Has any aggregator or rollup company been successful?

Remember the time when platform or brand aggregators were in vogue? Billions were raised for Amazon aggregators who bought marketplace native brands at valuations and multiples that made little sense (remember when these companies (I am looking at you Thrasio) bought a business per day).

Have any of these companies - validated the thesis that e-commerce on Amazon, Shopify would grow and owning brands would be valuable long term? Currently, the answer is no. In most cases, the companies either went out of business as they were dependent on financial gymnastics instead of buying the right assets. Secondly, the companies that have survived have not gone public or, when acquired, remained private.

Why has this business model not scaled?

  1. Businesses based on continuous mergers and acquisitions is not sustainable as every business has its profile and challenges.
  2. These businesses misunderstood their core revenue driver, which was accelerated due to acquiring the wrong brands.
  3. Most of these businesses thought that bringing in-house functions such as advertising, fulfillment, and operations would drive economies of scale. These functions require skilled executives, which the roll-ups never had.
  4. E-commerce is complex, and product-market-fit for new business models takes years, not months, to reach critical mass.

Conglomerates such as Proctor and Gamble took years to find the right mix of brands that drive revenues - why would roll-ups or aggregators be different?

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Even the likes of P&G and Unilever acquire/develop/sell/discontinue brands to balance their portfolio. And just look at the way L’Oreal and Natura have traded brands between themselves in the last year or so.