How To Sell Your Amazon Business For Maximum Value
Kris Gramlich and Dustin Kane discuss how to sell your Amazon Business for maximum value, evaluations, and ways to improve your Amazon business for future selling with Jim Mann from Thrasio.
Jim Mann is a serial entrepreneur, brand creator, Amazon FBA expert, and creative digital marketer. Currently, he is the Director of Acquisitions at Thrasio, the largest acquirer of Amazon businesses and one of the top 25 sellers on Amazon. Before Thrasio, Jim was an FBA seller for six years, managing and running all aspects of a travel brand on Amazon across the US and Europe. He specializes in e-commerce, private equity, online retail, third-party sellers, and more.
More About: https://www.thrasio.com
Listen To – Two Amazon Sellers And A Microphone Podcast On These Platforms:
Find Us On Social Media:
➜ Facebook: https://www.facebook.com/sellozo
➜ Instagram: https://www.instagram.com/sellozoofficial
➜ LinkedIn: https://www.linkedin.com/company/sellozo
➜ Pinterest: https://www.pinterest.com/sellozooffi
➜ Twitter: https://twitter.com/sellozoofficial
➜ YouTube: https://www.youtube.com/c/Sellozo
Other Helpful Articles:
Read The Full Text Below:
How To Sell Your Amazon Business For Maximum Value
– Hello everyone, and welcome to episode 96 of “Two Amazon Sellers and a Microphone”, brought to you by Sellozo. Today Kris and I are very excited to have Jim Mann from Thrasio on with us. Man, a lot to talk about Thrasio right now.
– Excited to have you guys on and what you guys are doing. Jim, how are you doing?
– I’m fantastic, good to be here guys.
– Glad to have you. You’re coming from London, so it’s a little-
– Sunny London, yeah, and it’s not sunny today, but yeah, North London.
– Very nice, well thanks for coming on. We’ve got so many questions and so many things to talk about in this space right now with what’s going on. But before we dive into everything, let’s just get a little background on you. You wanna give us sort of your story, how you got into the space.
– How you got connected with Thrasio.
– Yeah I mean, it should be “Three Sellers and a Microphone.” So I know – I love it.
– Oh yeah. I started selling in 2013, ’14 I went full time. I built a multi-seven-figure travel brands. I got up to seven figures in a year and a half. It was probably the sweet spot, when a lot of people were piling into the FBA model. I bought the course amazing selling machine. I followed the over the shoulder stuff, and threw some stuff up itself. I’m like, wow, this is real. And it just went from there. I don’t think I could put much skill behind it. I think I was lucky someone. I had some good teachers in the name of the ASN guys, and that was it. And from then on, it was masterminds, geeking out, going to meetups, webinars. And as we all done, just taught myself how to succeed on Amazon. First forward to 2020, I got hit by COVID, but as one of the guys in the wrong category when COVID… Was in travel. So whilst I was watching all my buddies kind of 3X, 4X their business last year, mine tanked 90% at four weeks. And I decided to give the brand some friends, that are brand managers. I didn’t really enjoy operating Amazon anymore. I didn’t have the fight in me. I was a bit tired, I knew Stephanie who’s the CEO at Thrasio. And she was in a mastermind with me, yeah. And yes, a million dollar of seller mastermind. And I said, look Steph my business has gone down the toilet. You guys are flying. I don’t know that much about acquisitions but I used to work in consulting. I know FBA pretty well, I’ve lived in it since 2014. And yeah, so one thing led to another, I ended up joining as director of acquisitions. And I’m now gone from selling on Amazon to sort of buying Amazon, an Amazon seller to Amazon acquirer. Yeah.
– It’s really fascinating. And I wanna get back to a little bit more of your story too, ’cause that resonates with me in a lot of ways, what you were talking about. You, me and Kris all started around the same time. It’s interesting, how many people we talked to, got their start right around that 2014 time, and had really good success with it. And I wanna go back to your story, but it’s fascinating how the emergence Thrasio, completely changed my mindset of what my end goal was with my business. I think all of us started when we started our businesses. It was like, this is our way to maybe potentially quit our jobs. It’s a side hustle. Let’s try to quit our jobs, but these, million dollar exits were not on our mind-
– You couldn’t sell it, you couldn’t sell it. And you couldn’t raise money. Do you remember you couldn’t raise money? You try-
– Oh yeah.
– Yeah of course this is business, it’s called Amazon-
– Yeah, yeah.
– I’m growing at 300% a year and I need some money to feed this business, it’s great. I’m doing like, million dah dah dah, and the bank has looked at you, like, you’re crazy. They just like, how do we manage this risk? How do we lend you money? And then, Amazon lending thankfully kind of saw the opportunity. And that was crazy. I don’t know if you guys ever took money for moms and lending, but I had a widget pop up on my seller central, click this button here and we’ll give you $300,000. And I found out my accountant, I’m like is this for real, like, press it it’s like a game. And I pressed the button seller central, 20 days later they wired me $300,000 and off we entered the braces again. We can go, go, go, go. So it was just, there was no funding, people weren’t buying Amazon brands in 2015, ’16, right? I think, one-on-one commerce, were they in 2016? Richard sort of thought this idea about buying 101 brand put them together and he had 101 million profitable revenue E-commerce business. So, I think, yeah when we started right through till 2017, ’18, I think selling an FBA brand was pretty alien to most people.
– And now that’s the end goal. I think a lot of people are out now seeing people exit for millions and they start this business with, okay I’m gonna run it for 24 months, get the profitable and then just flip it over and sell to aggregators like yourself, so-
– Yeah, we’re buying brands that started in 2017, ’18 and that extinct turned $20, $30 million into this, it’s crazy.
– It’s not.
– You guys are obviously the big boys in the space. I mean Thrasio is a huge aggregator. And like when we started doing this we’re like, we’re gonna get somebody from Thrasio out here, ’cause we’re working on it, obviously we’re in the space and there’s more accuracy popping up, I swear there’s another one every day.
– And pops up.
– And I’m kind of, I might be jumping ahead a little bit but I’m curious what the end goal is, right? Like Thrasio is existing, like I saw they raised more money, you guys raised more money in Japan recently.
– There’s more and more like every, I swear every week there’s new headline Thrasio raises millions, Thrasio does this, like what’s the end goal? Where’s this going?
– Yeah, I mean, look from the beginning I think it was just does this thing work. And then you build a team and you start building tech and efficiencies and data and you fast forward now. And we’re a thousand people. It’s crazy.
– We had 40 people start on Monday, last week. The speed of growth in the organization is insane. And what comes with that is depth and breadth of capability. So, we’ve got Casey now as head of SEO, one of the best guys and with this brain that he keeps warm under that hat of his.
– We’ve got a massive team of creative, we’ve got Instagram, Snapchat, Google, Facebook Ticktock, traffics, but we’ve got a retail team, taking brands into retail. We’ve got direct consumer team and are driving about 20% of revenue on branded sites. We’ve got a massive supply chain engine who are, within that, we’ve got product design and development and obviously we’ve got buying power, that means that we can get stuff on the water into the warehouses’ probably cheaper than most people are able to. And on all of that drives massive profitable growth on the brands we buy. That’s where we’re at today. Where do we wanna be in two years, three years, five years. I mean, Josh and Carlos have put the statement out and everyone’s saying the same thing, same narrative like, right now at work we are becoming one of the biggest operators on Amazon and getting pretty good on direct consumer and other channels as well. If we keep on this trajectory, we could potentially become an engine that has the ability to launch a brand from zero and turn it into a global consumer brand quicker than some of the old Unilever’s and pots and gambles do. But we know where we’re at, we’re not there yet. We’re on a really good trajectory. And if we can, and that’s why we’re trying to get, you gotta have a vision, right? You all know where you’re headed, that’s where we’re headed. We’re a thousand people at the moment, those guys are, I don’t know how many thousand work for PNG in their extended, they’re the companies within the group, that’s where we’re headed.
– Yeah, it sounds like you surrounded yourself with a good team. People who understand the market, that understand Amazon, Amazon is different than sign on your own website. Like there’s, there’s a system algorithms, there’s listing changes. So it sounds like you’ve got yourself surrounded with the good team over there.
– Yeah, we got an amazing team. like when we have a suppression, we get it up on average within 36 hours, no matter what’s happened. I think the average seller, when you get that notification and your heart drops you’re out of business probably days, if not weeks, we very rarely go further than 36 days or 36 hours because of the… We just know how to handle it. The data we’ve got from 17,000, 18,000 skews and the data team analyzing all of that coming in from the algorithm. We probably know more about the algorithm than anyone else operating on Amazon now. So we know how to launch, how to rank what’s working in certain categories, what isn’t, and then that drives what we’re willing to pay in which categories. And we know now where we get best results and what profile we do well. And so we’re getting better at buying all the time as well. And all of that stuff comes together and it’s like, I hate the word fly world, but it is, this is a sort of critical mass that just we keep building on, which is great.
– It’s, you’re talking about the growth of your team. I was on your website earlier and the job openings page. It’s just like, you can scroll and scroll and scroll. It’s like, holy cow, they are growing so fast but I wanna take a step back to your journey because I told you, it resonated with me. And I think the emergence of Thrasio and other aggregators has maybe changed the options for people that are starting to sell, because you mentioned that you quickly grew your business and then you sort of had like, it started to, there was issues that happen. And when you’re a single seller, and you’ve got this thing, it can grow rapidly. Like same thing happened to Kris and myself, our businesses grew rapidly, but you’re at the mercy of what one bad thing happening. And it can really harm you, a competitor comes in or you get suppressed or any of that. And that can sort of take your energy or the wind out of your sail quickly. And also the ability, like as a one person show like our, I think what I like to do is I love the process of product research and launching products and all this stuff that takes it. But once it gets to scale and then you’re talking about, now I got to expand to Walmart and expand to other places and keep growing and growing where I need to grow my team. The opportunity to sell at that point is so attractive to me. And now I think that’s the focus. So what do you recommend, like how does a seller properly prepare themselves better for that route now, when they’re starting their business?
– I think like most businesses are being valued on their trailing 12 months SD or profit. And so it’s really hard to do 10 product launches in a year and finish that year with nice profit numbers ’cause you’re in kind of growth phase. So I think if you’re thinking about putting a date on selling, try and put the trailing 12 months leading up to that date as make it as profitable as possible because it might seem not very intuitive but most people buying Amazon businesses are valuing based on the trailing 12 months performance not the future potential. So that’s really common, disappointment. I’ve just tripled my revenue in the last 12 months. And it’s gonna keep on that trajectory. My business must be worth that it’s like, well you’ve actually not made any money this year. You are on a really good trajectory but right now you’re not making money. So that’s probably one thing it’s just really focused on your journey towards profitability.
– Yeah, that’s interesting. So if you’re developing your brand and you’re trying to continuously launch products obviously you’re reinvesting your profits. So that kind of takes away that trailing 12 months. So sometimes smaller product segment, laser-focused on it and get it profitable is a better approach?
– It depends on the category, right? But for some categories to launch and rank, you have to do it initially at the expense of profit, ’cause you’re just getting traction right. You’re getting that honeymoon period and you’re looking at conversion rather than profitability. And so if you’re launching a couple of products a year and that’s a small percentage of overall revenue that doesn’t really hit your USD that much but if you’re really aggressive and there are people that are really aggressive and launching new products every month, that’s when you have that kind of moment where you got a lot of my business on an amazing trajectory, but at my USD, it doesn’t look great. And that’s the one thing I’d say let’s just really focus on USD before you go to market ’cause you’ll get the best price.
– That’s good to hear. I like that you book that down ’cause that’s kind of where I think Dustin and I are both at, we’re both at that phase of, we know the potential and we know what we would want to get rid of our business forward, but we’re like in launch phase. And so we’re not very profitable ’cause we’re just launching a product, after product after product to bring that profitability up and to get a good set of skews. So I’ve thought about selling it but I’m looking 12 months down the road. I know I have multiple skews coming out. I probably should hold off on that advert. So my valuation is a little bit higher- Yeah I mean-
– Profitability is a little low.
– Yeah, it depends some guys managed to launch and then they just put on the early reviewer program. They launched pretty much a ret… And they’re off to the races. It’s rare, but it happens, some guys just get traction very easily but I think for the majority of us out there you have to like just go through the pricing early on to get that traction and show the algorithm that your product is that key word. And then you start up in the private, the other things you do to get a target price that gives you the profitability you need in longterm
– Other than the trailing 12 months, what are some other really important factors that you guys are looking for when you’re acquiring businesses?
– Certain categories? So the ones we don’t like are I’ll take one step back. This is just my belief going forward that Amazon’s got two kinds of brands on it going forward. You’ve got the brands that are premium, differentiated have a store, and you can build a brand off Amazon at some point in the future. And then you got commoditized. So what, just give me that product at the best price and the two types of selling. Now the latter is really dominated by the Chinese factories, but it’s very hard to compete and very hard to differentiate. So it’s just about a price and commodity. So for us, as a Thrasio or anyone buying, we’ve have profitable long-term growth as we so we are not looking at, the categories dominated by the Chinese. We avoid technology. We avoid stuff where there’s obsolescence. So like an iPhone case, updates every year. We don’t like stuff that you put in your mouth. Then we’re finding that when we go into diligence and we get the product tested, it’s not through any intent from the seller, but often what’s in the bottle is in what’s on the ingredients list. So that’s pretty painful. And then you guys know that the SAPS category is aggressive for black cat. So there are certain categories where you’re going into the ring with some pretty underhand players. So that applies in technology and applies in SAPS. So the other one we avoid is fashion. No one likes to admit that they’ve had too much Turkey at Christmas and they come from a meat into a large and then they they’ve returned the products and give you a one-star review. And so you have return rates and fashion is hard and then fashion by definition, it goes out of fashion. Colors, or it’s just a different difficult category to manage from supply chain and inventory. So removing all of that, we’re open to pretty much, most of the categories, sports and outdoors are great pets, fantastic home and garden, fantastic and great results in those categories, yeah.
– How much does outside of Amazon impact the sale? Like if someone has a huge Facebook group for their brand or a big following on YouTube or any of that, obviously I think that helps grow their brand, like you’re talking about that’s a value you’ve add, how important is that kind of stuff, when you guys are looking at businesses?
– It depends, if our strategy is to build the brand D to C, that stuff’s really helpful. But here’s something really interesting, I thought you’ve seen we bought a brand called angry orange, and it’s like, have you seen it?
– I’ve heard of it.
– It’s a spray that when they pet, pees on the carpet and it kind of has natural oils and gets rid of the smell of the pee. We did a partnership, a collaboration with Snoop Dogg last year, you can google it. It’s a terrible advert, you wonder why Snoop is was doing this stuff. Like, did he not earn enough money? Or what’s he been doing? But anyway.
– So there’s an advert with Snoop. And the brand is orange. He’s in an orange like tracksuit. And he is there with his chain on, and he’s praying. And that drives massive direct consumer sales on the website, but it had a massive impact on Amazon as well. So even if you drive a massive D to C brands, people wanna go back to Amazon and buy, ’cause they want that prime delivery. They don’t wanna have to create an account and put their credit card in again. So what often happens is they’ll see the advert they’ll have a look at the website, they’ll buy into the brand story, and then they’ll go back to Amazon and buy it and see if it’s there. So all firm is in traffic, well firm’s in brand building has a big halo effect on Amazon sales.
– Mh-hmm, it’s amazing existing businesses that are more old school still haven’t come around to that concept yet. It’s a lot of them who don’t wanna even be on Amazon or feel like Amazon’s is big beast.
– And they’re like, oh, the Amazon takes all this money. They don’t realize that a huge majority of their customers are looking for them and wish they were on Amazon.
– Hundred percent, that’s changing though, like before it used to be find products that worked in retail and sell them online right? Now, I was talking to one of the biggest distributors in Europe for tech brands and someone else come, if it was a few people have heard it recently saying they now look at what sells on Amazon, to validate whether it’s going to sell in retail.
– Mh-hmm, it’s amazing.
– So big shift, big shift. Yeah, if it sells on Amazon we’ll put it in the stores and it used to be a hundred percent the other way around right? I’d be like, oh, a retail brand has a good chance of surviving online. Now they’re going , if it was surviving on Amazon we’ll stick it in our store here.
– It’s amazing, what a launch pad Amazon has become. I mean, I used to tell, back when we were starting, and your friends and family have no idea what you’re doing, when you’re saying, oh I sell on Amazon. I was like, well, imagine if I could walk into Walmart and just shove my products right on the middle shelf, I love it.
– Like I can do that.
– I used to get the pity face. When I started selling, when I sit in there I say to them, and they’re like, what are you doing? Oh, I sell on Amazon and I could see people’s face, right. I used to work in consulting on a professional job and they will let you, like are you okay, do you want me to buy you dinner?
– They had no idea that we were like doing millions of dollars on Amazon, had a great business. It’s just there’s lack of awareness.
– Like in 2015, people had no idea. Now everyone’s from Amazon now right? But in 2015, it’s like, are you selling some secondhand stuff like on eBay? What are you doing?
– Yeah, I know. Kinda had that story, I had two pallets. So long story short I had two pallets that were supposed to be shipped straight to Amazon yesterday. They ended up showing up at the UPS Store which doesn’t have the capability to handle pallets. So I get to the UPS Store and the guy’s like, oh, what are these boxes? What do you do here? I was like, oh, I sell on Amazon. He’s like, I don’t get it. So I had to described to him like, look, everybody you buy on Amazon is not Amazon. It’s normally gonna be somebody like me, that’s selling a product. And you could see his face, like what I gotta look more into this.
– Yeah, It’s amazing, how many people still think when you buy on Amazon it’s Amazon like that they’re buying the product offer, just a brand. So many people don’t understand the whole third party set of thing.
– No, not at all. In fact, I was just totally different tangent. My son was on Amazon yesterday. I was watching, he’s looking for some new stuff for baseball, and I was watching him. And I mean, he clicked every ad. It was making my head hurt so bad. I was like, oh my gosh, you’re just looking around and you’re clicking every ad on your, but it showed the power of those-
– Are you pitching Sellozo over here?
– I’m picturing my own advertising. And like all these random clicks that are not obviously gonna convert to sales, it was painful.
– But yeah, it is fascinating the whole space and what it’s doing. And so people still don’t understand it. I mean, I think there’s more awareness, but so less. And then again, now we’re in this next phase of where now you can be a worldwide seller very easily in all marketplaces with your brand. And that brings you to a question of how attractive is that to you as a buyer? Is it better to have the opportunity to expand, or is it better if it’s already expanded, and that makes the company more valuable.
– Yeah, but a bit of both actually. So taking a brand that already owns its category, in EU seven or eight or whatever, plus U.S. If you’ve reached the ceiling of converting in that sort of keyword search universe like we call it, your growth is limited in that, ’cause you’ve reached the ceiling of demand. So they’re great brands because the reason you’d look at that, ’cause then you’re going, well we could then go into Walmart Jet and you start looking at direct to consumer and all that kind of stuff. And that’s where the growth opportunity comes. If it’s just a pure Amazon play and it’s a leading brand in Europe and it has a review count that could port into the states and compete and like, a best selling widget in the states has normally got about three to five times as many reviews as the best-selling widget in Europe. So it’s quite hard sometimes to pull the European which are in to the U.S. and win, if you find brands that you can take from Europe to U.S., that’s when you can turn exit easily and succeed. And for the U.S. brands that are not yet in Europe, you’re not gonna 10X it just by going on the challenge in Europe, but you can get a pretty quick uplift. And then, for us personally when we buy a brand we have an objective of onboarding a brand and getting 15% uplift in sales. And first 90 days just through optimization. It starts off with a data team, then it goes to Casey’s team. They work out the keyword universe and what we should be going for. Then the creative team build out the assets to talk to the keywords we’re going for, the copywriters rewrite all the copy and start split testing the copy, the PPC team then start driving in all the campaigns around those keywords. And you put that all together. And then the first 90 days every agent has an objective of a 15% uplift in sales. So you can get significant growth on brands just by real focus and skill.
– That’s crazy. That’s insane.
– It is amazing. And I think you just, on another tangent you just summed up really well. How much is involved in this business? I mean, to have really succeed. And that’s why, if you’re a one man show or a small team, outsourcing a lot of these things is critical on them, because it’s impossible to manage your ads, manage your listings, split-test everything, manage your inventory suppliers, et cetera, and constantly stay up on what’s going on. And it’s really interesting to see that that’s the way that it goes when you get them. You’re systematically going through all those aspects to get immediate improvement.
– Yeah, and then unlike PPC, Amazon’s moving towards pay to play blatantly, right? There’s so little real estate now this organic search return. So you gotta be good at PPC now. And then video ads are the ones that are getting the best conversion and return. So, just creating loads of short little video ads, that are good, it’s hard for a solopreneur, let alone then having the ability to split test and look at conversion. I mean, you can drive yourself mental. You’re trying to do that. Worry about inventory limits, supply chain, my containers are now 15 grand that were three grand, 12 months ago.
– No doubt.
– It’s a lot, it’s a lot, a lot, a lot. And so I think that a lot of sellers are faced with either building a really solid team, which for a lot of people is not what they wanted to do. They went into this to enjoy a nice laptop lifestyle. I mean, I fit in that category. I don’t think I wanted to have it, build a massive team. I like the idea of building a brand and the numbers but I didn’t really like the consequence of that. I enjoyed my independent life. So, you throw all that together and that normally is what pushes people to go. Do you know what? Now’s a good time to get out.
– It’s so interesting you bring that up because I think knowing what your personal goal is, is helpful. So I’m beginning to like, visualizing like where you wanna go and trying to manifest it and all that. And I know when I started my vision was quitting my job, and as soon as I did, I was like success, but then you’re like, oh well now I gotta keep this growing. Now I’ve got a whole brand new full-time job. And it’s like.
– How did that happen? It’s your fault.
– But I get that and so that’s why, I was talking about at the beginning how this new evolution of what’s going on in the Amazon space with aggregators, like you I think resets the mind frame of sellers, of what they’re actually doing. They’re developing an asset to sell, an asset with value that they can exit and maintain that lifestyle, ’cause you see people now they sell, start over again. Now they’ve got more money to start. Then they sell, now they got more money to start.
– And they continue to do that. And they get better and smarter. And it’s probably more valuable companies coming to you in that regard. But on a whole another topic, PPC, let’s talk about that for a second. How important is that in terms of what you guys are looking for when you buy? Is it good if it’s really well built out, and you don’t have to do much or is it better if there’s opportunities as well?
– So, I can tell you that we normally end up spending more on PPC than most sellers do when they come in, but we’re more confident to do that, ’cause of the data we’ve got. And we know that we can spend more on PPC and it’ll drive a higher level of organic sales. And so overall we’re driving increased profit. We’re not just spending money for the sake of it. I think what you guys do is critical. I think PPC is, and I’m not just saying this ’cause we’re on the show. I think PPC is pretty much, your ability to source the right select and source the right products at the right price. And your ability to manage your PPC, I reckon are probably two of the most important things on Amazon now. So let’s assume you do your product selection right. The next biggest thing you’ll live and die by is your ability to manage PPC well.
– Let’s assume you’ve got your right product. You’ve got your keyword universe 100% now, two copies right. Your static assets are optimized beautifully. The thing you can dial up or down profitably is your PPC. And it’s getting harder, right? It’s getting more and more competitive, Amazon keeps releasing more and more features and they keep putting more and more paid search on the search result. So it doesn’t matter if you’re ranked number one anymore, learning about three slots that are not paid right on that search result. And it’s like Google, it’s all moving towards pay’s place. So I think PPC is either the opportunity to or the nightmare, depending on whether you’re any good at it or not.
– A lot’s changed like, since we both started, all of us have started. I mean, there’s video now. We’ve got displays and it’s a different mindset. I talk about this a lot, but it’s a different mindset. Like Amazon ads and PPC is like an analytical, you’re looking at the data. You’re looking at spreadsheets you’re trying to figure out, right, should I raise my bid, lower my bid, whereas product research it’s creative, like, okay, I’m gonna make a logo. I’m gonna do this to a product. I’m gonna add this to my packaging. And if you try to do that by yourself, you’re being pulled one direction or the other. And you got to try to figure out, I got to get rid of some of this. You gotta have a strategy for both of them. Like do what you’re good at. If you’re really good at looking at spreadsheets and you like the data and you like to do all that stuff, focus on that.
– There’s a lot moving, there’s a lot of moving parts.
– Yeah, I enjoy it. I think like you guys enjoyed, the kind of the hustle of trying to find the products and learning it and differentiating. And that was the thing that was exciting for me. I never enjoyed the PPC and the spreadsheets and pivot tables and analysis. That’s the stuff that killed me, that made me wanna cry. That in my fractional CFO, my fractional CMO, where my two like, things that just, they took over inventory management, my numbers, my PPC. And that allowed me to do the bit I enjoyed, which was kind of the product selection and design, all that kind of stuff.
– Yeah, we work and all day with PPC. And it’s probably not our favorite thing. I mean, in terms of doing it manually, like doing it that way, but automating it is amazing. Kris, go ahead, you had your question.
– Yeah, I wanted to switch to a different topic and it’s about selling and letting go of the brand ’cause it’s hard. It’s hard to let that go, right? Like we create these brands, we’re selling these products and then we either get approached by an aggregator or we go looking for an aggregator and then the time comes to like hand it over, like say here you go, go ahead and run with it. That’s a hard for me anyway, ’cause I’m probably emotionally attached to it. But for me anyway, it’s hard to let that go. How can they, if I sell my brand at Thrasio, is that it I’m done. And here you go, take it or am I still involved somehow.
– It depends on the year you’ve had, right? Some people would like to take it away,
– Yeah, you’re right. Most people feel are really emotionally attached to their brands. So they like the idea of money in the bank account. They like the idea of a bit more freedom and less stress but they don’t like the idea of giving up the brands to some strange aggregator machine thing. And they don’t know what’s gonna happen to it. It’s an emotional decision, I think for many people, I talked to a lot of sellers and we don’t, we pass on a lot of businesses we look at, but also a lot of guys that just, say it’s not, you’re not there yet. Keep going six months, keep going a year, you still got it in you. So early on in the conversation, I say this to everyone and say, look people are either like just give me a number I’m out and other people like, I’m thinking about it. So tell me what the process is like and what kind of valuations are we seeing? And what does this look like? What could I expect? As much as I can I’ll share any advice I can. And then we’ll reconnect in six months, a year, two years. Whenever it is whenever the time’s right for them.
– Sounds nice, yeah I guess that’s what keeps you separate from all the other aggregators out there. You’ve got the team built. You’ve got the infrastructure built. You’ve got the knowledge. You guys have done this. I think you just passed what a hundred brands. I thought of a guy at Instagram that I think you acquired him. He was your 100th guy or a 100th seller. I’m sure you got more than a 100 now. That was a month ago.
– So that’s what’s kind of nice. Is there a way for me to stay involved? Like if I say, okay, I’ll give you, here it is now but 12 months from now, do I get another cut on something?
– Yeah Kris, so I didn’t answer your question. Most sellers don’t stay involved in the business, and there’s a period where we have to earn their trust to let go during diligence. And so, we sign a term sheet against diligence. There’s a boring phase where you’re looking at the numbers and we’re verifying that everything in the profit and loss is true and that deal is good. And then supply chain come in, ’cause the most important thing to scale is kinda the factory or supply chain scale with us? Brand management team have a team meeting and then the traffic team and the marketing team have a meeting. And during that process this seller starts to go, holy shit, this is like a massive team. I’ve relaxed. They start to think the brands in good hands and it’s gonna get scaled. Sellers beyond a few weeks of the deal spectators, happy spectators. They’ve got full access to seller central. They can see what’s going on. There’s a two year earn-out period where we give 50% of the uplifting profit. We create back to them for two years after we buy. And so for them to feel comfortable with that they have to, first of all, trust that we can do as good a job as them, if not better. And they want to be able to look in on the numbers and make sure everything’s fine. So they have full access. Sometimes there’s a guy called Ben actually, is a UK guy who sold us a brand and he-
– We had another podcast.
– You know Ben?
– Yeah, it’s great. So Ben stayed on and did some consulting work, and the products he chucked into the pipeline, we launched and ranked and he got profit from those for the first two years after the sale. So there sometimes there’s a consulting agreement. We’ve had some sellers stay on. I had a product design now is the next seller. There two partners who were amazing at Kickstarter, and just complete product design geeks. And then I had to design it at Thrasio.
– Yeah, so yeah I’ve had a few guys that we’ve bought that have come in in different roles. And then if supply chain is really complex, I’ve got one we’re working on at the moment where we’re transitioning from them making their own stuff to us moving into third party so they can exit the business. Otherwise they start there as a factory for themselves. Instead of their hanging out for six to nine months to transition like as a consultant, their own warehouse and team into ours, a third party structure. But that’s rare nine out of 10 times, the sellers kind of just check out a few weeks after the deal.
– One other thing that I want to talk about is, a lot of these businesses that you’re acquiring, they’re run by one person, small group, whatever that, like Kris and myself, how important is the full structure of their business, their corporations’ intact, their books are really well done.
– Trademark, you’ve got years of good accounting, ’cause I’m sure you’ve seen it all. And I’m sure when you’re dealing with individual sellers, sometimes you may have, wonky accounting or missing stuff. How important is that to be really cohesive and solid when you’re looking to acquire them?
– It’s nice. If someone comes to us with a really good pen out is great, ’cause we can very quickly look at it and get an idea. If it’s something that wits, it’s a good fit for us, a lot of sellers hang on. I mean, a lot of bookkeepers can’t work out how the hell to make sense of transaction, a business reports out of ambulance. So a lot of people filing their returns every year they completely out, right? ‘Cause their bookkeeper doesn’t know how to make sense of the data. So before we make an offer, we completely rebuild the PNL for the last three years at skew level. And that allows us to see every bit, every skew out performed, what’s the ad spend on that skew or that looks a bit weird there. Why did that go up? What did that go down? And there’s always a story around the numbers. And we do that partly ’cause we wanna understand the historical bit. And also where’s the opportunity in the future. So short answer is if someone comes to us with no books whatsoever, it’s not ideal, but it’s fine ’cause if we think we like the business, we’re gonna rebuild it for them from scratch, anyway, before we put an offer in.
– That’s interesting, I think that’s probably comforting to a lot of people out there that have done a really good job building their business, but a lot of people, that’s not their forte, is really keeping everything super tight.
– And it’s like, you mentioned, it’s tricky. I remember the first time I tried, I filed taxes on my business and I’m like, I get this monster number on the form from Amazon. Like there’s like all revenue numbers. I’m like, well, that is not even close to what I made. There was a whole lot of expenses involved in this and breaking it all down is tricky, so yeah, it’s tough.
– It’s tough and it’s hard. And the way Amazon spits, I mean you must get this for the API as well. I would imagine that making sense of the data through the API is not much fun for you guys, but in general the condition of the data, if you’re not used to building PNLs from the transaction reports, it’s not easy to do, or it’s easy to make mistakes. And we get pianos in from PWC, a big accountancy firm that they don’t get it right and it’s not ’cause they’re not skilled at building up PNLs. ‘Cause this is a tiny business for a big accountancy firm. They’re just not skilled in making sense of the data that comes in those transaction reports. And there’s one myth, by the way I have a bit of a rant here, but I heard a guy yesterday on a podcast saying that be careful with aggregators, ’cause they’re build PNL and they’ll lie to you, right? And they’ll manipulate the numbers to make you look like you’re doing really badly. Like we would, I don’t think any aggregates would do that. I don’t think they would, I could tell you we wouldn’t. And we even get PNLs coming through brokers, that are not that tight. So any business before we buy it, we completely reconstruct their PNL for our own sanity and it’s an open book. We give it to the seller and we talk through it with the seller. So yeah, long story short, it doesn’t matter if your numbers are not great, we’ll rebuild it for you anyway.
– And are you finding the sellers? Are you going out and like getting them, or are they coming to you? What’s the breakdown there, are more people coming to you or are you going out there, sending cold emails? ‘Cause I’ll admit, I get emails probably once or twice a week from an aggregator.
– Yeah. What’s the breakdown?
– A bit of both, we’re lucky right? Everyone is in our world and thinking about selling is probably hard at Thrasio. So we’ve got a lot of inbound, but we still got a team of effectively biz-dev guys who are looking for what looked like the right profile businesses and that you experienced when you asked listening as a seller that, there’s input, we’re emailing people, we’re doing podcasts. We’re trying to put content out there to build an awareness, but yeah, effectively it’s a sales organization as well, right? We only offer and about 20% max of what we see, but we wanna get as many brands to look at as possible. We wanna grow and we’re lucky, we’ve got massive funding and an amazing track record. So touch wood so far, we’re growing at the speed that we’re growing and we’re delivering the performance we’re delivering and we can keep going. So we’re hungry to do as many deals as possible. And that means that you do need to have a kind of a biz tech team, out there knocking on people’s doors, yeah.
– I think it’s exciting. I mean, I heard of you guys long time ago from a podcast. And like I said, it really changed my view on how everything is going. And I think that this is actually good all the way around. I mean, I think it’s gonna spur innovation. There’s gonna be a lot more people excited about developing products. It’s gonna make products better, safer, cheaper. You guys are gonna be able to, it’s mentioned to see how you guys grow. And I mean, Amazon’s a beast, you guys are huge, but just like a tiny sliver of what’s-
– We’re a little spot. We’re a little sort of like its itch.
– Which is amazing when you think about it, just the scope of what they’re doing, but I think it’s a win-win when all the way around. And it’s really exciting, so if anybody’s out there listening right now and this is on their mind, they’re either in the, they’re looking to sell or they’re really ready. How do they get in touch with you or Thrasio? What’s the steps they need to take to get the process started.
– I mean, if I wanna speak to me directly, you can hit me up on LinkedIn or my email is email@example.com, so firstname.lastname@example.org. The website, thras.io or I’m on LinkedIn, Jim Mann, Jim Mann with two ns. That’s fine, it’s pretty easy.
– I encourage anybody to do that. Anybody who’s looking to sell, you guys are the real deal. I mean, they should be reaching out to you for sure. And we also need to get you to come back on periodically because this landscape changes every five minutes and it’s fun to stay on top of what’s going on. See what you guys are doing, see how we can be better sellers ourselves, see how we can be a more attractive asset for you guys in the future. I think it’s all fancy. We’ll definitely have you back on again and we really appreciate you coming on today and it’s been a blast talking to you and also for everybody listening right now, if you like content like this, I encourage you to go to Sellozo’s page on Facebook, like the page, turn on notifications, so you know when we go live, you can do the same thing on Sellozo’s YouTube channel. Make sure you subscribe to that. You’ll see us live every day and you can watch all of our podcasts videos we’ve done in the past. And of course, whatever podcast platform you like to listen to, we are there. So subscribe and leave a review for us on the podcast, so you can hear really cool people like Jim, talk about the Amazon space. So, Jim thanks again so much for coming on. We really appreciate it and we’ll do it again and soon.
– Thanks guys, it’s been great.
– Have a good one.