When millions faced the closing of shops due to empty shelves and lockdown, Amazon became people’s primary choice for buying groceries, and essential items like sanitizers, disinfectants, face masks, and other such products. As a result, an outrageous number of online orders led Amazon to record sales. By the end of Q2 2020, Amazon nearly doubled its profits to $5.2 billion with a 40% increase in net sales.
Amazon’s vast online retail presence also benefits several small-scale third-party sellers who sell their products via Amazon. The company says more than half of its sold items (60% of product sales) come from independent sellers who sign up and pay selling fees (plus a monthly fee) to cater to more than 200 million Amazon Prime members. In July 2020, Amazon had approximately 1.7 million independent businesses as sellers out of which 200,000 brought $100,000 in sales.
There is a massive opportunity for a capable entity to bring all of these potential seller’s businesses together and help them achieve an upper hand as a successful FBA business on a global scale. Realizing this prospect, Ex-CEO of Jafra, Malte Horeyseck, and his friend and founder of IVY organization, Phillip Triebel co-founded SellerX with an aim to be that bridge that helps small-scale sellers grow into a global brand as a seller on Amazon’s immense business structure. The SellerX team includes up to 250 people including business development and strategy expert Martin Buske who is currently working as the chief technical officer of the company.
Malte Horeyseck – “I think basically everything we are doing will help Amazon have a better quality marketplace,” he said. “This is about creating strong D2C brands, where you get quality every time. Amazon needs that in its marketplace right now.”
Two Friends and an Ambitious FBA Aggregator Vision
Malte Horeyseck and Phillip Triebel, the co-founders of SellerX met in Boston where both were attending Harvard Business School. After graduating, however, Horeyseck returned to Brazil where he ended up co-founding not one but two successful marketplaces. One is known as Dafiti, a company that grew from 0 to 3000 employees in record time serving as an online fashion retailer.
After that, the Brazilian entrepreneur continued to make advancements in the fashion and lifestyle e-commerce sector and chose to revive and rebuild Jafra, a Latin American skincare and beauty product brand for women. He along with two partners acquired the 1956 founded business in December 2018 transformed in the year 2020. Jafra went through a technological transformation and became a well-recognized body care brands for the Brazilian public once again under his leadership. Horeyseck was also involved in the operations as a partner at Grupo Lar around that time. Grupo Lar is an online furniture retailer that Horeyseck founded in partnership with Eugeio Marschner and stayed in Brazil and stayed in contact with his friend Phillip Triebel.
In the meantime, Phillip Triebel, is an alumnus of London School of Economics and Politics Science, University of Cambridge, and Harvard Business School where he met Malte Horeyseck. Triebel worked with Goldman Sachs for four years and eventually built an impressive personal record of acquiring and collaborating with up to 50 businesses active in different industries. After gaining a lot of experience in business expertise, Triebel joined Harvard Business School.
At HBS, Triebel met Beri Meric with whom he stayed busy founding IVY in 2013, a social platform where members are mobilized towards entrepreneurship, arts ,and social activities. Triebel and Beric’s brainchild is now a New York-based company that has a goal of disrupting the $4 billion global education market after raising $10.1 million to date.
Both Triebel and Horeyseck communicated and put a lot of thought behind their new joint project despite being on the other side of the world. The e-commerce sector happened to catch their attention during that time because it was one of the few sectors that remained sort of unscathed from the pandemic’s negative impact.
The mounting success of Amazon played a huge role in making a decision and gave the duo an idea about creating a startup that can help merchants to scale their businesses and thus creating a portfolio of brands. They planned to aim for FBA (fulfilled by Amazon) businesses which are basically sellers who use Amazon’s shipping and storing services to deliver and dispatch their products because they lack such infrastructure for proper storage, delivery, and dispatch for which they end up relying on Amazon.
By the end of summer in 2020, they founded SellerX in Berlin, where both Horeyseck and Triebel returned to, as the coronavirus pandemic was hitting Brazil and London hard.
“We found ourselves flexible and free enough to start a new project and we thought we were the perfect fit to found SellerX because I’m bringing the e-commerce expertise,” Horeyseck said. “Philipp, with very strong finance and investment background, is leading the acquisition side. We’re combining two trends. One is obviously the Amazon seller consolidation. The second one, what we really want to do, is build consumer brands,” Horeyseck said
Process of Selling Businesses to SellerX
The reason why anyone would want to be a part of the SellerX business model is their personalized approach towards different kinds of Amazon brands that deal with everyday essential items. According to the two co-founders of SellerX, the “X” in the name represents the sellers connected to the SellerX brand. They consider every company that reaches out to them as a unique and independent variable because all sellers are quite different from one another. This personal approach would lead various sellers to reach out to SellerX in the first place.
What SellerX does is buy Amazon native brands and scale them to unlock their full potential (while providing them a clear exit opportunity). SellerX would not only invest in these companies but also have them make the most out of their operational expertise. They have a simplified process to onboard new businesses through evaluating the SDE or Seller’s Discretionary Earnings.
Note: SDE is a measure based on the cash flow of a business operated by its owner. SDE comprises non-cash expenditure, one-time investments, profit before taxes or interests, and other incomes.
Below are the 4 steps followed by SellerX;
- Identifying the right kind of opportunity is fundamental for SellerX. During this process, they find the right investment opportunity with the potential to become a global brand. It all starts with an introductory call where both parties get to familiarize themselves with one another and the seller explains the situation of their unique business. Once both of the parties realize that they are the right fit for one another then they come to a mutual conclusion and move on to the next step.
- After the first step, SellerX gathers all information required for the valuation of that business. During this stage, the seller receives a free valuation report made by market experts on the SellerX team. Valuation is done considering many factors for example the size, growth, sales track record, and margin. Throughout the process, SellerX maintains a risk-free environment and zero-disclosure policy so that sellers who have come to join SellerX take their time and consider the proposition in front of them.
- Once the valuation has been done, the company takes just a few days in completing the due diligence to close the transaction. Due diligence is a common process involved when a private equity business chooses to invest in some business. This step is critical to determine whether sellers’ offers are real and legitimate or not. This step normally takes 30-45 days to run a full tax, commercial, financial, and legal check of the seller’s business.
- Once the entire kick-off procedure is done, the seller’s brand becomes a part of the SellerX family and they get rewarded for building a successful Amazon business. SellerX ensures that no matter what the reasons are but the entrepreneurs that they work with have an easy and smooth transition. This step helps liberate sellers to focus on the next phase of their leaving behind their brand in the best care.
Market Growth, Investors, Competitors, and Partners
In the last several months, experts have seen many startups amass a considerable amount of funds to support and develop FBA businesses. There is a clear opportunity to become one of the biggest players in this space as 50% of all online retail is being handled by Amazon. The opportunity is also supporting the concept of a direct-to-consumer approach which attracts people of age groups as it eliminates the role of a middleman and bypasses traditional retailers.
In the D2C strategy, we see an independent company building its brand from scratch to be able to sell its products directly to its customers on its own terms. Amazon has been a great platform for that as well. Just by listing a product on Amazon, you could get attention from its global audience. It removes the need of pitching your product to a buyer who might not be interested. Though it seems like a sea of opportunity, the flourishing market growth is also a matter of concern. The more popular it gets, the more challenging the landscape would be for newcomers.
The best thing about this niche is the abundance of interested investors who have been involved in several funding rounds throughout the end of 2020 in FBA opportunities that bear resemblance with SellerX. Companies like London-based Heroes and America’s Perch were able to raise £65 million and $123 million back in 2020. Both Heroes and Perch are D2C focused startups following the trail of Thras.io.
Since the foundation, the SellerX team bagged a total of 12 investors out of which 5 are the lead investors who participated in SellerX’s Seed, Series A, and Series B rounds. SellerX has emerged to the scene as one of the most promising European FBA startups that have such ambitious goals under the supervision of two marketing geniuses backing it as co-founders. There is no doubt why SellerX was able to close one of the largest equity funding rounds. The series B SellerX funding round closed successfully being led by the Growth Fund of L Catterton, the world’s biggest private equity fund whose primary focus is consumers.
Filip Dames, the founding partner of Cherry Ventures, said in a statement, “The diverse seller landscape on Amazon provides a unique opportunity to acquire some category-winning, highly profitable products, empower them through technology, and build them into the next-generation consumer brands. The founders Malte and Philipp combine decade-long e-commerce and buy-and-build expertise, which uniquely positions them to capture this opportunity.”
"L Catterton has unmatched expertise in the consumer goods sphere. This will be invaluable to us as we continue to grow. Together, we have an opportunity to cement our place in the future of consumer products."- Malte Horeyseck
The most obvious competitors of SellerX remain Thras.io, a $1.5 billion worth acquisition entrepreneurial company active within the Amazon third-party ecosystem, and Acquco, a New York-based e-commerce marketplace that focuses on FBA and is operated by two ex-Amazon employees. But what makes SellerX stand apart from its various competitors is the fact that the company remains focussed on evergreen consumer goods. The timing is proving to be perfect for companies like SellerX as another player in the same category called Heyday announced a successful funding round that raised $175 million.
$266 Million and 3 Funding Rounds
SellerX funding has taken place thrice since its foundation. The most recent funding round of series B concluded just a week ago with the participation of some of the world’s biggest business entities. But what makes the data about SellerX funding rounds so interesting is the fact that the company is hardly a year old. As of now, the Oddup score for SellerX, which is a measure of success of a company in its relevant sector considering all necessary factors, is 77.35.
Considering the Oddup metrics then it is clear to see that SellerX has managed to reach a benchmark valuation of $598 million (19th August). The last valuation that we did for SellerX after the closure of the Series B round was about $126 million less than the current figures indicating a healthy growth rate. Meanwhile, the post money valuation of this company is currently around $590 million.
"Money raised in financing rounds in this space is typically heavily debt-based," said SellerX co-founder Philipp Triebel. "What's so exciting about this round is that all of the €100 million in equity. It puts us in an incredibly strong position to raise further debt and to keep building our portfolio by acquiring the best Amazon sellers in Europe, the US, and China."
Seed - $118.44 Million
The seed round for SellerX was announced last year and it went on for 6 months during which the company was able to raise $118 million from lead investors Cherry Ventures, an early-stage venture run by experienced entrepreneurs who build fast-scaling companies like Spotify and Zalando. Other participants of the seed funding round were Felix Capital, TriplePoint Capital, and Village Global, ex-CEO of Amazon UK, Chris North, and the founders of KW Commerce which is a massive Germany-based Amazon seller dealing in mobile phone accessories and household items. Being the first real money that investors ever put in SellerX, some portion of it was in the form of equity while a majority of it was taken as debt that Horeyseck and Triebel intended to use for further acquisitions.
Series A - $30.36 Million
After the success of the seed round, SellerX co-founders wasted little time in announcing the Series A funding round for all existing and new investors during March of this year. This time around the company managed to raise $30.3 from its investors and increased its total available capital value to $152 million. The Series A funding round was led by 83North which is recognized as a global venture fund with $1 billion under management. But of course, this SellerX funding round was also joined by several other participants like Cherry Ventures, David Schneider (the cofounder of Zalando, German e-commerce MNC), Allegro, and several former Amazon senior execs.
Series B - $117.1 Million
The third and latest funding round of Series B managed to put a renewed spotlight on the SellerX business model that influenced the growth fund of L Catterton as they led the round which closed at $118 million. Other participants were Cherry Ventures, Felix Capital, TriplePoint Capital, and 83North. The impressive thing about this stage of funding was that SellerX had been operational for a little less than 12 months yet it managed to find support in the form of several growth funds and venture capital funds during each of its three funding rounds.
"What's so exciting about this round is that all of the €100 million in equity. It puts us in an incredibly strong position to raise further debt and to keep building our portfolio by acquiring the best Amazon sellers in Europe, the US, and China."
What’s next for SellerX?
Now that the company has raised approximately a quarter of a billion dollars, SellerX seems prepared to deliver on its mission of acquiring and scaling third-party Amazon FBA businesses. Within a year the company has grown to 250 employees working globally via three geographic locations: Berlin, Miami, and London. Since every seller’s aims, capacity, and other circumstances vary a lot, SellerX has included in their team experienced members from across different continents, supporting over 20 major languages for sellers in 10 serviceable countries including UK and US.
Up to 30 diversified yet evergreen brands are a part of the SellerX which seems to grow at a positive rate. SellerX has also been aggressively hiring top talents in their team to display strong operational expertise and investing in deep market research to allow new members to have product launches via innovative channels.
“Clearly there’s a couple of sectors that benefitted or got an extra tailwind through corona,” Triebel said. “It is exciting to be in a sector that has a lot of tailwinds. E-commerce is growing, Amazon is growing and the marketplace business within Amazon is growing.”