Southeast Asiait has also quietly landed in China, where traditional white label manufacturers are trying to move up the value chain and establish their own brand presence.
The last roll-up to enter China is the Berlin Brands Group (BBG), which aims to buy “dozens” of brands in the country over the next few years, founder and CEO Peter Chaljawski told TechCrunch. This will significantly increase the existing portfolio of 14 brands of the German company.
The move came following BBG’s $ 240 million debt-raised financing and its announcement to pledge $ 300 million on its balance sheet to buy out companies. The company opted for debt in part because it has been profitable since its inception. The recent funding will not be its last turn and it could use other financial instruments in the future, the founder said.
Chaljawski does not see venture capital and private investors as direct competitors in the hunt for brands. “There are tens of thousands of sellers in China who generate significant income on Amazon. I think the venture capital money applies to some of them, and the stacking model only applies to some of them. But “some” is a very, very large number. “
BBG is no stranger to China. The 15-year-old company has relied on Chinese manufacturers to make its kitchenware, gardening tools, sports equipment and other household appliances, with 90% of its products still being made in the country today. hui. For the new brand buyout initiative, it hires dozens of people in Shenzhen, which Chalijawski has dubbed “Amazon’s Silicon Valley,” in reference to the southern city’s key role in exporting, manufacturing and, more and more, the design.
Alternative to Amazon
BBG hopes to provide a new way for Chinese consumer products to grow in Europe and the United States beyond being an anonymous brand on Amazon. Sellers may want to break free from the U.S. giant to gain more control over consumer data, but creating a direct-to-consumer (D2C) brand is no small feat.
Many merchants who are good at operating Amazon third-party businesses don’t have the infrastructure to go beyond Amazon, such as an in-house logistics system, the founder said. In Europe, BBG manages 120,000 square meters of distribution centers, which allows it to get rid of Amazon.
Chinese brands may also want to find alternatives to Amazon in Europe, where the e-commerce landscape is much more fragmented than that of the United States, Chaljawski noted.
“If you look at the United States, Amazon is dominant. If you look at Europe, Amazon only has a 10% online retail market share. So 90% is beyond Amazon. In the Netherlands you have platforms like Bol. In Poland you have Allegro, and in France you have other dominant players.
To bridge the gap between international brands targeting Europe, BBG operates nearly 20 D2C online stores in major European countries, in addition to selling on Amazon. Its sales growth in the United States was also at its peak. Currently, over 60% of the company’s revenue comes from non-Amazon channels.
BBG is already in advanced negotiations with “certain brands” in China but cannot disclose their names at this stage.