With 44 percent of U.S. eCommerce business, it’s hard to say that anyone truly competes with Amazon. But there is a small group of companies competing to buy their sellers. Last week PYMNTS reported on one such company, AccrueMe, that injects capital into leading Amazon Marketplace sellers and then partners with them to help their trajectory. Now another company, this one with a fresh $87 million in funding, is on the scene.
Boosted Commerce acquires companies that sell on marketplaces. Its current focus is on Amazon, but it’s a platform-agnostic company ready to make a bid on independent sellers that sell on any marketplace from Shopify to Walmart. Instead of partnering with these companies as separate entities, Boosted wants to outright buy up to 100 marketplace sellers over the next year and capitalize on the of the synergies and advantages it offers. Co-Founder and Chairman Charlie Chanaratsopon tells PYMNTS that he sees his company as the Fifth Avenue of eCommerce: excellent products, exceptional service and above average value.
“We’d like to acquire consumer product store companies that we believe have that Fifth Avenue type of real estate on Amazon,” he says. “That means it already has the ultimate reviews and ratings and it has products that fit within our scope, which is mostly personal care and packaged goods. And why do we do that? We do that because if you have great reviews and great ratings, it’s a flywheel effect. We leverage the hard work these entrepreneurs have put into creating popular brands used by millions of people and taking them to the next level.”
Last week Boosted announced it had received $87 million from several investors including Spencer Rascoff, co-founder of Zillow and Hotwire. That funding will be used to acquire “dozens” of companies, according to Chanaratsopon, over the next year. It has already wrapped deals with six Amazon sellers ranging from personal care to consumer-packaged goods to stationery.
The acquisition criteria, outside of the Fifth Avenue analogy, is determined by an internal Boosted team. After securing the acquisition, Boosted works with the founders to integrate it into the Boosted family as well as the potential for selling it through CharmingCharlie.com. If the name sounds familiar, it should. The company reached almost 400 stores before it started winding down in 2018 and declared bankruptcy in July 2019. Charming Charlies still has 15 stores and has committed to reopening 75 more in 2021. CharmingCharlie.com still operates as a standalone women’s fashion and accessories site and sells on Amazon as well.
“Boosted is at the intersection of the retail revolution,” Chanaratsopon says. “And I think we’re unique in that we have distribution points already. And I think that makes us unique in the eyes of the sellers. Most of these sellers they really want to know who they’re selling to. And not just because we’re corporate guys; both my co-founder and I have started multiple businesses as entrepreneurs. So we’ve been in their shoes. And so why is that important? Because most of the deals or a brand we acquire … their payment that we paid in is in something called earn-out, which they get paid out over the next few years after we acquired the business. So imagine if you did that, you didn’t want to know who are the guys taking your business?”
For that reason Chanaratsopon says he plans on speaking with every potential acquisition as they get closer to closing the deal. He knows that the numbers of the potential acquisition numbers are staggering. According to his data, more than 2,500 sellers come on to Fulfilled By Amazon every day. Only 3 percent make it. Just to make it, he says, is a highly commendable achievement. But the ones who can generate millions in revenue are truly rare, and that’s where he feels that Boosted can make a difference. “Boost,” he says, is an active verb.
The pandemic did not have a marked effect on the Boosted process. After the first lockdowns in late March happened, he says, Boosted didn’t bid on any companies for about 45 days. Then, as it became apparent that Amazon was serving as the go-to store for so many people around the world, his team started up again. He did not find that the pandemic affected valuations or sellers’ willingness to be acquired. But he does think the digital-first economy it has accelerated will stay the course.
“Is there still room to have brick-and-mortar? A hundred percent,” he says. “The tide may be dropping for brick-and-mortar, but it’s far from completely dead. But the shift is real. I can’t tell you exactly what will happen next year but I can tell you, if I had to guess about the next five years, I think we will all ride the wave. We’re going to ride the tailwind from Amazon and Shopify and the pandemic has just made it rise faster.”