Revolutionizing exit opportunities for Amazon brands ⎜ Acquco ⎜ EP 156

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This is a podcast episode titled, Revolutionizing exit opportunities for Amazon brands ⎜ Acquco ⎜ EP 156. The summary for this episode is: <p>Ryan Cramer of Crossover Commerce talks with Jake Wolpert of Acquco one-on-one to discuss how aggregators are revolutionizing exit opportunities for Amazon brands and what Amazon sellers should think about when selling their business.</p><p>---</p><p>Crossover Commerce is Presented by PingPong Payments. PingPong transfers more than 150 million dollars a day for eCommerce sellers just like you. Helping over 1 million customers now, PingPong has processed over 90 BILLION dollars in cross-border payments. Save with a PingPong account <a href="https://usa.pingpongx.com/us/index?inviteCode=ccpodcast" rel="noopener noreferrer" target="_blank">today</a>! </p><p>---</p><p><strong>Stay connected with Crossover Commerce and PingPong Payments:</strong></p><p>✅ Crossover Commerce @ <a href="https://www.facebook.com/CrossoverCommerce" rel="noopener noreferrer" target="_blank">https://www.facebook.com/CrossoverCommerce</a></p><p>✅ YouTube @ <a href="https://www.youtube.com/c/PingPongPayments" rel="noopener noreferrer" target="_blank">https://www.youtube.com/c/PingPongPayments</a></p><p>✅ LinkedIn @ <a href="https://www.linkedin.com/company/pingpongglobal/" rel="noopener noreferrer" target="_blank">https://www.linkedin.com/company/pingpongglobal/</a></p>

Ryan Cramer: What's up everyone. Welcome to my corner of the internet. I'm your host, Ryan Cramer, and this is Crossover Commerce, presented by PingPong Payments, the leading global payments provider, helping sellers keep more of their hard-earned money. Hey, everyone. Welcome back again, another episode of Crossover Commerce. I'm your host, Ryan Cramer. If this is your first time, welcome to my corner of the internet, listening or watching us live on LinkedIn, Facebook, YouTube and, of course, Twitter. Don't want to forget about the tweeters out there, but you can watch this live on the PingPong Payments Twitter page. So go ahead and, of course, subscribe to those for every live episode that we do. But then, we go out on your favorite podcast platforms as well. So if you're listening to us again later on, thank you so much for listening to us on your way to work or at the office or your commute or whatever. If you're commuting right now or on your travels, we appreciate the time that you spend with us on this podcast. Like every episode, again, this is episode 156, so, of course, every episode here is brought to you by PingPong Payments. PingPong Payments helps Amazon and e- commerce sellers internationally, help them keep more of their hard earned money. That's with either sending international payments, in terms of their paying out their suppliers and manufacturers, paying their VAs, paying any employees internationally. If it's not in their currency, you can use us to do that. And then, also, on the receiving side, if you're a huge brand internationally, or you're a growing brand and you want to start to diversify into other marketplaces, PingPong's another option for you to receive in different currencies and not pay the fees that come with that. You can actually save a lot more money. Put that to your bottom line and, of course, buy more inventory, pay more for tier employees, or just pay yourself out a little bit more. But anyways, PingPong can actually help you save more money and apply it to other parts of your business, helping you save time, money and effort. Go ahead and sign up for free today, mention Crossover Commerce when you sign up and, of course, you can do that for free after this episode. Go ahead and save that and bookmark it, and make sure you use the Crossover Commerce or the link in the comments section below. Without further ado, though, thank you again, PingPong. Without further ado, again episode 156. If you're a consistent listener of this podcast, or you're watching this, we've had lots of great businesses have come on or representatives of their businesses come on in this space. This one is, without a doubt, no exception. One of the more exciting ones I want to say in the space, in terms of, again, we're going to use the phrase, aggregator, a business that acquires or buys the rights to use a brand's name, or just acquires it in general to either roll it up into their own portfolio or brands, but do so where they can operate what another, maybe smaller, medium- sized business owner started, and they're going to want to take it to the next level. They do that, there's lots of great splashes in the space. Again, have had lots of guests on the space before, but today, we're going to bring on the folks from Acquco. Again, it's a funny name, but it completely makes sense once you read it outside. Acquiring companies or Acquco, the team over there based out of New York City, or excuse me, in New York. The team in there is growing. I believe just had their first anniversary, if you will, but growing quite rapidly, making lots of splash in the news, again at Prosper Show. You might've seen them around on the likes of CNBC, but doing and operating businesses at scale and really revolutionizing exit opportunity. So what does that mean? What does that look like? If I'm you, the listener, and listening, " Hey, what, what is it? What's the difference between each of these kinds of businesses?" Well, we're going to dive a little bit into that today. So without further ado, I'm bringing on Jake Wolpert, who actually is the head of sales at Acquco. He spent the last five years scaling brands on Amazon before joining the team over there. Held leadership positions at Feedvisor, as well as Blue Wheel Media, and him and his team are now focused on presenting those opportunities in the likes of businesses. And if you're looking for a exit or looking to just move on from your business, or if you just think it's the right time to exit, this is the person you want to talk to with as well. So that being said, welcome to Crossover Commerce, Jake Wolpert of Acquco. Jake, thanks for hopping on today, all the way from, again, New York, correct?

Jake Wolpert: Yeah. Well, I'm in New Jersey right now, hiding away in the suburbs, but yep. We are based out of New York City.

Ryan Cramer: Gotcha. Okay. Well, thanks for hopping on today. I appreciate that. Maybe the stepchild, obviously, in the New Jersey area instead of New York. It's okay, we won't hold that against you. For people who are listening to this, maybe quickly, I did a quick introduction of you, but tell me a little bit more about you, your background in, and maybe why Acquco? What was the opportunity like for you and the team, and tell us what you guys are all about.

Jake Wolpert: Yeah, absolutely. And I do appreciate that intro. I think you nailed it and made me sound a lot cooler than I probably am.

Ryan Cramer: I try. I try my best.

Jake Wolpert: Do you want me to talk about overall background or just my background-

Ryan Cramer: Let's go... Yeah, tell me about you, Jake. You first. So what's your background? What does it stem from? You were from the e- commerce space, is this your first stint in the Amazon world? What's that background for yourself?

Jake Wolpert: Yeah, absolutely. So I went to college, I majored in Amazon, with a minor in e- commerce. No.

Ryan Cramer: As we all do.

Jake Wolpert: Yeah. I feel like everybody who's now in the Amazon space spent a significant amount of time doing something that had nothing to do with Amazon or e- commerce. I'm no different. I sold real estate, I did stand up comedy, tried to break into the screenwriting world, worked for a company that chief executive network that was manufacturing company, a peer network for manufacturing companies. But then I went back and I got my MBA at Rutgers. And then, after I got connected to a VP of sales at Feedvisor, I thought it was a really cool company. Feedvisor was leading the way in repricing software. They had raised an A round and was looking to break into the US, sells more to the US. They were based in Tel Aviv at the time. So really learned the Amazon space that way, learned the reselling world, and then the private label world when Feedvisor started to sell advertising technologies. And then, I joined Blue Wheel Media, which they have a sister company that is a top 150 Amazon seller. So I feel like I was being trained this entire time to buy Amazon businesses. I've spoken with thousands of sellers over the years. They're the most interesting people in the world. And then I joined Acquco. I think that what really drew me to them were the founders, and I spoke with and Ron and Gerald, and Wiley, and then our head of growth, David, and I really bought into them more than anything. And I'm really excited to be at Acquco now. I've been here for six months, although it feels like forever. And we are looking to build the largest collection of e- commerce brands in the world.

Ryan Cramer: That's amazing. Well, then, that's a good place to start. I think first and foremost, as you know, being in the Amazon space, I think everyone thinks is a misconception of it's going to age you. Six months will age you. Less than five years. I will definitely lose my hair by the time this podcast... whatever it looks like, my hair will be completely gone. But that being said, in the acquire space, I'm curious, you're the director of sales. What does director of sales do for an aggregator or the likes of a role at companies? Is that where you're going out and you make the purchase, or you're finding the companies to potentially acquire, or is that more of the M& A side and mergers and acquisitions? What does the director of sales do?

Jake Wolpert: Yeah, it's a good question. So I build the process for looking for, and targeting brands that fit into our portfolio. Again, I know I have sales in my title, but my job is not to convince sellers to sell. I know it's their baby, but my team talks to sellers, about a hundred a week, about the process, what to expect, how to prepare your business for sale. Obviously, if they're ready to sell my job is to convince them to sell to us and not some of the other companies out there. But we really build a acquisition strategy for the optimal brands that fit in our long- term plan. And then I work closely with the acquisitions team that does a diligence on the business and comes up with what we think the business is worth before we make an offer.

Ryan Cramer: Okay. So your job is to, maybe, find those companies, whether it's on Amazon or fits into the portfolio. So we've had, like I mentioned in the introduction earlier, there's lots of different, I mean, the term aggregator, I had this conversation last night, I feel like there should be a different word than aggregator. I feel like it's not a pleasant term. It should be more like finessing or growth company or something along those lines, of brand building, brand builders or something along those lines. But for aggregators, their job is to clearly find success on Amazon and maybe take it to another level. You guys are one of those companies who've announced a significant raise of capital, whether it's going to equity or to debt. We've talked about the differences on the show before. So I guess what I'm asking is what makes your team different? What makes you think that you can stand alone, not do what the other teams are doing, but do it differently and do so effectively?

Jake Wolpert: Yeah, absolutely. So first of all, you nailed it. I think aggregator is a term. The definition is really to collect, right? When you think of yourself as an aggregator, the goal is to collect brands, Amazon brands, and that's great, right? But long term, if you were just thinking about, singularly focused on just collecting brands, you won't succeed. We think of ourselves as Amazon operators, mostly because we are Amazon operators, right? Our CEO, Raunak, worked at Amazon. He was part of that merchant technologies team. His team designed new product features, and he also started a brand on Amazon. And the first year grew it, they did$ 7 million year one. Since then, Raunak has launched, grown, exit multiple FBA brands. Our other co- founder, Wiley, has done the same. They actually went to college together, went to Cornell. They've consulted with the largest brands in the world. And so that is one of our competitive differentiations, where we are actually Amazon operators. The majority of our company, we've either come from Amazon, we've scaled brands, we've worked for e- commerce companies. And I think the mindset is that we're not aggregators. We grow brands past acquisition.

Ryan Cramer: Very cool. So when we're talking about revolutionizing, obviously, the difference would be, what I hear right away is you guys have done it, you've walked the walk, you talked the talk, you're now doing that at scale, presumably. Is it public knowledge of how many brands that you guys have that are operating or is that something you guys keep to yourself?

Jake Wolpert: So we don't disclose the number of brands that we've acquired, but I think what's maybe more important is that we're doing over$ 200 million in revenue and we're profitable. So you can't do that without significantly growing the brands past the acquisition process. A lot of our revenue has come from growing them after we've acquired a brand, and we're very proud of that.

Ryan Cramer: So does that mean that you guys are searching for the sweet spot, if you will, of a certain size that makes it available in the context of, " Hey, it's not large enough where we'd have to do some significant moving of mountains to make it even more profitable," or is it something where there's this sweet spot of, " Hey, it's doing$ 5 million, we can take it to 10." Is that where the business like yours is really looking for that really nice sweet spot of does well, can do better, but at not at such an extreme measure where you're pumping out eight, nine figures. Is that more what you guys are trying to achieve?

Jake Wolpert: Yeah. Well, yeah, it's a good question. So first and foremost, we're looking for solid brands. We're category agnostic. We just want brands that have potential. Generally, they're above the$ 1 million EBITDA mark. So maybe three to$ 4 million. We're not usually buying brands below that, but then they could be above, any size above that. If we see potential in the brand, we're interested. If we think that, based on our team and our current portfolio, maybe there's some synergies that we can leverage, we are interested in acquiring that company.

Ryan Cramer: Okay. So searching for brand and business. I guess, walk me through the processes. I'm curious, since you're one of those people of identifying who these people are. It's not as much of a mystery, but you can know where these businesses are located if you go to their seller profile. You know where their business address is, technically. Lots of different businesses. What's the process on the day to day for you guys and your team? Is it just knowing what are top sellers in certain categories? There's so many different products out there and so many different sellers, into the millions, where do you even start in that processes? I'm curious.

Jake Wolpert: Yeah. So we do get a ton of inbound conversations. People come to our website, we've gotten good exposure. You see people at conferences or we're podcasts. A lot of our day is companies calling us, reaching out directly. But I do spend a lot of time on Amazon. I use third- party software. I also, I want to point out that we've built an internal database. The head of our data team is example- Microsoft, so we do use tech as well. And it's proprietary to go in, and we've built a lead- scoring model as well. It helps us identify the brands that are worth us acquiring. Then we reach out, we introduce ourselves and we take it from there.

Ryan Cramer: So there is internalized metrics that you guys are looking at. I've always been fascinated, too, with the aspect of where does the weight of each brand come from in terms of, is it more of the number of products they're selling, the quantity or the quality of... Again, there's distinguishing factors, right? If we're going to be talking about the feel, and it's a evergreen product where it's going to stay around forever, it's going to be consistent. It's going to be, you don't have to change much, you're just buying something that's going to be pretty, I won't say basic, the floor is high, but the ceiling's also very low. So you have a consistent brand, but then you have something that can maybe spike in terms of, maybe it's not for everyone, but it can have this trend- able nature to it. Where does the weight come when you're looking at a brand more? Is it a consistent product or is it more of a, " Hey there's opportunities to see this thing really take off, and if we hit a home run, if we put a lot of a lot of eggs, some eggs in that basket, we can really knock it out."

Jake Wolpert: Yeah. I love that question. And it's a tough question, to be honest, to answer. There are some products that are no- brainers, right? Top BSRs, review moat. They're not going anywhere. The challenge is identifying those ones that have the potential. For example, we think that home gym equipment is going to continue to grow. Maybe a lot of people think that as well, but people started working out at home, they maybe stopped going to gyms during COVID, and now there's like, " Ah, I have this exercise bike, I'm going to continue to do that." So we think that category's got a lot of growth potential, and we are looking into that as well. But it's really a balance between the home runs and the ones that everyone's chasing, and then, really trying to identify those ones that are maybe a little bit more niche, but do have potential long term, especially off Amazon.

Ryan Cramer: Right? Well, so with that being said, you're all... I say, you're all, there's lots of different companies, maybe, competing for the same category. In theory, there's only so many top brands that are selling into certain categories. So after you've exhausted that list, like I said, someone who's pretty consistent, they're going to have the top baby blanket or something like that, top child's toy, it's going to be consistent. There's not too much ebb and flow, maybe more so nowadays because of all the craziness going on. But, if you've exhausted that list, does your list continue to search for those hidden gems on Amazon, or do you try to take a different approach on off- Amazon? Because that's a question I think a lot of people don't necessarily know the answer to is, how do you find brands that may be not necessarily on Amazon fully or doing as well, or they just launched in the last year. How are you finding those diamonds in the rough of potentially jumping on Amazon, and then blowing up, because it built a brand off of Amazon directly?

Jake Wolpert: Yeah. So, well, the first part to your question are, there's a finite amount of top sellers, right? But I will say that, I think I read a stat recently, there's two million sellers, and a new one popping up every minute. So the important thing is to talk to as many sellers as you can, because the ones that maybe aren't top right now, will be top in six months, or will have significant growth. So I think-

Ryan Cramer: You catch them on the upswing, basically.

Jake Wolpert: Exactly. So I think talking to them, learning about their brand, learn about their story. I've been in a space for a while, so I'm able to predict who's doing it, who's doing a good job. You can look at their content, you can look at their initial reviews, and you can forecast that this will be one that is worth it. Second part of your question was off Amazon. We were looking for strong brands. If they're on Amazon, that's great. We do think that we can scale brand significantly off Amazon. But our goal is to be the largest collection of e- commerce brands. You can't do that without focusing off Amazon. You can't focus on multichannel selling, targeting brands who are on Shopify. And that's the key. We're combing not just Amazon, but the internet, looking for brands and talking to them. If it's a company that has growth potential, we're not going to discriminate if they're not on Amazon.

Ryan Cramer: So what's that mix look like, though? If I'm listening to this as a seller... We always ask the question, " Why now?" Why is now a good time to potentially exit my brand? And maybe I want to move on from that. Why is there a consistency where people are saying, " Now's the time to move on." Is there those three key points that you point to and saying, " Look, it's not going to get much easier than this now. Now's your time to do it?" What are the selling features for you guys?

Jake Wolpert: Yeah. Well, I mean, I think... First, it depends on the expectations. If you're a brand, how big are you and how big you want to get to? But then, you have to think about how challenging is it going to be? What do I need to do to get there? A lot of sellers that I speak with tell me that the things they did to get to five million are not going to be the things that they do to get to 10 million. Maybe they're really good at finding good products, launching them, branding them, maybe advertising, but they don't want to manage people. And the only way to grow further is to hire and build out a team. And I talked to Sal recently, and he's like, " I'm an entrepreneur, I'm a creator." I don't want to manage people." And when you start working in the business versus on the business and trying to build out a team, that could be a good time to sell. Amazon is getting really competitive. So maybe the same things that you're doing that aren't working, or you have to decide, " Do I really want to double down my investment in advertising and scale that way?" And then the second part is, if I grow two businesses to five million, it's really the same thing as 10 million. And so, do I have a better chance of growing another business to five million than I do at taking one from five to 10?

Ryan Cramer: Okay. Well, that makes sense to me. And I think, like you said, we were always taught the scalable nature of, again, cost, the investment that you have to put into it with sourcing and logistics. Now, I think the last time I checked, which was yesterday, of how many boats are on the water right now? It's going to be 70 boats and container ships are on the west coast of the United States. That's another way to get your goods quicker to the United States. So I guess, what's the revolutionary ideas that y'ouse are taking and doing different than every other person who's either sold, started aggregator business? And then, what's that path moving forward? Is it going to be different? You're going to take a right- hand turn quickly because of what you guys are forecasting? Like you said, you see where people can go. Where does that differentiating factor going to come from? inaudible.

Jake Wolpert: For us? You're talking about long term? After we acquire brands?

Ryan Cramer: Sure.

Jake Wolpert: Yeah. So every part of our business we've built playbooks for. And so, we have people handling all growth levers. It sounds simple, but we think we have world- class operators, and that is the key. I think technology's important, but you need to have people who really understand how to grow brands and scale them. I think we're extremely disciplined. We're not trying to just acquire brands because another aggregator's doing it. It has to be a brand that we've built a strategy for long term and we can execute upon. And if we don't think we can grow it and another company wants to buy that brand, it's all theirs.

Ryan Cramer: Mm-hmm (affirmative). What's the fear that you live in as a company who's buying these brands? What's the biggest fear? You're going through the processes, you think A, the numbers make sense, they look good. What's that traditional fear, that number one fear that you have of, about ready to cross the finish line, what is that thing that sits in the back of your head as a company?

Jake Wolpert: Everything you have to expect, or you have to anticipate. You have to be scared of everything, but at the same time prepared for it. Whether that's suspension or getting reported for whatever. I think the challenge is just being ready for whatever happens and not getting caught off guard. I think Amazon Sellers, maybe that's just me and you running a business. There's multiple things to take care of, we're not prepared, and it takes us forever to get over suspension, or new competitors are jumping in and driving up costs, the cost of advertising and how are we handling that? So I think just being able to anticipate all the challenges makes us sleep a little bit easier at night.

Ryan Cramer: Gotcha. So, what's that one thing that... I guess, in that regards, you're preparing for the fear. But what's a story, maybe, you can tell us that there was that worst nightmare came to realization of you guys bought this brand, but there was something maybe bad on the books, or there was, you can't get that product anymore. You can't make it anymore because of the goods. Or, it was something that wasn't uncovered or anything like that. Not saying that your team's bad in uncovering that stuff. Is there something that was just that worst- case scenario did come true, and you had to pivot and really think on your feet as a company? Because you don't know the processes, you're going through all these things called due diligence, right? For the listener out there, who's going through this process, businesses like yours are going to go and look at your accounting books, they're going to say, " Hey, what's profitable? What are you spending?" Paying your taxes, all that fun stuff, right? When any sort of business gets purchased, you got to look at what's in the black? What's in the red, and hey, can we make these numbers make sense for the investment? So with that being said, has there been something that's happened and you were... It was a 1% chance, but yet, it happened and now are stuck with that problem. Is there something you can share with us?

Jake Wolpert: The biggest one was the shipping container costs. That was a challenge. We don't have any nightmare stories like that. And I'm not saying we're perfect, we have challenges like everyone else. But we are extremely thorough in our diligence process and things like violating TOS, fake reviews, we flag those. So, if there's anything that we think... We look at the account health, we look at the history of the seller. We want, and we have been very good at flagging anything that is going to prevent us after the acquisition of scaling of the brain. So no nightmare stories. I've heard ton of nightmare stories, but no, nothing from us internally. I know that inaudible answer for you, though.

Ryan Cramer: Jake, this is a podcast, we're supposed to have good, interesting stories. crosstalk-

Jake Wolpert: That's not salacious enough, right?

Ryan Cramer: Well, that's a good thing. Well, that's a good thing. Maybe let's flip that question on its head, then. Let's take it the different direction. Something that surprisingly surpassed expectations internally of, maybe it was a smaller brand that once you got your hands on it, you were like, oh my gosh, there is a massive opportunity that was missed by the seller or by, just in general of, hey, if we just knock this processes down into streamlining it with our own revolutionary software or processes, whatever that might be, we now take that brand and completely, the value of it is completely 5x, 10x, whatever it is, surprisingly with your company. Has that happened inaudible?

Jake Wolpert: Absolutely. Yeah, absolutely. So Wiley, our other co- founder, is a supply chain guru, and he works on that side of the business. And you can save a ton when eliminating costs on shipping and the logistics side. There's two ways to grow the business. You can either grow sales or cut margin, or increase margin. And so, there been opportunities where we've acquired a brand and we've applied our supply chain expertise, and we've saved a significant amount of money. On the other side, the best Amazon sellers oftentimes are the best advertisers. And so, to be able to scale a brand and getting as many of the right eyeballs on the products as possible, we've achieved massive growth just putting in a more robust advertising strategy and just leveraging what the brand owner already done, built a strong brand, quality products, but just helping increase conversions.

Ryan Cramer: Right. Well, I mean, I think that's that would be the number one thing to do is get more eyeballs on it to build something as more impactful, but that comes with money. So is that a fear that... Again, spend in advertising, you can get really creative, the more niche and focus that you get, focused on people who are in market and ready to buy their products, the more costly it might be to target that individual, whether it be on Facebook or a Google PBC, or just on Amazon itself. What do you guys say if this conversation comes up of, " Hey, you're really going to hurt any small, medium- sized business trying to play ball by themselves." Almost the cost of driving up because you're able to invest more into advertising, like you said. If I can't play that game, isn't that hurt multiple people? It hurts the ability to be innovative and stand out for the small, medium- sized business, but then, also, hurts that funnel of businesses being profitable for you to potentially acquire them. Does that make sense? Does that catch- 22 makes sense to you guys?

Jake Wolpert: Yeah, of course. Yeah, no, totally fair. Are we killing the small businesses with, you're asking if we're-

Ryan Cramer: You take Amazon to the malls of America. No, I'm just kidding. I'm not painting gloom. I don't think that there's anything negative with aggregators, I'm going to be clear to listeners out there. I think the valid question, which I personally have heard from people is, how does everyone continue to play ball in the same sandbox, if you will? When the sandbox feels like you have to pay price of admission higher and higher. It's not free anymore to just jump in or at low cost. It's way higher barriers to entry to get in, to be successful, to overcome, to do well. And now all of a sudden, I have to play with the big boys from day one.

Jake Wolpert: Yeah, yeah. Absolutely. It's fair. So, well, first thing is I think Amazon wants to increase the advertising capabilities. It's a huge revenue driver for them, they're always creating new capabilities, new product placements, new ad placements as well. So I think this is what Amazon has driven companies towards. The second part is I think you're seeing a lot more professionalism on Amazon. So whether it's from an aggregator or just better Amazon sellers, we've all leveled our game up. I think maybe five, 10 years ago, it was a lot easier to sell on Amazon and get eyeballs on the product. So whether it's us or it's other top sellers, you have to have the best advertising strategy. Unfortunately, there are some people that are also throwing money into advertising and raising CPCs, but selling on Amazon is just getting harder. And I think whether you're an aggregator or you're just a seller that's a 10 million trying to get to 20 million, it's harder than it used to be.

Ryan Cramer: Mm- hmm( affirmative). So with that being said, we can do a hypotheticals again. That's not the reality of what this is. But if you continue down that path, say, for example, it's harder to get in. If I'm person that's just trying to start out, you're not doing it with$ 5, 000 anymore, back in the good old days. It's be 10, 20, depends on the product, with that little caveat, to get involved with that. As cost of advertising continues to go up, at what point do you start losing and suppressing that new seller market? Or, is it just, people are just going to get more creative and innovative and you're going to see... Are there little springs or leaks, if you will, in the ecosystem that is standing out on Amazon? Not in terms of black cat tactics or anything like that to stand out and get ahead, but more, is there going to be areas where smaller people that are starting out can definitely break through, even though that costs are going up? Do you see that happening or is it just going to be to a point where it's unattainable to even get started, and all of a sudden you see this dip on new sellers onto the marketplace?

Jake Wolpert: Yeah. Well, first thing is, Amazon is only growing, right? It's a resource for, I think 40% of e- commerce sales and only growing more. So there's going to be more people to buy products. On top of that, I read a stat recently that over, I think it was 60% of searches begin on Amazon. So Amazon is now a search engine maybe more than a marketplace. And then on top of that is, three- quarters of the sales are non- branded. Which means that people are just going to browse for products. My wife, for example, just looking to find new stuff. And I think if you're launching a new product and it's an integrated product, and you have A + content, you can still take a percentage of the market share. If you're saying, I want to launch on Amazon, I want to take 20 or 30%, or I want to play the... I think it's almost impossible to do that, but to take a good amount of sales enough to have a nice living, I think that's still possible. You obviously need to bid on some long tail terms as well and have a strategy for that and, potentially, layer in some ASEN targeting, but it is possible. It's just setting expectations that maybe being the next hundred million- dollar brand in two years may not happen.

Ryan Cramer: I was going to say, does that mean that it just takes longer to build out these quick, high- performing brands, if you will? It's just going to take maybe more, extra year or so, because to get your steam going, be more involved and whatnot, it's not going to just be this quick hit, one time, in seven months, I'm doing eight figures. It's not going to be as effective and easy anymore. It's going to be more long, strategic, building business thing. Be more thoughtful of who you're targeting, how you're standing out. And it's not just a me too product.

Jake Wolpert: I-

Ryan Cramer: I would agree with that. Yeah, I would agree with that. Yeah, that kind of thought from you, Jake. So Jake, for people, to sellers internationally, in the United States, let's be clear, are you guys looking for brands who are located in any specific country, or is this something where if you're a seller you're successful to bring, you can operate, you're going to play ball with those people?

Jake Wolpert: Yeah, absolutely. We are interested in... I mean, the truth is the majority of the sellers I speak with are located in the US and sell in the US. But I spoke with seller last week, large brand in Germany. We're still having conversations and we're interested in their brand, but most importantly, is we just scrutinize brands differently depending on where they're located. Just because they're selling in the UK, doesn't mean we don't want them, we look at them potentially differently, because the strategy for scaling would be a little different than if they were selling predominantly in the US, and it was a very similar product in our portfolio.

Ryan Cramer: Gotcha. So you're rewarding more a business that is already selling an Amazon, or I would say rewarding, it's more your appetite's a little bit more for selling and being successful in dotcom marketplace, instead of just in like. uk or dot any of the other JP or anything like that? Is that what you're saying?

Jake Wolpert: Right. Exactly.

Ryan Cramer: So that being said, do you foresee that outweighing, if I'm going to be a dominant brand or if I'm the number one seller in, let's call it Japan. Japan's the third highest eyeball traffic- selling Amazon marketplace right now, obviously competing with other marketplaces, but it's still becoming more and more popular. Is there a point where that completely outweighs the fact that it's talking to you, a billion people instead of 300 million- so- plus people in the United States? Is there a point where the eyeball test becomes, hey, impressions actually matter instead of sales? Does that make sense as a brand?

Jake Wolpert: Yeah, absolutely. It absolutely makes sense. Great point. At our leadership meetings, when we're building our strategy, we evaluate things like that. The most important thing though, is to be disciplined and not get drawn to sexy numbers like that, and we really want to make sure we're doing it the right way and not just jumping in because other aggregators are doing it or it's a trend. We want to do everything the right way, because two or three years down the road, we see ourselves being the largest Amazon operator.

Ryan Cramer: That's awesome. Well, I mean, that's the hope, I believe for everyone. There's only one top spot, but everyone can have a piece of the pie. And I think we'd both agree that there's lots of space, and I said earlier, in the sandbox, if you will, for lots of people to co- exist. But maybe my question goes to this other direction of, what is a trend for you and your team versus what has brands tied to it? Let me maybe clarify this question, for example. A trend can be something that's flashy has lots of a spike in sales. It can be the hot thing, if you will, a trend, like maybe a fidget spinner. Last around a year and a half or so, I think is the hotness of it, where, of course, a couple of people who were to the market, they were really successful. Then all of a sudden, by the time they were second or third shipment, everyone had a different iteration of a fidget spinner. Last about a year and a half or so, but that market, I would call a trend. What juncture do you weigh a product is a trend versus a product has sustained capability and will last X years? What is that distinction for you and your team?

Jake Wolpert: Yeah, so that's a good question that our M& A team is that, they're doing that all day long. Fidget spinner's a good example, right? It's a fad product. It's not something we want. Same thing, cell phone cases. Anything that's going to be a new generation every year. We don't want those products. An emerging product, like the pet category, I think is a category that's been emerging and that we're very interested in, or the baby category. As a parent, I know how I buy products for my kids all the time.

Ryan Cramer: Will say, that industry will not dry up. Let's just be clear. That baby industry will always be a new and emerging market constantly. You don't have to worry about those customers ever going.

Jake Wolpert: Yeah, absolutely. And also, all of my money I spend for my kids or my dogs. It's more of our transactions team, our M& A team that is looking into that. They're looking at hundreds and hundreds of data points to think, " Is this a fad product or is this an emerging trend?" And then they feed that information back to us, and then we go target those companies.

Ryan Cramer: Okay. So in that regards, they have to almost have a hat of predictor, but then also of... What data points does that help you... There's no industry secrets I want you share. What does it take for someone to know the difference between a trend versus staying power? Because, again, in the context of history on Amazon, let's just call it is, FEA's been around 2015, '14. More popular in 2015, I'll call it. So call it six, seven years that amazon. com has been a third- party marketplace for lots of different growing companies. We call it the genesis or the start of it all. So six years of data that you're working with, knowing around that a product is going to last at least six years, because that's the history you have, that's the maximum, theoretically, of what you could be working off of. You only know that a data or a brand or a product can last maybe theoretically that long. How long would you want a product to actually be, have staying power, sell well, go through, in theory, in that regard? Does that make sense?

Jake Wolpert: Yeah, it's a really crosstalk

Ryan Cramer: How do you know it has staying power for at least six years? Do I know if it's going to last 10 years? I don't know because the data doesn't tell me that yet.

Jake Wolpert: Right. It's a good question, and I don't actually have the best answer, to be honest with you. It depends on if we want to scale it on Amazon, or if we think that there's good potential to scale off Amazon, and have an omni- channel approach. We may think that on Amazon, this product's going to grow, but maybe the real opportunity is to get the product into Best Buy, Bed, Bath and Beyond, and that's where we can see significant growth as well. I think those growth levers are most important when evaluating how long is this product is going to have power for.

Ryan Cramer: Is there, is there a playbook that you guys feel pretty confident, hey, if it's just a Amazon product and a brand, again, a brand... I go back to the definition of brand, because that's what I think a lot of people get confused by is, what is that distinction of a brand? A brand on Amazon may not be actually a brand, it might be just a name that's tied to a bunch of randomized products. But then, you can look at a brand like, let's call it Zesty Paws again. We talked on the show. They were acquired for$ 600 million by a venture, a VC company, to a world company. I think they're based in China. But the brand itself is Zesty Paws. And they're known because they have a direct- to- consumer arm so that they can sell on their own website. They started on Amazon, so they started selling on Amazon, but pet- based products. And then, third, you are selling in retail stores of the likes of Target or PetSmart, things like that. Is that where you've achieved a brand or can you actually be a brand without existing outside of Amazon? Does that make sense? Because I know Anchor grew from it. It's a publicly- traded company, but they have their own direct- to- consumer arm. They have all these different things that, in theory, make you a standalone company. Can you have a brand that just exists on Amazon?

Jake Wolpert: I think so. I think so. I mean, I think Anchor, if they stayed on Amazon, they would've still been a brand. I do think, and I'm glad you brought that up. I talked about Anchor in a previous podcast I was on. Started on Amazon, grew massively, now a public company. They're selling at Best Buy, over a billion dollars overall. But I do think you can be an Amazon brand, especially with the amount of traffic, the repeat purchases. I think that's important. If you're selling a brand on Amazon and you're a subscribe- and- save, you could be doing significant amount of sales, and people know you and they have no reason to go anywhere else to buy your product. You're on Amazon. I think if it's the other way, if you're a brand and you're doing a decent job, you have to be on Amazon because people will see an ad, and the first thing we'll do is search for your product on Amazon. You have to be there. But I don't think in all cases you have to go off Amazon to be a brand. That's just my opinion.

Ryan Cramer: Okay.

Jake Wolpert: That's just my opinion.

Ryan Cramer: Well-

Jake Wolpert: I-

Ryan Cramer: Right. That's a strong opinion and a strong theory. You had mentioned in those points, too, that because they sell on Best Buy and they're selling directly to these other places. In theory, that's where they got a lot of name recognition, potentially. I guess, with a brand coming strictly from Amazon, I think you're right, it can exist, I think it can happen. I guess, the distinguishing factor I want to make to the audience and listener, who's saying, " How do I build my own brand? How do I build an Anchor?" Again, lots of these things happen over time. But if I want to build an Anchor, Anchor is by definition an electronics company. You can classify them as a specific, I can put them in a category X, Y, Z, or Zesty Paws again, and go back to that. They are a pet company or a pet supply company, whatever you want to classify, but they sell directly for pets. Can I have a brand that doesn't have some continuity or consistency across my products that I am selling online? Again, retail arbitrage. We actually, theoretically, just saw the number one seller on United States is actually a reseller that is going public, but they're reselling all of their products. And again, I don't have the name of it. And I read the article last week of-

Jake Wolpert: Pharmapacks.

Ryan Cramer: ...they're going public. Right. Yeah, Pharmapacks. Yeah, exactly. Thank you for that assist. They're going public and they're not even profitable right now, because they're reselling all products and, theoretically, at a loss. But they're doing it so consistent in going public and they're going to be profitable in the year 2024, I think is what it was. How do I become a brand if I'm reselling other products when it has no consistency? Does that make sense? Is that really a brand or is that just a company that's really good at getting products into people's hands?

Jake Wolpert: Yeah. I mean, I think Pharmapacks is a brand because they're a first mover. Number one, they're massive. I think, they're just recognizable. They have both recall and recognition. If you think of like the largest reseller, think Farmer Packs. If somebody says, " Have you heard of Farmer Pack?" Say, " Oh yeah, know who they are." Reselling, though, is tough. Usually, you just know the brand that you're buying. You don't know who's actually selling the product on Amazon. So I'm not sure how many resellers are actual brands.

Ryan Cramer: Yeah. I guess that's where my point is. Is that something that Acquco or any other acquisitions company or aggregator company, again, collecting of brands, ultimately, you just said they are a brand. What's to keep you guys from going after like a reseller? Lots of times I hear resellers are not worthwhile for aggregators, because they just don't have the margins, again, is the most glaring thing. I get that. But they're going public and they have the ability to do, theoretically, turn profit. So is there a division or space where aggregators start to make these divisions of resellers or buying products, like 1P products and reselling them online? Is there a space where that starts to evolve under an umbrella like you guys?

Jake Wolpert: I don't think for us-

Ryan Cramer: Because it's a brand. You just made the point of, and this is not to argue or piss on anyone's comments. Say, they are a brand, we've made that clear. Aggregators by definition are acquirers of brands. Is there a space where that becomes a play for somebody, whether it be Acquco or something along the line.

Jake Wolpert: Yeah, I think the issue with the resellers is a lack of exclusivity, right?

Ryan Cramer: Sure.

Jake Wolpert: So you can't really control your brand. You can't control the price. I think it becomes a lot more challenging if you're reselling lotions and toothpaste, and there's nothing-

Ryan Cramer: Right. The product selections all over the place. Let's be clear, if you've, listener out there, if you have never looked at their brand, it is this jumble of lots of different products. Stuff that everyone needs clearly, but it's all over the place. I can't say you would fit in this category. Anyways, it's all over the place.

Jake Wolpert: Right. And I think you have less control. I'm not saying that there isn't a business of buying resellers. I think somebody could do it. They'd have to make sure that there's some kind of relationship with the supplier where that's going to continue.

Ryan Cramer: A license or something like that.

Jake Wolpert: Right, exactly. I think advertising is not as powerful. There's just not as much growth levers if you're in the reselling business, except just for the sheer fact of get the product for the lowest price, toss it up there and maybe you can figure out a relationship with a supplier and just get a better deal. But other than that, there's not a ton of competitive advantages outside of Pharmapacks, I would say.

Ryan Cramer: Right. So is the other playbook that you guys may be look into is, once you buy these brands, is it naturally of start quickly building up that direct- to- consumer platform, or are you guys going, do you feel like the wholesale route is the quickest way to... Again, selling to retailers who can put these products on store shelves, it has that visibility, it's creating that brand awareness, whether they buy it on Amazon or in the store. What's that next space that you guys feel that's most important you need just to grow your brands?

Jake Wolpert: We do have relationships with retailers that we certainly leverage. Once we're evaluating a brand, even before we've acquired them, we're thinking about how soon can we grow this brand off Amazon? Or, potentially on target.com, for example, or Walmart. That's all part of the acquisition process so that we can hit the ground running. But it doesn't happen all the time right away. Sometimes, our main focus is let's scale this brand on Amazon, or let's significantly reduce manufacturing costs. And that's important for us as well. So I think most important thing, the point is, it's a probably a case- by- case basis.

Ryan Cramer: Sure. Yeah, Jake, wrapping up before the top of the hour. Again, we have Jake Wolpert here from Acquco. Again, head of sales. So maybe tell me, you've gone through all these different brands and whatnot, you've said a lot of nos, I'm assuming, but there's been a lot of yeses that you are interested in these companies. What's the number one distinguishing factor that, if I'm a seller listening to this podcast and I say, " What do I need to know? What do I need to prepare for in order to be potentially valuable in your eyes to sell my brand?" What's that number one thing?

Jake Wolpert: I think, have your financials in order. And also, really have an idea of what you expect, what your brand's worth, what makes sense for you. And it's okay for you to dictate the terms to us. If it works for us, great. But the most important thing is for the seller to feel comfortable through the process.

Ryan Cramer: Right. That's a great tip, and I think that's where I would leave us, too. So again, Q4 is starting, I want to say, next week, we're already there. We're already coming, approaching it. What's that excitement factor? What are you guys looking to do for the remainder part of 2021? And then, is there prepping and planning to go into 2022 already? What's that next three months look like for you and the team there?

Jake Wolpert: Yeah, I mean, so we don't have heavy seasonal products, but we are expecting a big Q4. 2022 is going to be a huge year for us. Our goal is to scale our brands to$ 500 million. So I think it's going to be pivotal for us. Hiring, though, has just been critically important. Everybody thinks of aggregators are racing to acquire brands, but we're also racing to find the best talent. We will be about a hundred employees by the end of the year. To give you some context, we were about 35 when I started a few months ago. So doing it the right way, being disciplined with who we hire, it's probably the most important thing for us for the next three months.

Ryan Cramer: Right. And I think you shared with me, just brand managers, people operating and, actually, taking over something that's as precious as the spirit that was built in, actually operating it at scale, and doing a, hopefully, better job than what the original seller was, I think is what you guys are looking for. Is there anything specific, if people are... What are those really important positions that are just super critical to a company like you?

Jake Wolpert: Yeah, brand managers, people who have expertise in advertising and SEO. Really, any part of growing an Amazon brand. A lot of the people we hire have actually started and grown Amazon brands as well. Because I think there's a difference between your own brand, growing it, and then growing someone else's brand. But we really want to keep that integrity of the brands that be acquire. And so when you have that personal connection to a brand and you experienced that before, it's really important. But we're looking for all levels of Amazon experts. Yeah, it can be challenging.

Ryan Cramer: Well, I mean, I think you guys are up to the task, too. I know there's lots of different, exciting things in terms of marketing and money in the space. And, of course, just the sheer opportunity that I think lots of people have finally acknowledged that brands have power on a platform like Amazon. I always talk about international growth opportunities. I talk about the ability to actually develop something from nothing, with all these different ideas, and you do the same thing, too. Coming from a service provider side, I think that insight is super valuable. If people want to talk, touch base with you, whether it's in person and you're going to be at a conference or an event, or they just want to connect with you guys individually, how do they do that?

Jake Wolpert: Yeah. Well, first thing, I'll be at Seller Velocity on Thursday, which we're pretty excited about. And then we'll be at conferences. Yeah, I'll post it on LinkedIn, just our schedule. But really the best way to contact me is email me jake. wolperty @acqu.co, but I'll also give out my phone number. I want to say that I'm available, I'm transparent. 908- 208- 9674. For people who don't want to talk, you can text me or come to the website and someone will contact you.

Ryan Cramer: Yeah, we have Acquco's website. Again, it's acqu.co, again, playing on the words of acquire company. I love it, I think you guys are one of the more... I would say, brand- wise, which I love talking about, one of the more recognizable brands in the Amazon aggregator ecosystem. Again, we've got to find a different word than aggregator. It's going to come. Someone's going to say it, it's going to stick. It's going to be this not, I want to say, a dirty word. We're going to keep it all to ourselves, like brand builder companies or whatever that looks like. So crosstalk

Jake Wolpert: Operator is good. Yeah, I think operator-

Ryan Cramer: Brand operators, there you go.

Jake Wolpert: Yeah.

Ryan Cramer: Exactly. Well, that's exciting. And again, thank you so much for, again, Seller Velocity, PingPong Payments is also a sponsor of. We will also be at that event, so make sure you stop by PingPong's table, Acquco's table. And thank you so much again, Jake Wolpert from Acquco, for hopping on Crossover Commerce today. We appreciate it. Now, friend of the show, we appreciate your time today talking about how you guys are revolutionizing exit opportunities on Amazon. Thank you so much, Jake.

Jake Wolpert: Thanks, Ryan, appreciate it.

Ryan Cramer: No problem. And again, everyone else, thank you, again, listener, for listening to Crossover Commerce. Again, this is our podcast and our corner of the internet, where again, it's dark in my corner of the internet. It got so dark quickly if you're watching this live, but that's the beauty of living in a state that constantly is either raining or it's hot as all get out right now. But that's why we go live. With the changes in the weather, just like the changes in the e- commerce space and environment, too, you have to ebb and flow with what comes. We're staying strong here in the darkness, basically, producing this podcast. That being said, I just wanted to give another quick shout out to Jake and his team. Thank you for hopping on. Again, you can check them out at Acquco, acqu. co, and check out, again, opportunities to be a brand manager, but then also, just the ability to exit a business. I think lots of people try to figure out what's the difference between companies, which one should I go with? Again, more money is, obviously, an important thing if you're exiting your business. But you want someone to have your brand that you worked hard for in the right hands. And I think there's lots of great companies out there that are going to do that. If you're not ready or if you are ready, and you want to have that initial conversation, again, Jake gave out his contact information. Either reach out to him directly or have your broker reach out to them as well. So that being said, I'm Ryan Cramer. Again, we have a slate of, I call it a slate, it's just this knockout group of people that we're going to be talking with this week on the podcast. You can do so and be notified when we have new episodes available and when we're going to go live on our social media channels, by following us on social media, that's either PingPong or myself, Ryan Cramer. You can just search us in all of our channels, your favorite ones, Instagram, you saw my handle down there earlier, Facebook, LinkedIn. Just go ahead and give us a follow, and you'll be able to notified of the next great episodes. Tomorrow, we talking about accounting services in the UK. It's actually very important to know that once you grow your brand internationally, why you should be working with an accounting service to make sure your numbers make sense. Everyone's not a math whiz. I, too, am not a math whiz, but you want to make sure your numbers line up and make sense, that's what we're talking with tomorrow, e- commerce accounts over there. So make sure you tune in. Again, there'll be notified. Just go ahead and hit the bell on YouTube or any other notification system when we produce these and put these out. But it's going to be great week of content. As always, I do this for you, the listener, no matter if you're on Amazon or you're an e- commerce brand, that is why we do the show. So that being said, this is Crossover Commerce, presented by PingPong Payments. We'll catch you guys next time on the podcast. Take care.

DESCRIPTION

Ryan Cramer of Crossover Commerce talks with Jake Wolpert of Acquco one-on-one to discuss how aggregators are revolutionizing exit opportunities for Amazon brands and what Amazon sellers should think about when selling their business.

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Today's Host

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🎙 Ryan Cramer - Host

|Partnership & Influencer Marketing Manager

Today's Guests

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Jake Wolpert

|Head of Sales for Acquco