Thrasio, a prominent eCommerce startup specializing in acquiring consumer brands sold on Amazon, is reportedly grappling with financial difficulties following a decline in online spending in the wake of the COVID-19 pandemic.
To tackle this issue, the company is actively exploring restructuring options and has initiated discussions with consultants and lawyers to address its financial situation, The Wall Street Journal (WSJ) reported Wednesday (Sept. 27).
The company is considering raising additional capital or exploring alternative options, including the possibility of filing for bankruptcy, according to the report.
Thrasio did not immediately reply to PYMNTS’ request for comment.
The company, which earlier secured a substantial amount of funding, including $3.4 billion from investment firms, embarked on an acquisition spree, purchasing numerous companies that primarily sell their products through Amazon, according to the report. However, this business model, known as “Amazon aggregation,” has faced challenges as consumer behavior reverted to pre-pandemic norms, resulting in fewer online purchases.
The shift in consumer shopping trends has made investors wary of supporting companies focused on selling niche products on Amazon, the report said.
Thrasio’s significant funding, with Advent International leading the initial equity financing and Silver Lake leading the latest Series D financing round in 2021, which valued the company between $5 billion and $10 billion, has not shielded it from financial challenges, per the report.
In response to these difficulties, Thrasio underwent substantial changes last year, including a workforce reduction of approximately 20% and the appointment of Greg Greeley, a former Amazon executive, as the new CEO, replacing founder Carlos Cashman, according to the report.
The latest news about Thrasio comes about a month after news that another Amazon aggregator, Benitago Group, filed for bankruptcy. That company sought protection from creditors two years after raising $325 million in funding, the WSJ reported Aug. 31.
Benitago’s bankruptcy filing reflected the changes faced by the market for Amazon brand acquirers, according to the report. Funding for such acquirers declined by 88% last year, with only five funding deals completed in the first five months of this year.
On Sept. 1, it was reported that Apollo Global Management is second-guessing its investment in Amazon brand aggregator Perch. The private equity firm has gotten more involved in helping Victory Park Capital, which invests in multiple aggregators, seek a buyer for Perch, Bloomberg reported.