This Trend Will Make Millionaires

Hey guys, this video is for those of you who are E commerce ogs that have been in the game for a long time, like me. If you're in that camp, then you're familiar with aggregators. These are businesses that buy other businesses specifically in the Amazon space. And for the last several years there have been really big aggregators that bought up every Amazon brand and every business that was doing any volume at all on Amazon and they drove up the value of Amazon based businesses. And most of the people who had exits were selling to aggregators who were raising money and competing with each other to buy up as much real estate on Amazon as possible. Now I don't mean to say I told you so, but a few years ago I told you that this was a disaster waiting to happen. And now we're seeing the disaster happening. It was recently announced that the biggest aggregator, at least the most well known aggregator, Thrasio, was starting to lay people off and they changed their CEOs. They also delayed their IPO. And it looks like there are some cracks in the foundation. No one saw this coming right now. Thrasio, of course, made huge headlines a few years ago when they were valued at $1 billion and, and they were the first unicorn in the Amazon based space. That's when all of these other groups started following their thesis and raising money from outside sources to make the same play. And that's when the Amazon exit boom was born. It was my opinion at the time that this was a bubble. Hey, there's a bubble. Not just because their valuations were too high, but because they had no idea how to actually run a brand. If you talk to people who sold their businesses to aggregators, it won't take you very long to find somebody who said, yeah, I sold my business to them and they ran it into the ground. Or yeah, they promised me that there was going to be huge upside as it grew, but I never saw that upside and so I didn't get the money that I was promised. That's because aggregators are buying up real estate on Amazon but not focusing on running a great business. They're not cultivating the customer list and they're not casting real visions for the individual brands. Their vision is about how much real estate they can own on Amazon while neglecting the customer. And anytime you neglect the customer, you are gonna go out of business. So here is what is going to happen. The first thing is that you're gonna see capital dry up for aggregators. Banks and lenders are going to get worried about their return on investment. And they're already starting to limit how much money they're willing to lend to other aggregators that are buying up Amazon businesses. When capital dries up, then the aggregators will not be able to buy as many businesses. And since aggregators are not very good at running businesses, you're going to see a lot of them default on their debt, which means aggregators are going to go out of business and people are going to lose a lot of money. Now, as a scrappy entrepreneur, this gets me really excited. Like I want to lick my chops and rub my hands together and say, let's go. This means that the market conditions are coming back to favor those of us who are interested in building profitable businesses. Profitable businesses. Who needs profitable businesses when aggregators will buy your company no matter what? And in order to have a profitable, well run company, you've got to come back to vision customer base, having great products that serve them and running effective advertising. The nuts and bolts, blocking and tackling. This means that the people who are raising a bunch of cash in order to go really aggressive on Amazon with the idea that they're going to exit to an aggregator, it means that their strategies are no longer gonna be effective. Which means that those of us who are interested in building long term brands have a nice window opening where we get to come in and dominate again. This is really good news for new entrepreneurs who have been saying, I like your stuff Ryan, but the market's so saturated now. This is the time where it's no longer saturated. This is also a really good time to think about buying your competitors because the valuations on companies are coming down and some of them are struggling, some of them have raised debt financing and that payment is starting to hurt. So this would be an interesting opportunity for you to look at bolt on businesses and competitors that you can add into your business as you start to create an umbrella of companies. Assuming that you are gonna do the brand building that's required to have a really excellent company over the long term. This is also the time that it is more important than ever that you have a core customer and you have an audience of them. Specifically, that means having an email list and either your own social media following or partnerships with influencers that have a vested interest in the success of your brand. This is also the time that is more important than ever for you to be running brand driven advertising like podcast ads and YouTube ads and Facebook ads that just collect an email address. Still to this day I do not understand why more brands don't run Facebook ads. To an email, opt in and then promote their products on the back end of that email series. I just don't understand why more people don't do it. There's so much profit here, but it requires work and so Amazon based entrepreneurs don't do it. So the puck is moving and the industry is changing and it's changing really fast and you're going to hear a lot about how the good days are over. And guess what? The good days have been over since 2014. I've heard that story every year in every business I've ever been in because people complain that the thing that they were doing before isn't as effective or the strategy that they thought was going to get there is no longer relevant. And so they don't keep up with the times. But there's always opportunities and, and there's a lot of them right now in the E Commerce and Amazon space because you see so much chaos happening with the big guys. There's really only one aggregator that I think does things well. They're called Grove G R O W V E. I have no affiliation with them, but my old partner is the CEO of one of their brands right now and they do a great job because they look for for brands that are well established and then they build the other pieces like Shopify and Facebook ads and email lists. They do the work to build real brands and the other thing that they do well is they keep the original founder in place at least for a period of time because the founder has a vision and the soul and the lifeblood of the brand. And so they keep them in place and then build around them. They also just have really good teams for all of the different divisions that need to be part of a brand and they can partner those with each brand that they bring on. The reason why their model is smart is they're not trying to buy up quantity of brands. They're buying up well established businesses that they can build long term brands around and have a really big exit. That is the only aggregator that I know in the space that I would consider working with right now. You're going to see a lot of changes over the coming months and in my opinion, they're all good for the industry. It's good that valuations are coming down to reasonable levels and it's good that some of the buyers are being flushed out of the marketplace. This gives us a new advantage and a new window of opportunity where we get to compete on quality and brand building. And those who do that will be in position to dominate through the next period and into the next boom, but it requires you to think about building a real long term business rather than flipping over to an aggregator. Those days are numbered and you've got to come back to the core fundamentals of building a long term brand. If you need some help, I'd be honored to mentor you on your journey. I help entrepreneurs build seven figure businesses that they can sell and if you you'd like more content like this, hit the subscribe button and I'd love to be part of your journey. I'm Ryan Daniel Moran with capitalism.com thanks for watching.