In the business world, the concept of a roll-up merger isn’t new. What’s changed is the role this business model and tactic is playing in the reality of e-commerce. This industry has been rising, becoming more and more popular and relevant in consumers’ lifestyles. Nothing has stopped the sector of online shopping.
Not even the pandemic. People turned to the online world for their grocery shopping, the latest fashion trends, and to improve their remote work style. With closed physical stores and worldwide lockdowns, e-commerce became an even bigger opportunity for businesses. Indeed, for many and different businesses. Amazon isn’t the only player in town.
The business of roll-ups
This is effectively a merger, a model in which different companies become one. It’s important to underline that the companies might be different, but they all deal with the same industry. It’s a group of small, business realities that become one company in the field, capable of competing with the giants of the sector.
A roll-up happens when an investor decides it’s time to change the cards on the table. The investor (or investors) chooses several small companies to merge into one. The main advantage is that competition in crowded and fragmented markets. Also, they can provide more products and services to their customers, which is also a great tactic to attract potential clients.
In the example of the e-commerce industry, roll-ups combine small businesses of online shopping to create one company, capable of competing even against Amazon. Plus, it’s cost-effective to share resources.
Examples of e-commerce roll-ups
One of the main examples is Thrasio, created with different merchants that sold on Amazon. Similar examples are Heyday, Perch, and Branded. In this specific case, these tactics are called FBA, or "Fulfilled by Amazon".
So, different merchants on the popular platform get together to become one bigger and more powerful merchant. The same business model happens on Shopify, another e-commerce platform. For example, OpenStore, founded by Keith Rabois and Jack Abraham. Players like Amazon are shaking in their boots, especially since Walmart Marketplace launched.
Introducing Walmart Marketplace
Launched in 2009, this platform is ideal for small creators and tiny businesses. Sellers can create their own channel with catalogs, shipping details, and customer outreach. Sellers just have to get approval to start selling after signing the Retailer Agreement. They can design their channel and then enjoy a final review by Walmart.
Once all it’s ready, the seller’s page is active. This is a curated list of third-party sellers, all approved and checked. There are many positive and useful features about this Marketplace, like the inventory, the analytics and insights, and payment methods. Orders and products reach customers worldwide and Walmart takes an average commission of 8-15% per sale. Still, there are no monthly fees. Other important features include the free, two-day shipping program and in-store returns.
The latest news for sellers? The partnership between Walmart Marketplace and Shopify. The goal is to get Shopify sellers to Walmart’s e-commerce platform, at least 1,200 of them. Of course, visibility increases for all the parties involved, since the Marketplace has over 120 million visitors. Furthermore, Walmart is investing $14 million to focus on supply chain and automation, since the company’s online sales grew by 79% in 2021.
If that’s not a jab to Amazon, what is?
Without a doubt, roll-up mergers are an opportunity for growth. Independent sellers and small companies can push their way through the crowded market and they actually (finally) stand a chance. So, Amazon truly isn’t the only player in town. And customers have choices, a whole menu of them.