Joshua Silberstein (Thrasio) “Thrasio makes between two and four Amazon seller acquisitions every week”<

Funded to the tune of 1.85 billion dollars, the American company Thrasio is buying up stores on Amazon to develop them by pooling their costs. Its founder deciphers this new kind of business model.

JDN. Why did you choose to specialize in acquiring sellers from the Amazon marketplace?

Joshua Silberstein. In 2018, we started from the observation that many sellers on Amazon were having difficulty scaling their activity. Very often, when the turnover increases from 1 to 10 million dollars and the product catalog diversifies, it becomes difficult to manage everything with a reduced team and to excel in fields as varied as marketing, logistics , administration, etc. Because they are not structurally prepared for this growth, the margin achieved by these companies is shrinking. At the same time, it is not easy for these entrepreneurs to resell their company in a sector where there are more sellers than buyers. Especially since these operations can take several months, without having any guarantee that the acquisition will be finalized. Thrasio answers all these problems.

How many brands have you acquired since 2018?

We manage a portfolio of 114 brands for a total of 20,000 products. We make two to four acquisitions each week. These operations are carried out in less than 35 days and we finalize 98% of our term sheets, which reassures entrepreneurs. Thrasio employs over 1,000 people and our main offices are based in New York, Boston and Houston. We also have collaborators in Salt Lake City and Los Angeles but also internationally, including the Philippines, Pakistan, Ukraine, Portugal, Germany and Great Britain.

Concretely, how do you manage to simultaneously manage the development of so many brands?

Our initial idea was to be able to acquire enough companies to be able to achieve economies of scale and thus recruit specialists in each field. To facilitate the organization, managers are appointed to manage each brand. At any time, a manager can ask our marketing team (which works for our entire portfolio) to carry out a campaign on Google for example. It also works the other way around: the marketing team can suggest that brand managers run a campaign on Spotify if they see good results with another. This system allows us to be efficient by having real experts in each field, rather than brand managers who do everything at once.

What are your main markets?

We are looking for companies all over the world. We opened an office in China and Japan. We are also very interested in potential brands to acquire in France. In general, the European Amazon sellers that we acquire distribute their products throughout Europe. Through this, 3,000 to 4,000 of our products are distributed on the French market.

How do you select the companies you buy?

We do not invest in fads. Above all, we are looking for products that respond to concrete problems of everyday life: cleaning products, sports protection for children, insect traps, foot massagers, etc. Once identified, we order the highest rated products on Amazon that meet that need. We ask about ten employees to evaluate the products received and then to classify them according to quality.

From a hundred products at the start, we arrive at a list of five products. We then look to see if any have a particular competitive advantage and we read the reviews left by customers. Finally, we study whether there is potential for the brand to grow further, either by modifying the product or by launching others.

What do you mean by "brand"? Are they resellers or manufacturers who use the Amazon marketplace to distribute their products?

In 99% of cases, these are sellers who design their products, which therefore cannot be purchased elsewhere. We are indeed looking for unique products on the marketplace giving us a competitive advantage. In some cases, for companies that have a catalog of a hundred products, it may happen that some products are not exclusive.

Are these brands profitable?

We currently buy companies whose average Ebitda is around one million dollars. All generate profits. Of the 114 brands in our portfolio, only less than ten are less profitable than when we bought them. For the most part, they now realize more profits than before their acquisition.

The name Thrasio does not appear next to brands that you own. Do you plan, eventually, to affix the name Thrasio on all the brands of the group?

We will probably make this name change in the future, but it is a process that takes time, especially to modify and standardize all the packaging of our products. The Thrasio brand should inspire quality and trust in the minds of consumers, regardless of product category. Sometimes, however, we launch our own brands when we identify an interesting sector and we cannot find a company to buy.

Do you plan to acquire brands that do not sell on Amazon?

We are open. We initially started by targeting mainly companies deriving their income from Amazon and its FBA system (Fulfillment By Amazon, editor's note) but we are now studying acquisitions of companies that are not present on the marketplace. We always wonder if the brand in question can fit into the system we have built and if we can help it grow. For example, we could buy retail companies that don't sell on Amazon. Eventually, we will surely distribute our products via different channels and not just on Amazon, whether through retail or DTC (direct-to-consumer, editor's note) sites in particular.

Do you already have brands that sell their products outside of the Amazon ecosystem?

Yes. Last year we started building Shopify sites for 7 or 8 of our brands. These DTC sites have been very successful and we plan to create several dozen more next year. This does not necessarily make sense for all categories, especially for products with low market value. But these sites allow us to reach another type of customer and to present the brand and the products differently.

You've raised over $1.85 billion in both debt and equity since 2018. What's next for Thrasio?

I don't think we really have competition today. Some companies tried to copy our business model without understanding that what we were doing was far from easy. We have close to a billion dollars of cash on hand, which allows us to be in a position to implement our vision. Raising funds again is therefore not a priority but we have already done so in the past and therefore it would not be surprising if we did a new round. We want to continue to acquire great businesses.

In 2002, Joshua Silberstein created Citywise Guides, a company that publishes guides for urban professionals. In 2005, he became CEO of Healthguru Media then President of Kirata Media in 2013, before becoming, three years later, President of SimpleReach, a data analysis platform for marketing content. He holds a BS in Economics from the University of Pennsylvania and an MBA from Columbia University.

JDN.Why did you choose to specialize in acquiring sellers from the Amazon marketplace?Joshua Silberstein is co-founder and co-CEO of Thrasio © ThrasioJoshua Silberstein.In 2018, we left...

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