By Ryan Gallagher
Since early 2020, online business aggregators have been gaining attention from investors as well as from many media outlets. Now, high-profile businesses known as Amazon FBA aggregators have come to the forefront after the digital aggregation market reached USD 14 billion, according to Entrepreneur. Professionals in this industry hypothesize this sort of aggregation is just getting started as competition grows between ecommerce companies and other “digital businesses”.
Current Climate for Business Aggregation
It’s no secret that ecommerce boomed during the pandemic. Everything under the sun such as shopping, learning, communication, and work–all had to be done digitally. During the COVID-19 storm surge, aggregators like Berlin Brands Group and Razor Group acquired ecommerce businesses (like Amazon sellers) amidst their strategy to simultaneously grow a group of smaller brands.
The success of their business model has kept investors’ money flowing to other aggregators—especially those selling on the Amazon marketplace. For example, 41% of all the US ecommerce sales occurred via Amazon in 2021.
While ecommerce aggregators like Thrasio have purchased profitable companies with already-cultivated customers, other aggregators emerged. Businesses known as “digital demand aggregators” have a slightly different business model. Digital demand aggregators have goals to acquire, maintain, and grow content websites. For these firms, the most appetizing sites on the shopping list receive a large number of organic visitors. By purchasing these sorts of sites from thought leaders and content creators, aggregators can further grow the site’s brand and income channels.
In 2021, a startup team known as TreasureHunter hit this “business roll-up” market. This was another example of an aggregator concept whose team differentiated themselves from Amazon FBA aggregators by buying up digital equity in other online areas that influenced ecommerce. Today, this team and others, are purchasing content websites in many different categories from thought leaders and content creators.
“With TreasureHunter, we want to revolutionize the digital content segment and give small websites and blogs the exact tools, resources, and partners we could have only dreamed of back when we established our first blogs in 2013,” said Benjamin Schardt the Co-Founder & Co-CEO of TreasureHunter who started his entrepreneurial experience with his own blog.
Business Aggregation Goes Virtual
It’s a standard business practice for large corporations to buy-up or “roll-up” smaller entities. However, the business climate within the post-pandemic’s “new normal” has produced several large digital business aggregators in one short timespan.
Digital roll-ups “are the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value,” according to TechCrunch. “…roll-ups often achieve much greater exit multiples, known as ‘multiple arbitrage,’ so it’s no surprise that the trend is making its way online.”
Firms like TreasureHunter acquire niche content sites in the form of sports blogs, digital recipe sites, travel guides, etc. Most importantly, these content websites are often created by truthful individuals who want to distribute content about their favorite hobby or passion. In the last few years, these content creators have been rewarded by steady growth in their advertising revenue and most recently, attention from bigger corporations.
Aggregators buy these websites in order to develop them into well-oiled, revenue-producing machines. Using larger teams and bigger budgets, aggregators uplift output around tasks that individual blog owners often struggle to complete. If this is to work properly, aggregators must cut the operating costs of the blogs they buy, increase advertising revenue, and continue to create helpful content that satisfies the site’s unique audience.
“We are leveraging the strong collaborations with respect to marketing, advertising, content management, and creating synergies between technology our teams are using to enable massive growth,” continued Schardt. “This is growth that would not be possible for the asset, stand-alone.”
What Does Digital Asset Aggregation Mean for the Internet’s Future?
In 2019, ecommerce ad spending in the United States reached USD 12.5 billion, according to Statista. In 2021, the total US ecommerce sales reached USD 960.1 billion, which is an 18.3 percent year-over-year increase, according to Oberlo. So, aggregators like TreasureHunter believe that controlling areas of the internet where ecommerce is influenced will be highly profitable if these trends are to continue.
Given the 32 million (and counting) active content sites with audiences across the US and Europe, aggregators predict competition growth and a greater value for digital assets with loyal audiences. Plus, these corporations bet that ecommerce sales as well as advertising revenue will continually increase. Crunching these numbers, the firms that are rolling-up online entities are also working to build higher quality sites as the internet landscape undergoes further evolution.
Using investor funding they’ve gained, aggregators will onboard newly-acquired assets–betting on the business model to achieve over the next 5-10 years. These companies aim to control “digital property” on the internet, just like the Amazon FBA aggregators have gained a large portion of control inside Amazon’s online marketplace.