Why should I sell my Amazon business?

Ryan Kramer:

What’s up, everyone. Welcome to my corner of the internet. I’m your Host, Ryan Kramer, and this is Crossover Commerce, presented by Pingpong Payments, the leading global payments provider, helping sellers keep more of their hard-earned money. Hey everyone, welcome to another episode of Crossover Commerce. You’ve made it. This is episode one 50 of Crossover Commerce. This is my corner of the internet, where I bring you the best and brightest in the Amazon and e-commerce industry, where I bring on guests every single time to help us get their insight and knowledge to help emphasize and grow your business.

Ryan Kramer:

Whether it’s a brand selling on Amazon, or a direct to consumer platform, or you’re just trying to take it to the next level, I want to have experts on this space and help you the listener to make sure that you’re making the right decisions, and just constant knowledge and understanding. Because this pace is always changing and evolving, you need to stay up-to-date with the latest trends, topics, and education in the e-commerce space.

Ryan Kramer:

That being said, Crossover Commerce, if you’ve not been on this podcast before, watched it or listened to it, this is presented by Pingpong Payments. Pingpong Payments is a global cross-border payment solution that helps people send and receive money internationally. So if it’s paying out your virtual assistants, your suppliers, your manufacturers overseas, or if you’re paying out your employees, as well, that might not be in the same country you are, you can actually facilitate that through Pingpong Payments. Also, to date, we’ve helped facilitate $90 billion in cross-border payments. So that’s 90 with a B. Not million, with a B. We’re talking about billion dollars in cross-border payments to date, now helping over 1 million customers worldwide save more money.

Ryan Kramer:

In a time where there’s growing costs and concerns with shipping, logistics, cost of goods, keep more of that money in your pocket and put that towards your margin. So it’s important to look at Pingpong Payments. Go ahead and sign up for a free account today. You can do so by clicking on the link below or in the comment section. Or, if you’re listening to us on our podcast channels, wherever you might be listening to, that’s going to be in the show notes, as well. Just mention Crossover Commerce, too. That being said, today’s a fun topic I always love to get into.

Ryan Kramer:

With 150 episodes now, you would think as a listener… If you are a friend of the show, you’ve known that we’ve talked to many different kinds of guests in this space, really excited to bring on another… again, the term aggregator in the space, but from a different country. They’re in Berlin, Germany. The company I’m, of course, talking about is SellerX. If you read the news yesterday, or if you’re aware of anything in general, in the Amazon space, there’s lots of exciting… Yesterday being September 1st, there was lots of… For some reason, everyone wanted to announce all this raise of funds and capital.

Ryan Kramer:

There was an article that came out on Marketplace Pulse that said there was 25 plus companies that had raised over a hundred million dollars in both debt and equity to be able to acquire brands and aggregators that they’re building, and actually acquiring brands at scale in different capacities successfully, in different marketplaces on Amazon, and that is what they’re doing. They’re trying to do that scale and do it with more debt and equity that they have available.

Ryan Kramer:

So that being said, it’s really exciting to have one of those people on. Yesterday was really exciting for brands like [Ozlin 00:03:23], Berlin Group. There’s lots of great ones that over… just yesterday alone was announced $1 billion in raises. But today, I’m really excited about one of the original ones that raised over $100 dollars. To actually date, they’re one of the most [inaudible 00:03:39] capital, I want to say 267. I’m pulling that number. The article read said $267 million to date to acquire brands in Europe, as well as the United States.

Ryan Kramer:

That being said, wanted to go ahead and welcome on Danielle Hale, she’s the Investment Head Region at SellerX on today to talk about the topic, why you should sell your Amazon business today. Why today? Why not wait? Why not yesterday? Why should you do that today? So that being said, I’m welcome on… She said Dani, but I’m going to call her Danielle on Crossover Commerce. Danielle, welcome to Crossover Commerce. How are you?

Danielle Hale:

Hi Ryan. Hi, thanks. I’m fine, and I’m really looking forward to talking with you about that huge market, which is saw yesterday, or yeah, yesterday, how it works. It shows like how big this market is. Probably, there will be a development the next year. Like, yeah, aggregators will merge maybe. So it’s really interesting to see this development here.

Ryan Kramer:

This is my-

Danielle Hale:

[crosstalk 00:04:48] positive.

Ryan Kramer:

I was going to say, this is my favorite topic to talk about, simply because it’s such an unknown. There’s so much that’s happened. It really started beginning in early 2020. Just to paint the picture for people who don’t know what an aggregator is, it’s a business that with capital, whether it’s venture capitalist, or private equity, they have money that says, you can have access to it, to acquire brands, a specific valuation. SellerX, I’m assuming, is no better. But let’s talk to that process for you. What would be your definition for your business? How would you say.

Danielle Hale:

Yeah. So I would say at SellerX, we buy Amazon businesses, and offering sellers a swift, smooth and straight talking transition, and we’re helping just entrepreneurs to realizing the next stage of the business. So it’s like sometimes they have limited resources to scale their business, so we support through the acquisition of the company, but they can also participate one or two years more in that. So we are completely VC-funded, so we have investors, really well known investors, like [inaudible 00:05:58], TriplePoint Capital Ventures, and others. We have more than 30 brands currently in different categories.

Danielle Hale:

As you mentioned before, we’ve just found it in 2020, imagine, one year, and we just fundraise more 250 million. Just series B in July was a hundred million equity. This whole space is really leading by debt capital. So we got hundred million equity to build up a worldwide company as a brands group in a digital space. So what we do is… So we operate globally. So we have locations in Berlin, London, Miami, Shenzhen, so China, and we operate completely globally.

Danielle Hale:

What we are doing is we acquire companies, and then improving them through efficiency, measurements, scaling by region, expanding channels. So like mighty channel strategy, and we push them worldwide. So this is what we’re doing. All of this is underpinned by deep specialism in tech and state-of-the-art infrastructure. So, you know how it is. The whole game is leading by data-driven decisions, and this is what we want to do in our investment team. So it’s not like you have a feeling in your belly. It’s like, you need to know where is the trend of the market? Also, for the niches. This is-

Ryan Kramer:

Right.

Danielle Hale:

… what we are doing. SellerX, we always say like, this means we look individually on every case and want to support the seller experience in the whole process. Because like most of us, they have been founders in the past and we know the few of the founders. So this is why we always want to have the best experience for the sellers.

Ryan Kramer:

Well, that’s amazing. I think that this space is… like you said, it’s evolving quickly, and it’s evolving fast. Fast, and there’s lots of money being thrown around. We’ve mentioned billion dollars being announced just yesterday amongst four different brands. You guys have your own in itself. The distinction I want to make for a listener out there, the difference between investment and equity, which is put into the company, versus debt, is completely different. Can you describe that for the listeners who doesn’t understand? That’s a big number, but if it’s not going towards the company, or if it’s just going to debt, or it’s just going to equity, those mean completely two different things.

Danielle Hale:

Yeah. Yeah. So the difference is this whole business model is based on private equity buy and build strategy. In private equity, you have a high leverage of your transaction money. So this is why you don’t need a lot of equity for the transaction. But if an investor gives you more equity, this shows like, okay, you should expand more, and it’s not just transaction-based, it’s also trust that you grow pretty fast. So this is what I meant before about equity and debt. But it wouldn’t be smart to put too much equity in acquisition, because you can work with that, as well. So it’s the leverage effect, as you know, guys.

Ryan Kramer:

Exactly.

Danielle Hale:

So-

Ryan Kramer:

I guess for your perspective, what were you doing before SellerX? You’ve been in the professional space in… What was your background? Was it in finance? Was it in mergers and acquisitions? What’s that background like for you?

Danielle Hale:

Yeah. So my background is not the number one from other aggregators. Yeah-

Ryan Kramer:

You weren’t selling in Amazon before this, right?

Danielle Hale:

Yeah. No, I didn’t. But what I did was… So I just started my career in traditional commercial banking. So yeah, I was mainly involved in the small and medium size enterprises in Germany, with financing stuff, and all also controlling of a small medium bank. The perspective of German traditional medium size companies is completely different to e-commerce. So it’s like this typical… maybe a butcher or a builder or whatever.

Danielle Hale:

So after this experience at the beginning, I just decided to switch in strategy consulting, and there was mainly focused on digitalization strategy. So at that time, yeah, I had already understood that banking, as it was then, could not continue to exist like that. So yeah, during that time, I also started two businesses. So now, there’s the founder story, but not on the e-commerce side.

Ryan Kramer:

Right. There you go.

Danielle Hale:

So one was like a one-woman show, where I just sold exam preparation courses to students. So it was more in the teaching-

Ryan Kramer:

Very cool.

Danielle Hale:

… education segment. The other business was mainly driven by student demand. So for example, my founders and I, we just sold hoodies and printed books and just add-on stuff for your university time. At the end, we just decided to donate the profits of this company. So at the end, it’s not this usual story, where you say, I buy a car, or whatever. So it was just with a sustainable purpose.

Ryan Kramer:

Your profits went to a good cause, you should say. That’s amazing. So, while building something, that led you into SellerX, obviously. What was that decision like? What did you feel that the opportunity was like? In the space where there’s not a lot of track record, you can’t… You’re probably a numbers person. The numbers were suggesting lots of growth opportunity at rapid pace. Is that a possibility, or is that a scary notion to jump into, if you will?

Danielle Hale:

Yeah. So the background of the story was that I also was involved in a venture capital stuff. So after that, I was like, yes, I’m an advisor, transaction advisory stuff in financial services, and then I switched to technology, fintech, into tech. So this shows I always want to do like new stuff. This was something where we’re really well connected in the whole venture capital ecosystem and startup ecosystem. I was impressed by SellerX business and growth story, and especially the founders team. So the stories, they are from Berlin, and they build it up a worldwide active company. So this was, for me, pretty impressive.

Danielle Hale:

Because as you know, as a US guy, in Europe, we don’t have this massive group. So it’s like, where I thought, wow, finally, someone in Europe to build up a really worldwide active group. And then I just thought like, okay, I just heard about reputation. It was really great, professionalism was really good. Also, the talks with them were just honest. So I decided like, okay, the company’s great, reputation is great. Also, there were two facts why I decided to go to SellerX.

Danielle Hale:

So one, I just realized that e-commerce market would be one of the fastest growing markets in the next decade. Just like you know, through corona, the adaption of e-commerce was insane. Everyone was like, just I’m just lazy. I want to get my delivered stuff. So this was one point. The other point was that I, yeah, have led workshops with the corporations, banks, asset managers, about future of financial services.

Danielle Hale:

And then I just noticed, no matter what the business model is, the focus is always on the ask end customers use case and satisfaction. To be honest, in my point of view, no industry is as hundred percent customer-centric as a direct to consumer business. So this is why I decided… So like market trends also definitely interested in consumer products, to be honest.

Ryan Kramer:

Great.

Danielle Hale:

But also, the end customer and the focus.

Ryan Kramer:

That’s amazing. That’s a good space to be in, and you made a lot of good points. I think in this space, as it continues to grow… In the aggregator space, people ask the question, is it a trend? Is it something more of a feature say? Are people going to get pushed out? What would you say for like… Because there’s only so many sellers in the world. There’s a lot, but a lot of people, people think that there’s more and more aggregator space coming to the play, they either cannibalize each other, or they’re all just sit as this major corporation, like a Johnson & Johnson, if you will. Not a bad thing, but they have lots of brands underneath them, going on almost like as an umbrella.

Ryan Kramer:

What’s the consensus over in Germany? Because you said there’s not many in Europe. There’s a maybe handful on one hand in both UK, as well as in couple countries, a couple in Germany, and a couple in the United Kingdom. Within the United States, a little bit more focused, and we’re seeing more popup in Asia. But is there a point where you see a roof for people coming into the space, or do you think that there’s just so much opportunity out there, that everyone can play in the same box together? Does that make sense?

Danielle Hale:

Yeah. Yeah. I think there are two different perspectives. So one perspective is they could also exist standalone without any exit. Because everyone is profitable, they just acquire profitable companies. But as a private equity investor thinks, is that you buy an entry purchase price [inaudible 00:15:43] and then you’re looking forward to the exit. So you need to understand what kind of exit could that company have? If you are not big enough, you cannot do an IPO. You could do a smaller IPO, but at the end, it depends.

Danielle Hale:

So there are some cases where you could say, okay, they can exist some years. Maybe they will be acquired by strategic investors, for example, such as Nestle, or, I don’t know, Hanker, or these big corporates. They sometimes really acquire consumer brands, and then they could acquire like a brand group. So this is one exit case which can be happened. The other one could be that the market will be consolidated. So there will be mergers in the market, and then they go for an IPO. This is also something that can happen.

Danielle Hale:

The other thing is like, okay, what kind of exit could be also possible is maybe also traditional private equity companies will acquire them. This could be also happen. So there are a lot of different exit cases, but at the end, I think everyone has this focus on, okay, why can you… when can you exit? Because this is the game here, it’s private equity. So-

Ryan Kramer:

Great. So I guess in that case, what are we looking for at SellerX? Tell me the stipulations at which a brand can come to you to the table. What’s the minimum that you’re looking for in that regard?

Danielle Hale:

Okay. So you mean our investment criteria, right?

Ryan Kramer:

Yes. Yes, please.

Danielle Hale:

Okay. Yeah. So it depends. So in the past we knew like… So in general, SellerX looks for Amazon-native brands, and they should demonstrate a track record, and yeah, a high growth profile. We just look on, okay, what happens in the past? And then we think about how can we build up this brand? So we think about new expansion in other markets, new channels, new product launches. So this is one thing where we take a look on it.

Danielle Hale:

We also love brands with competitive review modes. So in their specific niches. So sometimes there are niches, which are not really competitive because there is no one in it. So this is where we are always have a spot on it. I would say also, high quality product with great reviews. Also, the reviews should be true. So we also track like, are there fake reviews? This is really important for us to understand the product and the customers.

Ryan Kramer:

Highlighted lately. Yes, exactly.

Danielle Hale:

There should be also like this case where we say we should avoid those we perceive are [inaudible 00:18:31] temporary in nature. We don’t like to have this seasonal-

Ryan Kramer:

You don’t want trendy products.

Danielle Hale:

Yeah. We love evergreen products. So this is where we focus. From the financial perspective, we generally look on businesses that have a certain size, so like more than 1 million revenue, fast year over year growth. So I would say minimum 30% per year, and the margin should be like 20% minimum. But the thing is, we only invest if we are convinced that we can hold this margin level in the long term.

Ryan Kramer:

Okay.

Danielle Hale:

So sometimes if you have discussions like, hey, my margin is 50% and you take a look on the market, you understand, like, okay, this won’t happen the next six months. Especially after a corona peaks, we know that the market changed a little bit four, five months. So Amazon market is the most dynamic market all over the world. You know, right?

Ryan Kramer:

I was going to say, both good and bad. Let’s call it what it is. Well, that’s fascinating. So you’re a numbers person, and I think numbers are super important. Let’s think about this. As cost of good and logistics have gone up four times over the last year, year and a half, or so, is that concerning for a business like yours to consistently try to… With regards to PPC, logistics, and everything like that, is that a concern for you and your team to know that those trends will continue to grow exponentially, maybe cutting into margins, or what what’s the consensus around prices where they’re at right now.

Danielle Hale:

Yeah. So markets are, in general, dynamic. So you have different developments, depending on raw material, demand. So this is something what you always need to force. So we wouldn’t say this take forever. So this is market development works. So one thing is like, cox development depends, definitely, on the product. So there are some raw materials which are high demanded. Also, this supply chain costs, I would say, issues, it depends how you… If you own the supply chain process, you have more room. So this is why we want to own the whole operations, and we are on this way.

Danielle Hale:

So this is we will exist in the long term, because we have this experience and the whole supply chain, start from developing products, until brand management, supply chain management, and also negotiation with suppliers. Now, as it is, you can just negotiate if you have a big pool of reliable suppliers. This is what we have. So this excellence in hold operation is really important to be in a long term successful. This is like what we do.

Ryan Kramer:

Right.

Danielle Hale:

Especially, like I just said, market trends, it’s normal that you have dynamics in.

Ryan Kramer:

I know there’s not specific brands you go towards, but is there specific categories that you feel most comfortable talking to? For example, a non-starter would be maybe electronics, I would say. If I were to guess, electronics are very difficult. You have to constantly be updating, it’s a hard product to cover in warranty, a lot breakage. There’s a lot of varying factors in there and the cost to make it, so on and so forth. But if you go into more of like a home and kitchen category, you might have little less… even competition, but you have a little more margin to play with. There’s lots of things that are evolving in growing, not as much as a risk, if you will. Is that fair to say? Or what what’s SellerX’s philosophy around that.

Danielle Hale:

Yeah. So definitely there are some niches which are really growing, especially baby, kids. Sorry.

Ryan Kramer:

No problem. Yeah. You were talking about baby, kids’ categories, games, things like that.

Danielle Hale:

So parents, normally, they do all want to spend money for bad quality for their children. Right?

Ryan Kramer:

Sure.

Danielle Hale:

So they really look on quality. They would also spend more per item if they know it’s safe. I don’t know, safety focus, more safety focus, more quality focus. It should be sustainable, it shouldn’t be toxic. So there are some points where they think like, it doesn’t make sense to buy like this normal China product for my child. I just want to have sustainable products, for example. So this is one niche where it’s possible to have this unique value proposition.

Danielle Hale:

To be honest, in household and kitchen, there is sometimes challenges if you have commodity products now, as it is. So, especially in Germany, we have a lot of Chinese sellers on the market, and they have really competitive prices. So the pricing game is see really strong, and sometimes it’s not possible, for example, to have a triple prize for a pan. So-

Ryan Kramer:

Right.

Danielle Hale:

… it depends on the quality. But Amazon is difficult with this high premium pricing product. So it depends on the use cases, what kind of story you want to tell, and your brand strategy.

Ryan Kramer:

Right. Because I know that there’s aggregators that are more brand-specific, that would go with just health and wellness, for example, or just stick in the specific categories. Your approach is more, find profitable products, know that you can scale them profitably, and then really grow out the brand itself. Is that fair to say?

Danielle Hale:

Yeah. So we are more opportunistic, I would say.

Ryan Kramer:

There you go.

Danielle Hale:

But we-

Ryan Kramer:

That’s the word I was looking for.

Danielle Hale:

Yeah. But we don’t invest in electronics, as you’ve mentioned before, but, in general, evergreen products. Yeah.

Ryan Kramer:

Okay. If I’m a company and I want to come to you, we’ve set the table in that regards, why should a company… What are the number or top things that you would convince someone to say, like, now’s the time to exit a business? Is it all those things that we highlighted earlier of, hey, we have the ability to scale and you don’t? I could be a brand of one, and instead of me doing all these types of things… Obviously, or shows you have a team of 50, a hundred people. I’m not sure how big SellerX is actually right now, but you guys are continuing to grow and develop those operations. So you have a whole team dedicated to one brand, and you have the ability to scale it, whereas myself, I may not have the time, money, or capital to do such. Is that the number one thing to-

Danielle Hale:

Yeah, I think there are more trends why sellers want to sell. So I think like five years ago, Amazon businesses were not outed with a perspective of an exit. It was more then like, I just want to build up my own company, it should be lean, I just want to be like this digital nomad, where I can live where I want to more in this space. Also, some of the e-commerce seller’s just built the brand as a side business, as well. They didn’t want to go fully in this medium size company or whatever.

Danielle Hale:

So if this is the case, the exit opportunity is a no brainer. So after transaction, SellerX will scale the brand own resources, and the seller can still participate without risk. So, we contribute liquidity as an upfront payment, and participate them in some cases with an earn-out, as well. The thing is, execution and operational excellence is key here. So why is it so, yet… It’s clear. So it’s our resources, we invest our employees, our teams in scaling the company of the seller. This is why we are definitely cherry picker regarding our teams. So yeah, our teams are highly experienced, also, in e-commerce, they came from Amazon space. They joined for many years in these well known companies.

Danielle Hale:

So this excellence is important for seller to know. Also, the seller should be really aware of this operational skill of the aggregator, because probably they tell… they talk to a lot of them. So this is why they should also do a due diligence from their side about operations and excellence in that space. So the other point is like, most of the sellers, especially in Germany, they would like to expand and grow, but this is the biggest challenge for them, because they have limited resources. They don’t have money, working capital financing, until the limit. They don’t want to get this risk, they don’t want to build up big teams to invest in that growth. Also, sometimes they don’t have know-how about the foreign markets.

Danielle Hale:

Especially like US, sometimes it’s completely different from the culture. So you need to close this culture gap as well. So these are some challenges, where they say like, I cannot scale this company right now, so you should do it. There are also some developments, challenging for sellers. As everyone knows, Amazon gets more competitive every day. So in different categories, it’s really insane how competitive. Some sellers cannot compete in these niches in the long term, they think. So this is why they say like, I cannot invest everything, so let’s do it, but with you.

Danielle Hale:

Maybe there’s also like… As you’ve heard before, there were changes in restock limits and so on, so they just felt like, okay, I’m completely dependent on Amazon. I feel really bad right now. So I don’t want to have this risk anymore after all these changes and this margin pressure. So some of them just feel like. I just want to have a break. So-

Ryan Kramer:

Right.

Danielle Hale:

…. yeah. These are some reasons. Yeah. I have more. If you talk with sellers, you get so many reasons. It’s also about passion with the product, it’s about, I want to invest. It’s a lot of reasons, to be honest.

Ryan Kramer:

Right. I think a lot of people now, they see it… there’s a couple different ways. There’s an opportunistic valuation of… Maybe valuations are at an all time high and they won’t get better than what they are at. But I think I also want to look at, from the aggregator perspective of, you’re not going to just jump in and acquire this processes because you don’t think it’s going to last beyond two years. You want something that’s going to last 3, 5, 6 something years, and it’s going to have staying power.

Ryan Kramer:

That being said, why would you… Maybe this is a theoretical or a philosophical notion. Why would you look starting an Amazon-native brand, instead of maybe looking at a direct to consumer brand and getting a better idea of numbers? Is it just because of data’s more accessible through Amazon, or is it because it’s hard to measure just a direct to consumer brand that might actually be doing very well, and you can still scale it onto Amazon instead?

Danielle Hale:

Yeah. To be honest, the conversion rate on Amazon is the best conversion rate ever. So it’s like-

Ryan Kramer:

It’s very good. It’s not bad.

Danielle Hale:

Yeah. It’s like a no brainer. Especially the analytics is just great. So you find out a lot about behavior, customers, and also brands and trends. So this is one point. The other point is, it’s easy to scale within buy and build strategy on Amazon if you start with that business. So in the long term, as I mentioned before, we will do, definitely, multi channel. We will definitely Shopify buildups and so on. But as a start, it’s just great to start on Amazon. Because at the end, most competitive platform, also just really honest, really customer-centric, customer-focused… Customers say directly if they are not satisfied, you have it in your review mode. So it’s the high transparency you can ever have. So this is, for buy and build strategy, the smartest, smartest entry point.

Ryan Kramer:

Right. Do you ever fear… This is a notion I’ve heard a couple times. Is there a fear or a reality where you think that all the top selling products are just going to be ran by aggregators? In the next two to three years, pages one to two, and then it’s going to be harder for small, medium sized businesses to even break into the entrepreneur space on Amazon? Or what would you say if you heard that statement?

Danielle Hale:

Yeah. So to be honest, after this development and this professionalism in that space, we just know that with all this expertise from the market, it will be really competitive to go in this market in two years. Because just experts will be in this market. If you are this small seller… As I mentioned before, five years ago, it was easy to go on that marketplace and to perform well. But I think in two years, it’s more difficult. You need to find this niche, where no one had the spot on it. I think this is really difficult compared to five years ago. But I don’t want to say to people, you shouldn’t try it, because at the end, risk gets return. Right? So sometimes it-

Ryan Kramer:

Right.

Danielle Hale:

… makes sense. It depends.

Ryan Kramer:

Well, I’ll give you my thoughts after this, but I’m curious does that… If I’m a small to medium size brand right now, should I be fearful of any sort of aggregator right now, or should I actually welcome competition and welcome in the space? What’s the thought by that? Because if I hear that and I say maybe I may not be able to be competitive in top selling markets, and there might not be opportunity anymore, maybe I don’t want aggregators keep coming and raising money in the space. There’s a pro to exiting business, but if I want to keep selling and operating myself, why would I want to invite that competition then?

Danielle Hale:

Ah, okay. Understood.

Ryan Kramer:

Does That make sense?

Danielle Hale:

So-

Ryan Kramer:

What would you say to someone who feels that way? There’s no wrong answer. I can tell you my thoughts on… I’ve defended aggregators, as well as that everyone can play in the same, same box.

Danielle Hale:

Yeah. So I think there are two sides. So totally understood that point with the petition, because at the end, most of the aggregators also build up new brands, new product launches. If they’re in different niches, they would launch also new products. But at the end, this market is really huge. So this is one fact. If you have a nice product, really well, performing, quality, good marketing, whatever, it should work if you are currently in that space. So just to say like that, five years ago, there was no possibility for an exit for an e-commerce seller. So it should be more like a chance, and not just like a competitor.

Danielle Hale:

So sometimes we say to targets where we acquire, like, hey, it’s so cool that we can acquire your company. You can build up a new brand, but in another niche. This is okay for us. So we think like, this market is so huge, that we allow everyone who sold his business to us can also found a new company. This shows how we think. Also, this shows how the e-commerce seller should think. Right?

Ryan Kramer:

Right.

Danielle Hale:

It’s like, yeah.

Ryan Kramer:

I can add on to that. So yeah, Danielle, that’s a fantastic point. I said this statement literally yesterday, when I made those announcements. Again, a billion dollars raised in capital. The phrase that I responded to is actually to someone I really well respect in the space, and they said, scary, and I said… A lot of people are like, “Well, it’s great, because people can exit.” They’re like, “Well, are we going to…” There’s this concept of, will small to medium size businesses… Eventually, once they exit the first time and they try to do it again the next time around, scaling at the same way won’t be… Because there’s competition, there’s aggregators that are now acquiring brands, they’re taking top selling performers, and almost like pushing out people.

Ryan Kramer:

I said, how think of this is think about a boat. Aggregators are going to be big, they’re going to have multiple brands. You can’t just ebb and flow like a small to medium size business can. They can make changes on an instant that’s only impacting them. You, or people who have 25, 50, 100 plus brands, they can’t do that, necessarily, at the speed and the effectiveness that maybe a one-person shop can do. Right? They can-

Danielle Hale:

Mm-hmm (affirmative).

Ryan Kramer:

… look at the trends, they can look at… be innovative in that regards, they can only worry about one. You almost have to be responsible for a conglomerate, if you will. Again, this is not… you’re not taking over the world. You’re talking about multiple brands you have to adhere to, and you can’t maybe take as many risks or as all these different kinds of things. So you have to think about, there’s opportunity to be innovative and flexible, versus consistent and have capital that can back that. That’s why kids can play in the same same box, because they have different pros and cons to both. Does that make sense?

Danielle Hale:

Mm-hmm (affirmative). Yeah. So maybe one add on to this. So I think there are trends, which are a resort from the digitalization. Right? So-

Ryan Kramer:

Mm-hmm (affirmative).

Danielle Hale:

… if you say in general, the small local shop, then you shouldn’t say that. Because in general, a lot of consumer products are advertised via Instagram, right?

Ryan Kramer:

Right.

Danielle Hale:

So at the end, this, this whole story also depends on other social media platforms, and not just Amazon.

Ryan Kramer:

Right.

Danielle Hale:

So just one point. At the end, also am Amazon went in this direction, that small shops needed to use Amazon, as well. So this is the same trend with Instagram. So this is just like [inaudible 00:37:46] which is from this digital digitization. We cannot change that, and we should use this point to grow and to build up great brands for customers. So this is like… Also, for customers, they want to have the transparency. Right? For-

Ryan Kramer:

Right.

Danielle Hale:

… example, if you know a local shop next to your door, you would go in the restaurant or whatever, you would go to there. If someone tells you, hey, this is a nice restaurant, we should go, and also Google tells you on Google Maps, I don’t know, five stars, and then you go there. So the whole transparency is there because of the digitalization, and we should use it to have good experiences for consumers. Right?

Ryan Kramer:

Absolutely.

Danielle Hale:

So this is the same point, I think. Right?

Ryan Kramer:

Well, like you said-

Danielle Hale:

Or?

Ryan Kramer:

Yeah. The idea of trends, right? You have technology. As it will continue to grow and develop, there’ll be companies and services that will allow small to medium size businesses grow. We’re one of those, we work with the whole scale and plethora of both aggregators, but also small to medium size businesses. But that concept, you’re talking about different economies worldwide. So, looking at opportunistic natures and what sells in Amazon in the United States may not sell on Amazon in Germany, which is why it’s super fascinating. You’re seeing more country-centric aggregators starting to pop up.

Ryan Kramer:

You know Germany inside and out, and I’m assuming you and… I think the other one is Berlin Group. Again, not many people will know the inner workings of amazon.de. So it’s going to be, you have a leg up on the competition in Germany, as well as the United States, but then someone might have it in Japan or… You know what I mean? There’s lots from markets where trends are different amongst economies. There’s buying power that’s continuing to grow on Amazon across the world, not just in the United States, because Germany is, what, number two market behind United States, Japan grows, as Canada grows, as Australia grows, as China grows. All these different platforms.

Ryan Kramer:

But then also, you take that core, and then build outside of that on different marketplaces, different wholesale and retail opportunities. The opportunity is incredible. That’s what I’m saying is… It’s almost impossible to have a corner of the market, if you will, because the market doesn’t exist in the world. There’s no way, because there’s always going to be new trends. There’s new categories that will emerge, new trendy topics. You’ll have an aggregator who wants to only do trendy things and launch it themselves and say, we can do that ourselves and launch that product, and then move on. So there will always be these opportunities, they’re just going to evolve over time.

Danielle Hale:

Yeah. Totally understood. So I’m from the fintech space, as well. So what I know is also in the tech industry, financial services-

Ryan Kramer:

Right.

Danielle Hale:

… also, the services are worldwide, especially in the crypto space. So what I mean is, through digitalization technology, we are completely global active, always. It’s insane. This is the development from the past five years, I think, and it will continue, to be honest. I think everyone will just speak at the end, maybe in a lot of years, just only English, or I don’t know. But it’s insane how international business is, so… and it won’t go back.

Ryan Kramer:

Absolutely. So in that context, we’re talking about 2021, and we’re looking into… This is an exciting time going into Q4. This is probably the first full year you and your team have been able to plan. As we’re acquiring new businesses what’s the most important thing for SellerX right now? Is it establishing footholds for your brands in certain markets? Is it the acquisition or a number of acquisitions you want to have in your portfolio by the end of the year? What are the most important things for you at this juncture, before the end of the year?

Danielle Hale:

Yeah. So definitely the deal flow, so to scale via acquisition, because this is the main business model. So acquisition after acquisition, this should be running. Also, scale the existing portfolio companies profitable, and to keep the growth high of this existing portfolio companies. Also, I think all hyper grow company is forcing hiring great people. So this is a big challenge, but we will get it, because reputation is important for that space, and yeah, we are pretty convinced that we can build up the whole team in appropriate way in the context of our growth story.

Ryan Kramer:

Absolutely. Yeah. So in terms of valuation, if I’m a seller and you’re looking at their numbers, the processes, submit numbers, go through all the number of boxes that you need to fill in order to see [inaudible 00:42:55] how many units you’re selling, what’s the turnover rate, so on and so forth, margins… I won’t go through all the different data points. But what’s the number one thing you look for that’s actually the most negative towards a brand’s evaluation. Is it just the nature of either being attacked, or just having seller-central issues? Because I had a conversation, to set the table for you Danielle.

Ryan Kramer:

Earlier this week, I had a conversation with Chris McCabe, and he was talking about not a lot of aggregators, or people in this conversation, are talking about risk management in terms of looking at a brand. You have to look at the terms of, well my brand be attacked if I transition from them to us? Is that a component that not a lot of people are was talking about? Or what’s the number one biggest risk that you think that you have to worry about when acquiring a brand?

Danielle Hale:

Okay. So for the transition phase-

Ryan Kramer:

Yes.

Danielle Hale:

… so we just call it onboarding phase, we secure-

Ryan Kramer:

Or just knowing that a…. I would say, knowing that a brand is actually going to say what it’s doing. Does that make sense? The numbers look great and everything like that, but if you are… if it’s doing too well, am I opening myself up for someone to attack me? If there’s a shutdown or anything like that, is there something that you’re looking at that it bring most fear in you when you are initially… like, you have acquired a brand? Does that make sense?

Danielle Hale:

Sorry. I don’t know what you mean with attack me.

Ryan Kramer:

So-

Danielle Hale:

So, in what kind of space?

Ryan Kramer:

Yeah. No, no, no, that’s fine. No, that’s great. So using the phrase attacking, I’ll take that off the table.

Danielle Hale:

Okay.

Ryan Kramer:

So when your account gets suspended, so if I have [inaudible 00:44:33], I have been suspended-

Danielle Hale:

Okay.

Ryan Kramer:

… in the last year or so for a couple times, once or twice, you guys look into, obviously, the reason why they’re either not… they’re no longer on available on Amazon, Amazon took them down. It it be because of competitors actually attacking your brand, that brand itself, and on the back end, putting different keywords, or changing out images, or something where it’s actually malicious against it in the invitation, because you’re a top brand, you might have competitions trying to be malicious towards you. Do you ever fear for that towards your brand? That-

Danielle Hale:

Okay.

Ryan Kramer:

… if it’s a top selling in that category, we’re inviting malicious activity towards us? Does that-

Danielle Hale:

Okay.

Ryan Kramer:

… make sense?

Danielle Hale:

Understood, understood.

Ryan Kramer:

Okay.

Danielle Hale:

So I think-

Ryan Kramer:

[crosstalk 00:45:20] my mind.

Danielle Hale:

So I think in general, every seller has this risk, in general. So you have always the risk to get attacked via fake reviews, via-

Ryan Kramer:

Sure.

Danielle Hale:

… I don’t know, maybe copycats. They want to just copy you to get the reviews, and then get fake reviews, same images and try to get the ranks. So-

Ryan Kramer:

Right. Hijack your listing, things like that.

Danielle Hale:

Yeah. So this is like the operating business, this is normal. To be honest, you need to understand how you can be pretended to that space. So I think it would be strange if… So if we would like to go in the product, and then doing the due diligence, we would see there are four copycats from China with half of a prize, to be honest, difficult, maybe. because at the end, you don’t know what happens the first three month. But this is a risk, what always can happen. But normally we have a feeling like, especially for commodity products, this can happen.

Danielle Hale:

So it depends on the niche, on the category, and on the product, what will happen. Also, you cannot keep that risk totally from the table, because it’s always the operational risk on Amazon. So this is why our strategy is to do multi channel, because at the end, you are not dependent like before-

Ryan Kramer:

Right.

Danielle Hale:

… on the market.

Ryan Kramer:

You’re not a one-legged stool. You’re not one-legged stool, you’re not only supporting… We did see that. In 2020, you saw a lot of brands who were only selling on Amazon, and they got shut down because they were no longer… their brands or their products were not deemed necessary, or it was… Back before the… when corona hit worldwide economies, they were not accepting products that were not deemed necessary, whether it was necessary items for like baby or like goods and solid goods. If it was deemed unnecessary, you couldn’t even get your inventory into a warehouse. A lot of people couldn’t sell and that was their only source of revenue. So, that’s why the multi-channel idea has become accelerated for lots of brands and lots of companies like yours, I’m assuming. I guess on the flip side-

Danielle Hale:

I’m sorry, one thing, one thing-

Ryan Kramer:

Oh, go ahead.

Danielle Hale:

… pertaining the risks. So sometimes you have products where you need to do a deep dive in compliance stuff. So like in Germany, for example, we have different rules for consumer products, especially in the beauty segment. So sometimes some player go in the market and don’t understand that there are requirements for it. Also, in the marketing labeling and what you say about the product. For example, if you say like, your skin gets better if you take this product, sometimes that’s not allowed, especially-

Ryan Kramer:

Right.

Danielle Hale:

… in the CBD space, for example. And then the people just do it. They have it in it, and then Amazon is cutting them. But to be honest, they should cut them, because this is illegal. So-

Ryan Kramer:

Right. Right. For compliance reasons, nation and nation, you’ve been in the fintech space, that’s what we have to do, be complicit in each country that you have to be compliant in. You can’t have falsified claims, you have to have certain checks in. If you make certain certification in order to deem it safe, reliable, trustworthy, all this fun stuff that I’m sure you guys get to worry about, and like, do we want to put it into that market or not because of how it states, XYZ.

Ryan Kramer:

Does that actually hurt a brand, maybe, if it’s in all these multi-channels that you have, and it’s not in every single marketplace, for example? If at scale you have to worry about that coming up, if I want to put my product that’s in America, and I want to put it in Japan, for example, that requirements won’t allow for that product specifically to work there, so that actually caps the growth potential of that product?

Danielle Hale:

Yeah. I think it depends on the market. So yeah, if you cannot put in the shelf of Walmart, this kind of cream, then you are limited. So it depends on the case. But in general, I would say one strategy, what I would say I’m concerning, if you have like a German company, and this company is already multi-channel, and this company didn’t really rank well in that market, you need to understand why is that so? Is it because they didn’t push the retail stuff, or was it just that the retail didn’t want to have this product on the shelf?

Danielle Hale:

So I think are different cases where you can say, okay, if they already tried to go and retail, and it didn’t work out, should we want to buy that company? Especially in Germany, we have big retail, like the [inaudible 00:50:26], and these are the biggest players in Europe. [inaudible 00:50:31]. If you have this relationship that they don’t want to put your product on the table, it’s concerning. So yeah, this is why sometimes it could be risk for seller to try to push it in multi-channel. If it doesn’t work out, then you have a problem at the end, I think.

Ryan Kramer:

Absolutely. I know we’re coming up on the top of the hour, Danielle. Again, you’ve been so fantastic in getting in theory, and I think this is super important for our listeners out there, if you’re listening or watching this to understand where this industry will go, and then how, not just entrepreneurs, but you as a business will continue to evolve and push business to growth in this economy, too. We’ve seen trends like how social media developed the digital social commerce space. E-commerce has made possible for small to medium size businesses to make their products available internationally, worldwide, however you want to call it, at an instant… to be delivered to you in two days, that whole adage. Amazon’s delivered to you in two days.

Ryan Kramer:

But as the economy grows, you know the German market, you know Europe, I would say, more than a lot of our listeners. But what’s exciting for you in this space as you continue through this year, and then next year? What are you keeping your eye on, specifically? Is there something that’s under the radar that all of people are talking about, but that you are specifically keeping an eye on?

Danielle Hale:

Yeah. As it is, I cannot talk about everything. Right? But-

Ryan Kramer:

That’s fine.

Danielle Hale:

… there’s something we’re always passionate about, is to talking to sellers, and then you find out, so what is the opinion of the market, to be honest? So this is something where I’m pretty excited to have a look on it. I would like to go in the future, and would to know what the sales would tell me in one year. So this is something-

Ryan Kramer:

That’d be amazing.

Danielle Hale:

… where I’m really… Yeah. That would be amazing. So I think the market works like… It’s really important that you, as an aggregator, are a good entrepreneur. So you need to understand the market, and also you need to understand the pain points of the participants in the market. So this is one point why I’m excited. The other point is like, I’m just excited to know how is the portfolio companies running? I love to know the growth story of them, I love to know that how will be the advertising, digital work. All this stuff, it’s just amazing to see this hyper growth every day. Also, I just would like to know how it would be in one and a half year. I’m pretty convinced that it will continue until then. So-

Ryan Kramer:

Yeah.

Danielle Hale:

[crosstalk 00:53:35]. So I think every aggregator has maybe a different focus a little bit, but at the end, I think the market is huge. So I’m not concerned about, as you said before, this pressure, or… I don’t know. I’m pretty convinced that the good entrepreneurs will keep running.

Ryan Kramer:

Absolutely.

Danielle Hale:

So-

Ryan Kramer:

Well, I think as long as a company is innovation-first, and they are customer-centric, I think, ultimately, that’s where the success has to come from. As long as people are knowing that’s the case, it’s not, let’s try to figure out how to take over the space and wipe everyone out, it’s more of, hey, we can operate and do it our way, and everyone else can have a seat at the table, and there’s no… I don’t think we’re going to be overcrowded by any means anytime soon. I think there’s a lot of capabilities and capital to be had, and what’s exciting. It’s a growing market. It’s kind of a, well, we think we can do it better, and you’re going to try to do that your way, and best of luck.

Ryan Kramer:

That’s what capitalism is, you’re trying to make business better year over year, day over day, however, that looks. But yeah. Dino, I know we’re at the top of there, and I don’t want to squeeze you for more time. I know it’s late over there, but for people who want to work with SellerX, or just learn more about the processes… I know we talked about your due diligence model, and it’s fantastic all the markets that you look for, the minimum requirements. They want to reach out to you and your team, how do they go about doing that?

Danielle Hale:

Yeah. So you can reach a out, if you’re interested, on our homepage, and as well on LinkedIn. So they can just text me, or also via our homepage and get contact there. So yeah, we also work with some brokers. But at the end, sometimes it’s easy to talk directly. So yeah, feel free.

Ryan Kramer:

Hey. Yeah. As long as what’s best for the seller at the end of the day, but also for both businesses, I think everyone can work together in that regard. So yeah. So reach out to you if they want to learn more information or obviously work. If you’re working with a broker, talk to them and point them in that direction, too. So, hey, thank you so much. I know I would talk to you more about this if time permitted, but we’ll have to have a part two or three of all the exciting things. Is there anything we should be aware of? Is there any news that you want to drop here on this podcast for us, or it’s a wait and see and wait-

Danielle Hale:

Wait. Not yet. Not yet.

Ryan Kramer:

I was going to say, if I read an article today, Danielle, about SellerX, I’m going to be a little upset you didn’t tell me about it today. So no, that-

Danielle Hale:

I’m sorry.

Ryan Kramer:

No, that’s okay. I’m just kidding. I know there’s exciting things for you and the company, and I know you’re one of those for you who are growing in Europe, as well as the United States. So continue success for you and the team, and I’m excited to hear about and watch you guys continue to grow.

Danielle Hale:

Thank you.

Ryan Kramer:

No problem. Again, thank you so much, again, Danielle for hopping on today. I’m going to ahead and… This is what happens to everyone when you go ahead and produce yourself. You have all these different malfunctions and errors. But anyways, if you’re watching or listening to this live, again, we appreciate you spending some time today to talk about why I should sell my Amazon business. Again, such a fantastic conversation with Danielle of SellerX. They’re based out of Berlin, Germany, but you can actually reach out to them on their website, just sellerx.com, it’s in the comment section below. You can certainly check that out.

Ryan Kramer:

If you’re listening to this, the show notes will also link out to her and her contacts, as well, how you can reach them and see if exiting is that time. Again, we learned about multiples are high, reinvestments are high. If you don’t want to have to worry about the headaches of ongoing cost issues, you know I got a brand, but you want to invest in another opportunity or idea, then that’s the time to do it. I think lots of people have been happy in their exit, they’re able to reinvest it into another business online. Or, you can actually do other ventures that you might want to do. That’s the beauty of e-commerce and entrepreneurship, there’s always opportunity available, and we discussed and touched on those today.

Ryan Kramer:

Again, this is Crossover Commerce, my name is Ryan Kramer. This is my corner of the internet, where I bring the best and brightest experts in the Amazon e-commerce space. Again, thank you so much to Danielle and all of her team for hopping on today, for watching and listening today. If you have questions, go ahead and reach out to her. But in the meantime, this is episode 150 of Crossover Commerce. You can listen to any channel where the podcast might be available, like on Apple, Google, Spotify, or any podcast platform, or you can watch us live on our social media platforms on YouTube, LinkedIn, Facebook, and Twitter. But again, I’m Ryan Kramer, this episode 150 of Crossover Commerce. We’ll catch you guys next time. Take care.