EP252 - Amazon FBA Roll-ups w Chris Bell CEO of Perch
[NOTE: The audio quality of this episode is not up to our usual standards due to some internet challenges. But we felt the content was valuable enough to publish the episode anyway.]
A number of firms are acquiring, or some would say rolling up, brands that primarily distribute their products on Amazon using Fulfillment by Amazon. By some accounts, these firms have cumulatively raised over $1B in capitol, and are rapidly acquiring brands.
This week we explore this trend, with the founder of one of these firms, Chris Bell, CEO of Perch. Chris sees Perch as a next generation CPG conglomerate leveraging the Amazon marketplace. While traditional CPGs may review their pricing quarterly, and set marketing strategies annual, Perch adjusts pricing strategy hourly, and advertising strategies daily.
“Amazon marketplace is 2x any CPG and growing faster.”
CHRIS BELL, CEO OF PERCH
In this interview we cover:
- Overall trend, and how Chris sees the marketplace
- Perch criteria for acquisitions
- Synergies for brands in the roll-up model
- Off Amazon strategy
- Potential risks of this model, including from Amazon
- What the potential future of this market looks like
If you’re interested in selling your FBA business to Perch, you can reach them at firstname.lastname@example.org.
Episode 252 of the Jason & Scot show was recorded live on Wednesday, January 27th, 2021.
Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript
[0:24] Welcome to the Jason and Scott show this is episode 252 being recorded on Wednesday January 27th,
20:21 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:41] Hey Jason and welcome back Jason Scott show listeners.
In this week’s episode we are going to do a deep dive into a trend that I’ve been really fascinated by and we’ve touched on it on the show a little bit last year.
That trend is that there are a number of firms that are acquiring or some would say rolling up Amazon FBA based businesses.
Sometimes I’ve heard these called Amazon Roll-Ups FBA roll-ups,
what have you and cumulatively if I’m doing my math right these firms have raised about a billion dollars now with this strategy,
globally there are several in the US and there’s some rowing across Europe and other areas so it’s really interesting and I can get a lot of questions
because one of the founders of Channel advisor I get a lot of questions from Amazon FBA Sellers hey
Scot what you think about this and how do I sell my business for a crazy high valuation so we’re going to dig into that in this week’s episode and to walk
just do it we’re really excited to have one of the CEOs of one of these companies we have Chris Bell and he is the CEO of perch Chris welcome to the show.
[1:49] Scot nice be here.
[1:52] Chris we are thrilled to have you here because one of Scott’s favorite topics is to talk about Amazon so if we don’t have enough Amazon shows he starts to get antsy so I totally appreciate you.
Accommodating us but before we jump in the Amazon we always like to get a little bit of background about our guests and you you came to purchasing a pretty cool e-commerce e way so can you tell us a little bit about.
What you did prior to perch.
[2:17] Definitely yeah so I started my career early on I was a computer engineer actually and I my first job was at General Electric Milwaukee designing and implementing software.
I did that for a bit and then actually went into sales I wanted to go get a bit more touch with the customer so I’ve told viewers and software for a couple of years which wouldn’t.
But eventually wanted to do something a little bit more thought provoking so when the business school at Carnegie Mellon after that I went to Bain & Company which the bomb brought me to Boston about 11 years ago,
was that being for six and a half years,
and will it be nice spent about a third of my time in the private Equity Group or I worked on over 40 transactions that leading private Equity institutions probably and then the other two-thirds of the time I work.
So mostly helping them understand their customers and then I’m doing whatever we could to drive.
[3:16] Salesforce Effectiveness pricing products for fitting customer service.
And then after six and a half years of being I wanted to go build something and point I was looking at.
You can wait there along and asked me to come and build their North American supply chain which was really amusing but also enticing it was amusing because those Supply chains.
And I actually tried to back out of the interview process I just thought they had the wrong guy who must be,
and they convinced me and it has all my work previous I’ve been in sales and work mostly on organic growth customer like growth called it in,
and all I talked about was the customer and they said exactly you know for e-commerce supply chain is the key to the customer,
if you think about why people buy they showed me some NPS data which is a festival measure.
[4:15] Process and fifty percent of all of their comments positive or negative related to the supply chain that show up on time was it broken even more soberly pair because heavy bulky things people are entering your house.
Speaker in your living room where the best of the bed in your bedroom and so I got really excited about about this customer vision and just honestly Wayfarer and the team there was amazing so I joined Wayfarer in 2016.
And three and a half years we open 50 buildings across North America 42 final mile Center is deep sort centers whose an absolutely.
Crazy amazing time when I left was but a 3 billion dollar supply chain my favorite factoids,
is when I joined Wayfair on average it took 27 days from click to deliver for a heavy bulky items if you are infrequent but Kevin Conway Fair 27 days later it would be in your living room,
and when I left we were doing 2-day delivery of couches hot tub profanity and so we were kind of Amazon priming that evolved into Bates.
All of the conversion left and customer satisfaction lift and repeat lift that you might expect.
Then you’re given that time we hear is great company I really enjoyed the time I learned a lot and a lot of fun getting in the supply chain and building that but I really wanted to go build something and I started looking around talking a lot of entrepreneurs in the Boston area,
and you know honestly I fell into this space and I really enthralled.
[5:40] I’m here back then you’re rolling up Amazon businesses but it’s not really that big of a thing there’s really only one other person that I do have doing it.
And as I thought about both the opportunity and just you know you guys know this but from the outside we look at Amazon.
You hear it’s big but you just don’t realize how gargantuan this this thing is and you start getting into it and I started I went to a conference in New York and talked to some entrepreneurs that we’re doing this.
One I just thought they were awesome right just really true entrepreneurs we strap their company but their own money into it and had built something really interesting,
and differentiated and then to it felt like a perfect Mint or Matt from my background I’ve done a lot of them a lot of experience in e-commerce a lot of experience and I change which is a common endpoint.
Many small product companies and so I jumped in start.
[6:35] That’s awesome Chris two quick things for our listeners for our Millennial listeners and our gen z westeners a copy machine is back in the day.
People used to record ideas on dead trees and sometimes you need a copy of the dead tree so you could actually make a machine that duplicated the dead tree.
[6:54] That’s right that’s you that’s a great summer I thank you for that.
[6:57] Yeah I’m totally here for you,
and then obviously Scott kind of spilled the beans about what perch is about but maybe they just get a little bit more clarification.
When you say FBA sellers you are talking about,
businesses that focus on selling on the Amazon Marketplace and generally use FBA for fulfillment.
[7:26] That’s correct yeah we are today focused on Amazon third-party Marketplace Sellers and you’re right they generally use FPA and you’re probably for you and your listeners you understand the difference between FDA and Marketplace and not Omar.
Find more broadly that difference is lost on full two great people but my incorrectly called an FBA sellers for common understanding but we think I go ahead.
[7:54] No I was just curious in general do you care if they’re using,
FBA white so in general you have to use FBA to be particularly successful on the Amazon Marketplace so I imagine you’re mostly interested in successful Sellers and that and FBA is kind of a,
a tactic that correlates strongly with successful sellers but like do you actually care like if there was a good business that that had a good run rate and,
you know doing their own fulfillment and like somehow miraculously was winning even without FBA like do you,
is there some Secret Sauce to FBA as far as you’re concerned.
[8:35] No not at all we generally you’re right most people who have what we call winning products which is what we look for in diligence.
Are in FBA but they’re not all in FBA and like you said the oftentimes you get a bit of a thumb on the scale but we have looked at solar people Prime products we’ve looked at companies,
that’s just to start going without sewing fulfilled Prime especially in the heavy bulky space,
and again you can win there because Amazon doesn’t give you as much of the thumb on the scale for the heavy bulky stuff they don’t really want that in the Fulfillment centers,
so in general we’re looking for great companies with great products that are winning within their Niche and ninety percent of the time they’re in FDA but it’s not.
[9:20] Yeah and I imagine when you do look at a vendor that specializes in big and bulky it starts bringing back all of your your Wayfarer vibes.
[9:28] Yeah absolutely I actually I love the big bulky space and I think it’s an interesting,
spot for two reasons one you know you can have an opportunity to differentiate yourself a little bit more in the film inside give an Amazon doesn’t play as well in that space.
Then too we actually find those spaces to be less competitive just because of the working capital requirements you know you can sell $10 widgets with pretty low working capital and so we generally find those remote quantitative.
Sales niches and if you get into a 200 dollar kayak.
There’s just less people who want to sell that thing and therefore you get the mildly positive space we would love to do more.
[10:11] Yeah I mean I always like to say well if it was easy eBay would be doing it so.
No I’m telling my friends at eBay I’m just kidding I’m rooting for you the the.
It’s funny I used to like people used to always ask like what’s the,
the category the Amazon isn’t winning at that you could kind of compete where there’s a white space and every time I think of one
it eventually gets eliminated right so originally it was big and bulky items,
and then it was like live plants and as you may know they have a pretty robust wide plant business now
and so I was for a while saying like personalized products and now they’re they’re launching made-to-order apparel so it’s like you can’t win it’s just a matter of when they,
they get around to focusing on the particular problem that you’re good at solving
I do want to dive in a little bit more on your criteria for a company that might fit in your portfolio but before I do we did
hit on wafer a little bit like is there it seems like they’ve had a really good run as a result of covid is there any you still have a lot of friends there is there any remorse about not being in that space at the moment.
[11:22] I do have a lot of friends there and I think they’re doing some amazing things but no remorse at all I mean if perch maybe a perch wasn’t going as well as it is I might be looking back and wondering but this has been an absolutely amazing time and.
We are growing really quickly and we’ve been lucky enough to attract an amazing team and so and having the time of my life so no regrets at all.
[11:48] Very cool and then let me make sure I understand the founding story so you were did you get recruited by a VC or this was like your your kind of had this idea and you went out and and got funding and launched.
[12:02] Yeah much more the latter I had spent some time talking with a whole bunch of entrepreneurs around Boston and I met a couple of folks who were not in this exact space but kind of in the Amazon space more broadly and so kind.
Your Edge my way into it that way and then yeah kind of circled on the idea ended up talking to a bunch of friends and.
And co-workers talked to like neeraj the CEO and founder of Wayfarer about it I’m talking to you game Theo bleep are there about it.
And you know in a circle around different ways like you can see the problem which is.
Consumer products eventually is a game of scale right Procter & Gamble Unilever all these companies,
they are huge and they are highly acquisitive because scale matters you can get,
Austin damage on the supply chain you can access to Capital Access to Talent access other channels part of the reason why all these entrepreneurs are on Amazon,
because Amazon’s done such an amazing job of lowering the barriers to entry the so many other channels have such high barriers to entry in other markets the oh 75% of the companies we’ve acquired only sell in the US,
because one the working capital putting inventory into places the to honestly.
It’s just a big pain to register the fell in the UK it took us four months to get our vat numbers so.
[13:22] And a brexit brexit doubled the work so brexit is good for you.
[13:24] Oh my gosh it’s such the as this we’re still talking to UPS about shipping things from the eve of the UK and they still aren’t.
We could have done quite yet.
And so so we saw the problem and I so I luckily because I’ve been in Boston for 11 years being at vain,
and being being around this space I have a lot of friends in DC and private equity and also just in the space like I know a couple people who have software companies in the space,
so I just went around and told them hey know what do you think a lot of people say hey build song right that’s what everybody should do is you go build some key to be SAS software,
and like try to compete with teca metrics or poor tile or not even compete with them right but try to solve these problems suits off world it just kept coming around to.
[14:11] The real thing we’re trying to build a scale the only way to build scale is to build scale like real scale,
if you are buying a billion dollars of raw materials a year and we’re not there yet but that’s what we’re getting to and you can’t do that you can’t fake that.
You actually have to be buying a lot of textiles and a lot of plastic and that’s when you get their bill scaling so,
back to this and then it’s also the other part of the story that I find interesting is as you guys alluded to this is a super popular space you know,
Billion Dollar Plus raise,
you know I saw something as a dirty reporting entrance when I launched perch I probably had 250 investor conversations in 49 of them were like yeah kind of a weird idea but you know you probably make some money but not for us and luckily Alex afar.
Site rages you got it and he was super excited and be really quickly from meeting terms.
[15:08] It’s not easy it was really like it was a really not easy path to raise money for this a year and a half ago and now it seems like everybody.
Glad with what we did because we got a head start and we’re pretty clearly ahead of everybody in this space but one we’re enjoying and we worked on the man that lead but it’s it’s it’s just funny how quickly things yes.
[15:33] Yeah I feel your pain when I had a SAS company we were like one of the first three and everyone said it was crazy and would never work and then I should do e-commerce and then,
now I’m doing an on-demand Services never thinks I should have B2B SAS time I’m like a cycle off it feels
feel feels like but that’s that’s what we call Innovation Chris works right out on the edge there so if I look at crunchbase which is often wrong it says you guys have raised north of a hundred million is that kind of directionally right.
Yeah and then one other quick
question so so you know so let’s say I’m an Amazon Seller and I’ve been selling you know excess inventory of shoes that’s not really what you’re going for right you’re looking at more kind of,
nascent Brands so so have a direct consumer brand meaning their manufacturing it and,
come up with a product not re selling other people’s products is that is that fair.
[16:30] That’s correct yeah as we as I alluded to earlier we are looking for winning products and Brands as we could find them a little bit more about what that means to us.
But we want something that we think is defensible for the medium term,
and I don’t believe that competing for the buy box in a reseller Arrangement is defensible and even if you have an exclusive reseller arrangement,
still that comes up for Renewal right I don’t know if it’s annually every three years but if we’re paying a multiple of earnings we want to believe if we pay three times annual,
We want to believe that we can get at least six years if not more out of that and so the way that we think that is most likely is you have a trademark you have a brand you have bran.
Let’s get brand registry with Amazon and then on top of that you are winning within your Niche so you have your top of organic search you have great ratings and reviews a low return rate profitable unit economics consistently right we realize sometimes you have to do,
Lightning Deals or other such things to drive some volumes recontact I think that if you are running 25% tacos a generalist.
[17:44] We want to see stronger gaming performance.
And I really you know the rating review moat and the return rate that’s action and MCX that it’s really really important to us because that shows.
The customers are speaking right there telling you and everybody else because of the quality product,
and they’re willing to share that with their with their quote are quote friends with others by writing a review for you.
[18:12] Got it and I realize you’re talking I failed to ask if there’s a geographic Focus like we joked a little bit about brexit are you everywhere Amazon is are you primarily in Europe in the US or what’s the.
[18:26] Yeah today we do North America so we do um.
As you guys know mostly 95% or plus us and then we do panting you and UK in terms of selling Gio’s we purchased businesses from sellers.
Pretty globally maybe 40 or 50 percent in the US.
Yo 40% in Western Europe and then you know 20% interest in Europe and so then it doesn’t matter where the seller is it matters that they have a great product and have the attributes that we.
But even though it’s been mildly amusing that it’s you know even the sellers and Eastern Europe often times they’re only selling on.com in the US that’s.
I’m not the one to go.
[19:22] And then any so I imagined when I look at,
these kind of nascent Brands they do tend to Cluster and like cpg so like Health and Beauty supplements is that are those kind of the category hunting grounds that you you tend to focus on.
[19:40] We have a little bit of a broader Focus but you’re right that that’s where a lot of Sellers and so because of another part of our of our company thesis is that,
the barriers to entry are come way down if you Google,
launching a product on Amazon you’ll find videos that say make sure you have at least one thousand dollars in the time to launch a new product on Amazon which is amazing for all the bad rap that Amazon gets they have been one of the largest drivers of Entrepreneurship ever,
maybe millions of opportunities for previously didn’t have opportunities 10 years ago if you wanted to launch a new consumer product in health and beauty or housewares,
you probably needed 50 to a hundred to two hundred thousand dollars you probably have to buy a full container load from an Asian manufacturer you have to find some.
[20:29] Peter Griffin give them all sorts of your margin and so it’s been it’s really amazing what they’ve been able to do,
but we we despite the fact that the barriers to entry or come down which is enabling always with launch products it’s still really hard to launch a great product,
we you know we found some research Procter & Gamble still has a 97 percent fail rate on new product launches,
the entrepreneurs we talked to also have a 95 to 99% kill rate of product launches you will launch 20 products and one will be 95 percent of their revenue,
and so in general a big part of what we think is that it’s really hard to want to do products and cross the chasm to be a winning product winning your in your Niche having.
You have to be the number one market share BFW being market share Michigan.
And it’s a couple with that is we stay away from launching meaningful brand extensions if you products right so we look for people for cross,
as of it have that product Market fit and I really with their customers and that’s that’s an important part of our youth.
[21:37] And then so a company I started is called Channel buzzer in our theory is if you can do
X on Amazon you can do Y where Y is about the size of X off Amazon is there do you actually help these Brands so so so Amazon’s kind of like are you proving yourself you’ve,
just product-market fit you’re getting good reviews is there a strategy to also start selling off Amazon.
[22:03] Yeah there is yeah we’re starting to experiment with a couple of other channels Walmart being the top of lips we don’t have.
Anything that we think would be a perfect fit for ways are yet but obviously Wayfarer is near and dear to my heart,
so any other Marketplace Channel as you as you just said why is never as big as X and so we’re trying to figure out the right resourcing actually believe that the way.
We want to which is a big part of what we’re building is a technology platform that we can run these products across platforms,
and across keogh’s without a ton of humans,
and so we can hear you guys may know you can control almost everything about Amazon great guys you can control your your photography you’re a good Merchant copy or price for ads can,
you can download a bunch of data and you can get your visibility without even log in to sort them for so.
[23:06] But we’re building that we built a lot of those pieces for Amazon to build those things same things for example for Walmart.
Cost about the same from a technology investment perspective and your parent for that investment isn’t quite as high so what we’re doing now is a little bit more.
I’d call it skunkworks you were Walmart actually been coming after us and they’re obviously investing in the marketplace so they’re working with us and giving us some.
Was it some on the scale but they’re kind of helping us with some lunch Cadence and some advertising and some support to get us the list somewhere.
Place and so we’re taking them up on that and we’re going to see how it goes right if that ends up being smaller than expected then then we’ll focus where the money is going better than expected.
But those things we’re doing is we’re getting some of these brands have chasing boil tea customer or less,
so we’re working to monetize those right and how do we leverage social and leverage female Drive traffic either back to Amazon right to drive that organic ranking then move the sales or to their own sites and,
save a little bit on the on the sale speed when you drive it to your own site but then you deal with.
You know so many returns and all you know what the intermitting state sales tax and all that kind.
[24:30] I’m depending on the size of that business brand Stephen looking at multiple channels.
As well as good group that means it’s tough you know it’s easy to hate on Amazon but it’s also where all the dollars are so we’re trying to balance your thoughtful multi-channel strategy with also focusing Road payments.
[24:53] Yeah no that makes total sense you you alluded to some of the the tools and automation that you guys have put in place I imagine that is,
one of the synergies that you get by acquiring multiple of these companies like are there other other synergies are advantages you you perceive that you’re getting by aggregating a bunch of these guys or is it,
is it really just a smart Investment Portfolio strategy.
[25:22] Yeah there absolutely are we I think you’re right that.
If possible perhaps to do a smart investment strategy group here.
Are I really don’t focus on building but I think could be.
You’re better Department Gamble and you love her and others in the future and I think we can do micrograms are taking share pretty meaningfully from large brands,
and they’re doing that despite all of these challenges that we talked about earlier great despite not having access to Capital despite not being in other markets another channels.
Amazon third-party Marketplace is twice as big as the biggest CPT code paying the world and it’s growing more than twice as fast but the fastest growing which is not the biggest,
and so Michael brands are taking all this share despite their handicaps and we want to accelerate that.
And build a really amazing operating company that is helping these great amazing products of the next level.
Yeah so some of the examples today are on the manufacturing side working with manufacturers both on cost and terms,
and that is every manufacturer is different and what we can get there is different with every with every relationship but the capability of being able to do that well it’s common across same thing with inbound your,
from our Wayfarer relationships we actually have a great relationship.
[26:48] Since broker so we’re helping Salah dating all of our inbound on the full containers we’re getting meaningful reductions by driving volume through a single source and luckily.
Yeah I’d say 75 ish percent of our stuff all comes through Shenzhen and so that it was a not necessarily on purpose but it’s been a nice tail went to that ability to consolidate those with ears.
And then yeah like we talked about on the top-line side as we are building,
our approach to add optimization pricing optimization we don’t price advertised every brand the same but you create the archetypes and we have different product archetype.
And we treat those archetypes like for example you can imagine there are really competitive,
where the key there is to monitor your competitors prices in real time and reactive real time so that you’re always one of the best price items there and then drive as much process by changing and keep your margin,
and there’s other items which is actually probably,
you I’d say 70-plus percent of our portfolio are items we call aspirational where we’re priced maybe 15 or 30% more than most of our competitors but we have a review mode,
and you have a great photography and great merchandising and there is more about understanding what drives people to buy are we holding share there we go there we can invest more in.
[28:14] In sem and kind of ads PPC ads because we find that when you’re more expensive that branding you seeing your image on that first page several times actually batters the best moment they perceive quality when they see.
Over and over again and so what we manage that without cannibalizing too many of our organic sales and so a lot of those.
[28:37] Is the technology but also approaches and thought processes are common and then as I mentioned earlier most of these brands are not in more than one geography and so we have a team that’s solely focus on,
translating easons get it you know the copy,
you’re getting as you guys talked about putting things into Europe and now into the UK is its own Challenge and so getting it over there getting it listed going through launch Cadence getting them ranked driving,
sales is is not the same for every product but is similar right it’s a similar watch Cadence and an approach process,
in general a lot of focus on how do we make these the best brands of the best product and how do we grow them like wildfire.
[29:25] I love it I’m curious is there a
a common pattern like like when you do Acquisitions do most of them tend to be have the same strengths and weaknesses or or is it all across the board like do you acquire one company that’s,
that’s great a tad optimization and maybe you know could use some help with price optimization and then the next acquisition is,
the the reciprocal of that or do you know do most of the entrepreneurs on Amazon tend to have the same strengths and weaknesses.
[29:56] It is all over the board it’s actually it’s I think I’m going to do it one of my favorite parts of this job is meeting these entrepreneurs and hearing their stories but then also getting into their business with them and seeing what they’ve built we find.
It’s great I feel like every business we learn something we’re always open to the idea that we don’t do it best be aware learning and not even even if we were the best today everything’s changing so quickly Amazon’s to thing,
he’s got these millions of entrepreneurs are innovating so quickly that even if we were somehow the best for one day,
next day some think of something brought up so we’re always talking to them always trying to learn so I would say every acquisition learn something,
and every acquisition there’s a number of things where we feel like we have a better model Renegade varies a lot really interesting some people,
I super cost of course really tight supply chain and cost profile and either good margin or they price their driving a lot of sales through.
[30:57] Chris point,
and others are a hundred percent focused we’ve acquired a couple of companies that were just amazing at Social and engaging customers and I think all sorts of off the platform for ganic traffic on the Amazon.
And and using that to drive both sales but also the as you guys probably done that.
Your halo effect Amazon really likes external traffic coming on and finding your product and buying it and so that was a really neat one to one.
[31:28] Coordinated all of that and they all these people do this in amazingly Scrappy ways you know nobody’s paying somebody 25 Grand a month to go and create a social campaign they you know they figure out ways to.
Part-time VA offshore and I’m ways to recycle content or great new content and cheaper ways and so it’s really interesting it’s a lot of fun to see all these things and corporate.
[31:55] Yeah on the back on the Synergy side it seems like a lot of examples are Supply Chain management like what I would call back end kind of stuff maybe a little bit front end with like Amazon optimization
but do you envision a day where where you guys will either.
Have some cross-selling amongst your brands or even like a front door where you know people can come in and shop at the perch collection for lack of a better.
[32:20] Yeah absolutely it’s something we talked about and think about quite a bit,
we today for the most part today most of our brands are,
Brands and products and they are found they’re discovered on Amazon through keyword searches and we are able to drive,
usually upside post acquisition on that side of just,
optimizing your keeper try to G and getting more ranking on more keywords and also globally across the envelope it is,
but we are talking about how we won leverage already engaged customers so email us that we acquire the social engagement that we acquire,
and then eventually how do we start driving customers to we started outline view of what we’re calling Master Brands and so I don’t know this is all in development you guys getting a peek behind the curtain here so we haven’t figured all this out,
[33:16] We like to call that at Jason and Scott exclusive.
[33:18] There you go yeah you’re getting the scoop.
So my current hypothesis is I don’t think that perch is going to be a super consumer-facing brand I had to sell,
because the collection of things we have underneath it,
is so broad today I’m you asked earlier about where we’re focused and we’re focused where the big bucks are but in general it’s pretty spread out we have apparel Brands we have Sports and Outdoor Brands we have,
the house where Beauty Brands and and we’ve been I don’t know if there’s a cohesive customer story about all of those and so we’re we’re Landing instantly creating past two brands,
Polio I buy a product or category and so we’ll have a question and we believe if we have amazing.
You know facial products and skin care products and hair care products and other things in general if you buy one of our things,
the odds that we can email you or connect with you on social and suggest another one and it’s similar adjacent space like that.
The odds that you’ll be interested engaged and maybe convert hi if you purchase skin care products and we then email you about soccer balls for you know punching bag or something.
[34:37] Read it feels a little bit disconnected and so for we’re still we’re still iterating on it but we’re we’ve started.
This idea of Master Brands by product category and driving.
The idea is to keep the sub Rams so the way I’ve described it to a few people is and if you guys have ever been in this fora,
but Sephora has a brand that people know Sephora it’s a store you want to store but if you ever been in one is actually a collection of microgram.
They have the section over here that’s the woman Brooklyn makes her own eyeshadow the section over here are the makeups lipstick from a woman,
there were Brazil and so that’s the idea is to really keep the brand identity because there’s a lot of value and what these entrepreneurs have built and but the build on it and create this trusted Rella where people know that all of the brands within this umbrella,
our quality and have been vetted also that we stand behind them right we’ll have great customer service and a good return policy.
[35:40] Yeah I’ve seen some of our customers almost like self form around Persona stew so they’ll be like you know the busy traveler and.
One seller will pick up a bunch of Travelers and then they’ll be kind of a theme across that or you know like you know busy moms and,
then you can actually get broader category expansion because it could be stuff for the car or stuff kids,
some beauty stuff so it’ll be interesting to see how you how you figure out those cross-pollination opportunities the
one I know we’re going to get this question so I’ll go ahead and ask it as quickly as I can hear if someone is interested in talking to you about selling their Amazon business
you know can we have your home phone number or I guess I should say what is the best path is there like can you go to perch your website and just kind of like apply or do you guys kind of have to seek folks out.
[36:35] No absolutely we love we get.
I actually pulled this up we have not had a single day in the last 90 days were haven’t gotten one in town who we haven’t gotten at least one inbound dressed so we didn’t had a zero early today on our website so our website is perch hq.com,
so you’re welcome to go there and you can fill out our form it comes out I reach out to you or you or just to get another Jason Scott exclusive I’ll give you my email address and if people just want to email me directly I’m happy,
to direct you to the right folks and that’s just the Press at perch hq.com,
and anybody who likes can email me and I will connect you with the right person on their team to have an initial conversation and in general we love.
Talking to entrepreneurs in this case without talk to you about the process and so I would encourage anybody even if you’re only mildly curious if you if you don’t have time for a 30 minute phone call that’s fine hello are on our website and we’ll add you to our mailing list and will send to you,
what we hope is a.
Helpful monthly newsletter that has thoughts on sale process and Amazon broadly but if you’re also if you want to talk to somebody just get a sense of what is the process feel like.
How do we value companies and things like that to me know and I’ll connect you with our head of MMA and where we gladly jump on the phone for 30 minutes.
What we’re looking for and it’s not a match today great will stay in touch.
[38:01] Nice and I’ll just try to save you a little bit of email traffic if if you are focused on that busy traveler Persona that Scott mentioned probably don’t bother to email.
I’m just I’m kidding but it’s not maybe the best time for the busy Traveler
I am curious we talked a little bit about your fundraising do you share anything publicly about like your your your overall scales or sales velocity or anything like that to kind of,
give us an idea of your order of magnitude.
[38:33] And we have not shared anything about our revenue and locally we did share in December that we had acquired or 20th brand and we have since then wired handful more and so we’re.
[38:49] Got it and so would you say maybe then like five Pharma packs is that where your Noms teasing sorry.
[38:55] It’s tuned and it may be give us 6 months.
[39:01] Cool and then on the competitive set so the ones in the u.s. I’m tracking is and I may get these names wrong if I don’t care about apologize if they’re listening there’s Gojo or go yeah I guess and I think they’re in Austin
and then thracia or thrashy oh how do you guys think you differ and I’m kind of curious,
have you seen any bidding wars break out there seems to be enough people kind of poking around here that maybe there’s been some some auctions going on with some of the bigger brands.
[39:32] Yeah sure it is it is very clearly getting a little bit more competitive over the last six or so months I’d say when we first started.
We were mostly competing against SBA buyers so people who get an SBA loan and go and try to buy one of these businesses and run as a lifestyle business was the most common profile we’re up against.
And now we do run up against actually I don’t think I’ve seen.
Go to at least not my name against us but we do see I actually don’t know if you pronounce of grass to regress show but we do see them.
I work frequently and we see a kind of a smattering of other folks and it is it’s getting a little bit more competitive I think as you get some of these new entrants a lot of them are hungry to make their first deal.
Or a few deals and so they’re willing to strap a little bit but we’re focused on.
[40:30] Doing what we do best which is finding great entrepreneurs.
And treating them well work at being fair and transparent and the whole we know what we’re doing we’ve done this a lot we have a really good track record in the Brand’s we’ve acquired performing really well.
And it’s a 300 billion dollar market place and so we are focused on building like I said a great lasting company.
How we differ I mean in the eyes of the entrepreneurs at the end of the day.
I think the most important thing we can do is treat them and this is what I tell Nate who’s our head of m&a constantly that they are.
Break beat them with respect to do some typically really amazing.
And being fair and transparent and full with them and taking good care of their brand.
We’ll go a really long way we still get a lot of our deals referrals from prior sellers,
besides you know who maybe don’t know about these competitors or don’t have it have had the same experience with them but had such a great experience with us they tell people they can’t follow us,
if they’re thinking about selling their business and we think that referral base and the word of us I’m being good at what we do around the country as well and then on the I also think.
[41:46] As I mentioned earlier that we don’t view ourselves as investors we’re not trying to take a private Equity approach and just collect a bunch of assets we’re trying to build a real amazing technology focused e-commerce company,
and with the best products in the world and we hope we can make a bunch of these household brand names but I think over the medium term that will prove out and we’ll have we’ll have those brand names and the goal there is then,
get analogy I use is your most tech entrepreneurs want to sell through Google right that’s just it’s that you get to tell your friends Google bought my company,
and you know you built something amazing or something like Google is going to pay to buy your company and I think if we build the right operating company then that’s what we can get to we are the brands that we own will be,
Global names and will be really well known and will be known that they’re part of our portfolio and in the immediate term as you said it’s a little bit.
[42:45] Yeah I think in a few years,
the it’s all going to come out in the wash and I with the team were building and the track work they were building I expect will be will be there and then it’s no longer you know they’re saying this and works in the proof will be in the pudding,
and that’ll one make it easy rest for it to continue by Brands will we can show that we can double and triple in 10x then what we’re time.
And to hopefully he’ll make us a buyer of choice because it’s not just about the dollars people actually care about the brand and want their brand to be in the hands of the company that’s going.
The most successful it can be.
[43:23] You know it’s funny as you’re talking I’m I can’t help thinking there’s a sound byte we play a lot on the show from Amazon your margin is our opportunity.
like I totally agree with you that Amazon has been an amazing incubator for entrepreneurship and growth and I you know it’s a lot easier to write the negative stories than the positive stories
but that being said like is there a risk like that you.
Get to successful that this model Bears out and then Amazon decides they want to play more directly in that model or maybe even for some unrelated reason,
they change the search algorithm or or FBA or something else in a way that derogatory affects your portfolio like is there a concern about kind of Amazon as a single point of failure.
[44:17] Um yes absolutely there is right it’s something that I think about a lot I think so I mean there’s a few things that what you said in there,
better probably worth addressing the first one is is Amazon going to try to take more of this crop the pool yes absolutely right there definitely Google’s doing it,
great five years ago you maybe had two sponsored spots of reporting people search now it’s half or two-thirds of the page is all sponsored and they have.
[44:46] Skulls and all sorts of Amazon has and will continue to do the same thing,
and that’s where that’s that will be something that is a challenge for us but back to your complaints I think it will be less of a challenge for us than for the entrepreneur,
right if we have the right scale we can pull cost other supply chain to expand our margin we have the best engine that optimizing that’s good.
We are driving traffic off Amazon,
these customers off Amazon in a way that just frankly almost impossible to do if you’re writing five million dollar Revenue business then it will hit all of us but I expect will be best position to.
To cope with it and to continue to grow and be successful in it and then to your other question I know.
Do we have actual examples I’m going to turn your evil eye on us and smite us.
You know you know we could be a ten billion dollar company and they probably wouldn’t notice right it’s a printer billion dollar market place I mean you probably noticed like you’re not.
[45:53] Any means but if we went have Indigo shooting her with them right we would still be just a tiny drop in their master.
And so I think the odds that they us as a threat anytime soon and try to mitigate us at a specific.
Or last year ago dare anybody like that I think it’s just pretty small and a bunch of ways we’re trying to help Amazon and accelerate the Playbook be we are.
Trying to buy great products we’re trying to keep them in stock we’re trying to drive cost out and give that contact to the customer,
it’s the customers telling us they won’t they’re calling us they want higher quality higher priced products we also lose if we follow the data but in general we’re trying to be a high-quality seller stand behind our products you know we give.
Here we go full refunds if there’s an issue for example right you know a lot of people don’t or make Amazon deal with that we really are trying to build.
Great company of great Brands and products into the in general as we’ve never been Amazon.
[46:53] They are seeking out good sellers they’ve created a little bit of a problem for themselves with all of their.
For creating direct from China especially manufacturers and that has been some good out of that for sure and that’s lower cost.
[47:09] But they’ve also created a lot of bad sellers,
that is one of the top priorities is I understand it within the marketplace ecosystem today is weeding out and getting rid of bad sellers who are selling company that items and so we are the antithesis of that,
I’m hoping they should embrace that.
And then if we keep doing that and we’re good seller and we diversify our Channel over time and we’re not all on Amazon and I think one hopefully we can find a way to get into a good.
[47:40] Your balance with Amazon and be valued part in the time and they’re a good channel for us and then to becomes less important over time as we.
Yeah it’s a risk and it’s something we think about,
it’s hard to imagine that they they do something to us and it was a one last point on that is they’ve also you brought you guys probably know about this,
a I being such a boon for entrepreneurs they have also created a bit of a political liability you know is those got called in front of Congress there’s antitrust legislation brewing and the EU,
trying to push Amazon to separate their first party in third-party business because the EU is saying you’re competing with these entrepreneurs,
and you can’t be and all this you know stuff about them stealing data and so I actually think they and trying to do much aggressive here,
is heart I think it’s getting harder there by as you said earlier every everywhere they were these opportunity there’s sucking it up which is great there also quickly becoming,
big tax and people are getting afraid of except the politicians are getting pretty big Tech so I think they’re going to try to lately in the space for a while.
[48:50] Where do you it’s kind of fun to kind of play forward
do you think that I know it’s an e-commerce it’s hard but that’s the fun part of this Jason I do an annual prediction show and it’s a it’s always a very humbling to especially this year for me to see how that turns out so if we kind of fast forward three to five years
you guys are
acquiring like sounds like about 20-ish Brands a year maybe you can crank that up so you’ve got hundreds of Brands what what do you,
what’s the endgame you just keep rolling or do you start.
Like offering the your own fulfillment offerings or something or like start kind of you know productizing almost like Amazon does some of the things you build or where do you see things going.
[49:37] Yeah we are aiming for.
Being a consumer Products company that owns at least a handful of household names and so what I think that looks like and.
Don’t know if that’s five years away or a little bit longer but what I think that looks like is we are selling multi-channel as we’re selling we also have our site.
We’re selling through any other Marketplace that is big enough to be meaningful and maybe Walmart will be there you know Google is,
I’m actually feels like a drug only but get things off the ground we’ll figure it out.
Facebook and Instagram get stores off the ground will be selling their but well whoever is Meaningful in the space plus direct consumer.
We’ll be doing that will likely be in brick-and-mortar in some way and selling some of these products.
That’s still even though we’re going to make now that will pop back to being 50 people spending at least a year new most likely and.
And with all of that right so we’ll have we’ll be using FBA most likely but we’ll also have our own fulfillment for our multi-channel will also have likely a physical distribution so that we can replenish the stores because that’s the different working capital and inventory.
[50:53] Will be likely more Global than just north of North America and the UK so pushing into South America Eastern Europe Maybe,
some more Asian countries that will have to see the products don’t translate quite as well over there.
[51:10] Yeah that’s the idea is we’re kind of we’re a multibillion-dollar company that obviously isn’t that the scale of somebody like parking gamble yet,
but is looking like they’re on a path,
to having these household names and the big difference being key for e-commerce and like I said we’ll have a brick-and-mortar shred you will be doing that but you’re one of the things I talked about quite a lot that’s good thing about Justin traditional sleepy,
this traditional cpg sets bracing annually maybe quarterly if they’re feeling really happy but we set pricing sometimes hourly,
we end and same thing with ads and things like that and so we’re building a really different Tech platform and a really different process and approach to managing these brands,
but I think and accelerates the share game that there already are already experiencing and if we can take that Global and take that across channels.
I think it can be a really powerful story and I hope I hope we have people we have you are were publicly traded company and and some can continue to grow and.
[52:15] Maybe with a SPAC we can pull that into.
[52:17] There you go yes.
It’s becoming I don’t know if you guys have heard this I’ve heard several investors say SPAC that it’s like it’s becoming a verb.
[52:26] Yeah wow.
[52:27] You could spec that and then you could hope that a bunch of hedge funds short you so that you could get run up by the the Robin Hood hours.
[52:34] There you go I like it.
[52:36] I feel like we’ve mapped out your whole your whole growth strategy there I like it.
[52:39] I think a notes.
[52:41] Chris I love that vision for the future I look forward to having you back on the show when you’ve achieved all of that,
but that’s probably going to be a good place to leave it for today because it’s happen again we’ve used up all of our allotted time as always if listeners have a comment or question there welcome to hit us up on our Facebook page or Twitter
I will certainly include your contact info in the show notes and as always if folks enjoyed this episode we sure would appreciate it if you jump on iTunes and right us that,
that five star review before you sell your business to Chris.
[53:18] Great thanks guys really appreciate it at this is little fun.
[53:22] Thanks Chris we really appreciate it this has been a Hot Topic and he did a great job of walking us through it we truly appreciate.
[53:29] Awesome looking for the talking again soon.
[53:31] Until next time Happy Commercing!