【Lucy's Date】To sell your Amazon brand or not, that is the question

- Interview with Henry Xu, Head of Greater China Acquisition Business at BBG, the largest Amazon brand acquisition company in Europe

In the past two months, a large number of Chinese Amazon sellers' accounts have been closed. According to the Shenzhen Cross-border E-commerce Association, the losses of the entire industry chain have exceeded nearly 100 billion yuan, affecting tens of thousands of merchants.

For a time, the industry was shrouded in dark clouds and people were in panic.

At the same time, according to relevant information, more than a dozen domestic and foreign companies have entered the market with huge amounts of money, intending to acquire high-quality brands from Amazon sellers.

There is a closure and a purchase, which makes it seem like a "storm is coming", which makes many sellers at a loss.

Many industry media also took the opportunity to seize this hot topic and conduct various analyses and judgments. Some said that the wolf was coming, while others said that Amazon was plotting something. Some industry media even simply made a high-profile statement that they were willing to act as agents for sellers to sell their brands in order to help sellers choose suitable buyers and avoid them being deceived.

After communicating with some big and small sellers, I learned about their actual situations and needs. On their behalf, I interviewed Henry Xu, head of Greater China acquisition business at BBG, the largest Amazon brand acquisition company in Europe, hoping to let more people understand the ins and outs of this wave of acquisition fever.

BBG just landed in China in early June this year. It is one of the few foreign companies that established a company in Shenzhen specifically for acquiring Amazon brands.

Let's hear what Henry has to say.

Lucy: What kind of company is BBG?

Henry: BBG stands for Berlin Brands Group, one of the three largest e-commerce companies in Europe and a big seller on Amazon. Although it also acquires Amazon brands around the world like other companies, it is more of a cross-border e-commerce practitioner rather than a pure financial investment company.

BBG was founded in 2005 and has nearly 1,000 full-time employees worldwide. After 16 years of development, it now has nearly 100 sales channels, 14 private brands, and 3,000 products that it incubates and produces, which are sold in 28 markets around the world.

Since the end of 2020, BBG has begun to expand globally and announced that it will invest more than US$500 million to acquire Amazon brands around the world.

Lucy: What are the conditions for you to acquire an Amazon store?

Henry: BBG has a strict due diligence process and only looks for brands with the greatest potential and sales growth worldwide. Most categories except fashion and consumer electronics are within our acquisition scope, and the main sites are: the United States, Europe, and Japan.

These brands must have annual sales of at least US$2 million, a net profit margin of at least 15%, and an average selling price of at least 15 euros or US$15.

Lucy: Faced with peer acquisition companies that entered China before BBG, how do you view peer competition?

Henry: Amazon's brand acquisition model is still relatively new to Chinese sellers, and this market needs peers to educate together. More peers participating will give sellers more choices, which will have a more positive impact on the development of the acquisition industry.

Lucy: Since BBG is also an Amazon seller, will it not buy after learning about the seller’s data, but instead sell similar products?

Henry: We already have so many self-operated stores and brands around the world. We just want to achieve rapid expansion through acquisitions, skipping the slow growth process from 0 to 1, and spend money to acquire successful and promising brands from sellers. If we can do it quickly through investment and acquisition, why should we bother to do it ourselves?

In addition, before checking the seller's relevant sales data for valuation, we will sign a "Confidentiality Agreement" with the seller to ensure that their store information will not be leaked.

Lucy: Are there any successful acquisition cases?

Henry: Although BBG has just entered China, it has already had successful acquisitions. Looking around the world, BBG has acquired dozens of brands in different categories in Europe and the United States.

Lucy: What is BBG’s biggest advantage?

Henry: BBG has 16 years of experience in cross-border e-commerce operations, which is our biggest advantage. We are not only good at operating the Amazon platform, but also have our own independent website and other vertical e-commerce platforms.

The benefits these advantages bring to Chinese sellers are:

1. We are more confident and courageous in evaluating your brand, because the acquired brand will have more channels to increase sales under the operation of BBG.

2. For every brand we acquire, we will distribute profit dividends to the sellers in the next few years. Sellers who sell their brands to BBG, a company that specializes in e-commerce operations, will have a greater chance of receiving these profit dividends.

3. BBG not only covers the US market, which is a must-win for cross-border e-commerce, but is also familiar with the complex European market (which has different policies, regulations, language and culture). After all, this is our home base. For different European countries, we have operators who speak the corresponding languages ​​to manage them.

Lucy: Many sellers see that there are so many companies wanting to acquire them, and their psychological expectations are very high, so they want to sell at the highest price. What do you think about this?

Henry: It is understandable that sellers want to sell at a high price, but there is always a balance between the desired price and the actual transaction price. We will give them a relatively reasonable estimate based on the seller's store's past operations and future development prospects. At the same time, sellers must also have rational psychological expectations. It is not realistic to expect the highest price infinitely.

Lucy: Currently, many sellers’ accounts have been closed, but the brands still belong to them. Will you acquire the brands of these sellers?

Henry: This is a question we have been facing recently. Unfortunately, we do not acquire brands with store histories.

Lucy: Some people say that "foreign acquisitions of Chinese sellers' stores are plundering Chinese resources." What do you think?

Henry: Judging from BBG's acquisition purpose, we do not belong to that category. On the contrary, we are helping Chinese products and brands go global faster.

We have more than 100 e-commerce sales channels around the world, including Amazon, our independent website and other third-party platforms. We can quickly roll out sellers' brands across our many channels and directly reach end consumers.

Lucy: How long does it take to complete the acquisition and let the seller get the money?

Henry: If the seller is highly cooperative and has complete data, you can get the brand acquisition payment in as fast as three months. The next two to three years is to wait for the net profit dividends earned by BBG from operating the brand.

Lucy: How many stores does BBG plan to acquire in China?

Henry: We have big ambitions. As long as there are suitable brands and products, we are willing to acquire them.

Author's Conclusion:

Through the interview with Henry, we have a basic understanding of how foreign capital enters the Chinese market to acquire Amazon brands. Of course, this only represents our understanding of BBG. The situation of other acquisition companies requires sellers to understand and judge for themselves.

Buying and selling are always voluntary market behaviors. At any time, decisions need to be made based on a clear understanding of both parties. One should neither blindly believe nor follow others, nor be blinded by one thing or be distracted by the other, and listen to the misjudgments of experts who are ignorant of the truth.

The way to know whether a company is real or fake is very simple, that is to get close to it. The market is always full of good and bad people, and there will always be fakes and fakes coexisting. As long as you want to do something, you should understand it yourself and make your own judgment, and at the same time refer to the opinions of credible organizations and individuals.

If the seller's Amazon brand is at its peak and has a bright future, there is certainly no need to sell it; but if you are in urgent need of funds to do other projects, or have limited energy and cannot further expand the brand, or even worry about the uncertainty of Amazon's policies, then selling the brand to the acquirer is also a good exit option.

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