Berlin Brands Group commits $302M to acquire D2C and Amazon merchants – TechCrunch

If the rise of direct-to-consumer businesses has been one of the big e-commerce trends of the last decade, the model is beginning a big round of strengthening D2C players, bringing in more economies of scale Is, of course. Related topic of last year has been.

In the latest move, a startup out of Germany called Berlin Brands Group Has announced that it plans to invest € 250 million (approximately $ 302 million at today’s rates) to buy smaller companies and bring them under its fold.

While many of the company’s competitors in the consolidation race are primarily focused on the Amazon marketplace – leaning on fulfillment by Amazon (FBA) to cater to distribution and logistics – founder and CEO, Peter Schalski, tells us This is a different story in Europe’s current target market.

“In the M&A market, a major difference between the US and Europe is that the latter is more fragmented,” he said. “In the US, D2C vendors do a lot on Amazon. In Europe, there are still plenty of options. And in some markets such as France, consumers also do not like the Amazon. “This is, of course, to sell directly to consumers and to bypass the market altogether, which Chalzavsky said will remain a major focus for BBG. All in all, BBG today says that it uses some 100 channels to sell its products.

BBG is not your typical e-commerce startup, so far it has managed to build a large and profitable business on its own scale in a big way. And despite being a big e-commerce player in Berlin, the BBC has no connection with Rocket Internet, the well-known incubator of established e-commerce businesses in the city.

The startup is investing $ 302 million from the startup’s own balance sheet. And what we understand is also coming ahead of BBG to raise a significant round of external funding to continue its growth. Although BBG has raised money (an undisclosed amount, per) pitch book) In the past, this would be its first significant equity round at closing.

BBG itself has built its profitable direct-to-consumer business from the ground up. First based on audio equipment in 2005 (Chalzavsky had ambitions of being a DJ in the past life) it has some 14 brands today, covering 2,500 items, that it has developed and developed itself, It sells in 28 markets.

The group model that BBG has taken includes a variety of consumer electronics (including audio gear, fitness equipment and home appliances), and is sold under a range of different brands such as Auna, Karlstein and Capital Sports. To date, it says it has sold more than 10 million products, and is profitable, bringing in € 300 million (approximately $ 363 million) in revenue in 2020.

Its focus for the new acquisition will include more brands and products in gardens, home and living goods, sports, electronics and home appliances, with the goal of generating anything from € 500,000 to € 30 million in revenue.

While BBG has been mostly about organic growth, it started moving its first forest into inorganic expansion last December, With the acquisition of home goods brand Sleepwise, which Chalzavsky describes as making “a very nice blanket”.

A good blanket rest can come in handy. Despite its success to date, many challenges lie ahead for BBG.

The first of these are contestants. BBG’s strategy changes and acquisition plans have come at a time when consolidators have begun to emerge in the space, armed with fists of dollars to bolster smaller brands that are Amazon (in fact, primarily Amazon displacement) such as Markets have emerged with success, but perhaps without clear avenues for scaling.

Includes a choice of Thracio (Which recently raised $ 500 million in loans to use to buy companies), Seller, Time of joy, Heroes, Perch even more.

this story At FT since December (before Thracio’s most recent debt round), it has been estimated that at least $ 1 billion has been collectively raised by these companies to create new online consumer empires based on this model.

The vision for all of them is very clear: they want to create the next Unilever, P&G, or Sony, and they are building new economic models and technology, leveraging new innovations in logistics, economies of scale, sales analytics and marketing Huh. To do this.

Another challenge is how successful and efficient a company, which has hitherto been on a very deliberate and organic path, will be in integrating a lot of new brands, with relationships across cultures and business partnerships, in tow. Are present.

The third is the sourcing of quality brands themselves. As we have previously stated, taking Amazon only as an example, tA ton of junk is sold here, including a whole industry of wholesalers who buy sites and resell on Amazon, which is one of the reasons why so many merchants sell similar products in specific categories. These marketplace vendors leverage things like SEO and armies of reviews to move their products to the top of search results, and they can often sell well, even if they are not consumers for you. This means misleading signals for potential companies looking for hot companies.

How marketplaces are created, how much balance is there between them and their brands trying to make these things to their owners will be interesting to see in the coming years. Amazon and its ilk have only continued to grow and become more efficient, although this sometimes means that they are very powerful, rather than being more useful to third parties:

On the other hand, we are seeing a more frequent theme to help them: Startups and large companies continue to have a presence to help younger players stay in the game on their own terms. These include giants like Shopify, but also new players. Gosite, Shogun And Xentral.