The Name: Thrasio
The Place: Well, it’s headquartered in Massachusetts, USA and has offices also in New York and Houston. But it has country specific websites in Japan, Germany and the UK and there are signs it may turn its Sauron-like gaze on the rest of Europe one day.
The Story: You know those little fishes who swim alongside whales and nibble up their scraps and generally make use of their eco-system so that they have developed a symbiotic relationship over eons, which benefits them both. That’s a bit like Thrasio.
I see. But which one is Thrasio – the whale or the little fish? It’s the little fish. Although it has been valued recently at around $6 billion.
Crikey, if that’s the little one what on earth is the big one? Amazon. And that’s worth over $1 trillion.
OK, fair enough. Everything looks like a minnow next to the: Thrasio is what is popularly known as a ‘roll-up’ outfit.
Some sort of carpeting firm is worth $6 billion? Nope. Thrasio hoovers up (and I mean literally hoovers up – the rate of acquisition is frightening) the companies whose products are selling best on Amazon. In fact this particular column is really about an innovative retail model rather than just Thrasio. There are around 40 of them now all acquiring private label businesses selling on Amazon – Thrasio is just the biggest of them.
Whoa there. But wouldn’t that be very expensive buying up best-selling consumer brands: Absolutely not. This is crucial to understand. As Joshua Silberstein has often pointed out the competitive retail advantages of the past 50 years – like effective use of TV marketing, big warehousing and logistical capabilities – including retail distribution networks are becoming irrelevant. In the world of FBA (Fulfilled By Amazon) anyone can build a multi-million dollar business.
And who, pray, might this Silberstein be? Co-founder of Thrasio. Along with Carlos Cashman. Two serial entrepreneurs who founded the company in the summer of 2018. They noticed almost before everyone else that in the Wild West of US e-commerce it didn’t matter if you were selling 50 completely and utterly different products, it only matters that you are selling the top one in its own Amazon listing category. Cue choirs of heavenly angels…
And shouts of Eureka! Probably. The third-party marketplace on Amazon now accounts for more than half of all products sold on the site. And every single product line sold on it has a unique product code and all the metadata is attached to that code.
Metadata? Product reviews, that kind of thing. So companies like Thrasio can come along to a business that might sell multiple products and say – we like your bicycle company well enough but what we really love are your customised bicycle helmets. And they can buy just that product. They might sometimes buy the whole company.
And then what happens? Phew, well what doesn’t happen. It’s a bit like doing a deep clean makeover with before and after pictures. The acquired brand’s products are put on a Thrasio conveyor belt where half a dozen of its employees go through a 500-plus point checklist on everything that could possibly affect the Amazon sales of that product.
500 points. Must take a blinking age: Takes about a month. This is literally the Stock, Aitken and Waterman of Amazon brands. The areas that need help, whether it be logistics, marketing, legal, whatever are farmed out to specialist employees and so in a very short time you have a thing that has been buffed up from all angles till it shines very brightly indeed.
Its own mother wouldn’t recognise it. And talking of parentage…You want to know what the owners think of all this. Take a guess?
Ecstatic that they have achieved a more financially lucrative exit strategy than they could have dreamed of: Yup. Thrasio’s founders are often quoted noting that Amazon has created the biggest field of entrepreneurs the world has ever seen but the starting of the business is the easy bit and once you get over say $1 million in revenues the whole thing ramps-up to another level of complexity.
I should say it does: And a whole raft of those people cannot, or don’t want to, take it any further. They’re too small for an investment bank or private equity to be interested in them and that’s where Thrasio sidles in. Most of the offers they make are taken up with alacrity and the whole thing is done and dusted in mere days. Backed by a lot of investors. And a lot of money.
Ballpark? I’ll give you a timeline. In 2019 Thrasio did its first funding round for a grand total of $6.5 million. Eight months later it does another one for $20 million. In April 2020 another $35 million, then $110 million at a $780 million valuation. In July last year it really gets going with a funding of $250 million and a valuation of $1 billion. And it recently raised a further $750 million valuing it at $6 billion.
Holy Moly: Someone somewhere is seeing an awful lot of potential, especially in the US market, whose population is so much more wedded to buying on Amazon than are Europeans.
So come on, there must be a downside: As someone once memorably put it – all these roll-up operators are banking on Amazon continuing to let them play in their sandbox. And even if Amazon continues to let these companies swim alongside it picking off the parasites from its vast bulk…
You know you can probably overdue this metaphor: Fine. I was just going to say that it just takes a few bad reviews or slight misdemeanours for mighty Amazon to swat a product off its listings.
Or worse – see that something is successful and then develop its own version: Correct. And then you’re officially stuck. But that doesn’t seem to be dampening anyone’s ardour at all.
Amazon eh? It is its own economy as big as the entire GDP of some countries. Thrasio already has around 100 brands on the site and is in the top 25 sellers so it can weather a few individual disasters as its portfolio is so varied.
Anyway, I’ve looked up this Ancient Greek Thrasio guy. And you could take him two ways. Personification of boldness and courage. Which is, of course, what Cashman and Silberstein want this to be.Let’s not forget, according to media reports, Thrasio’s revenue has doubled on average every 73 days since its launch. Just take a moment to take that in.
Or alternatively the personification of over-confidence or insolence: Not quite so much of that part in the marketing literature.
Only time will tell: Indeed.
Flooid has evolved from the PCMS heritage to better serve retailers looking to deliver customer engagement across multichannel, multi-vertical operations. The Flooid Basket follows individual customers, not channels, allowing retailers to offer seamless, personalised customer experiences across any vertical, device or location. The new Flooid name, logo and brand visuals reflect a modern, fluid way of shopping, as well as the ability of retailers to embrace no limits innovation using Flooid’s technology.