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The fastest growing brand aggregators you can invest in now

Upexi (NASDAQ: UPXI) acquires highly profitable brands that lack the resources that they need to grow and inject capital, personnel and supply chain efficiencies to scale revenues and increase profit margins. They are making serious waves in the brand aggregation sector and growing fast.

In fact, Upexi (NASDAQ: UPXI) announced their financial results for the fiscal 2023 first quarter ending September 30, 2022 (as of November 2022) and its revenue has increased 199% year-over-year to $11.6 Million, primarily due to its strategic acquisitons.

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Why should I care?

A year of stand-out brand acquisitions

Upexi (NASDAQ: UPXI) can credit its fast-growth over the past year to many operational highlights, mainly some substantial acquisitions. Their annual revenue growth has been primarily driven by four acquisitions, including:

  • Cygnet Online, a prominent Amazon reseller of branded OTC, products, supplements, and beauty markets, with $26 million in TTM revenues and a significant footprint as an Amazon reseller and liquidator
  • Interactive Offers, a programmatic ad-tech company, that has brought advertising in-house, and helps Upexi brands scale on exclusive publications across the health and finance industry
  • E-Core and its Subsidiaries, which provides Upexi with an entrance into the toy category as well as national retail distribution for owned and non-owned branded products. One of its biggest brands, Tytan, is a high-quality, eco-conscious toy company that has grown 100% over the past two years
  • LuckyTail, a strong pet care brand on Amazon and eCommerce channels

Upexi’s (NASDAQ: UPXI) growth strategy will continue to focus on both acquisition and organic growth, while also expanding to international markets.




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The Brand Aggregation Industry: An Outlook

Disclaimer:
This content is for US investors only, if you are not a US investor please ignore this content. This content is a paid advertisement for Upexi (NASDAQ: UPXI) from Interactive Offers and Finimize. Please refer to the full disclaimer at the bottom of this page.

 

Key takeaways

  • Outlook of the brand aggregator industry
  • How they differentiate themselves
  • Three case studies

 

The current outlook of the brand aggregator industry

The brand aggregator industry has really taken off in the last couple of years. Brand aggregating companies – firms that specialize in buying brands to scale them up and make them more profitable – have raised close to $16 billion in capital since 2020. And it’s no wonder banks and institutional investors are lining up to fund these companies: the industry’s expanding rapidly thanks to the post-pandemic boost in online shopping. Global ecommerce made up only 19% of total retail sales in 2021, up from just 7% in 2015 – and it shows no sign of slowing down. 

Brand aggregators flock to Amazon when they’re trying to find good brands to acquire: it’s the leading online retailer in the US, after all, accounting for close to 40% of the US online retail market. Amazon’s huge success has enabled thousands of third-party sellers to scale quickly. And as of the third quarter of 2022, 58% of goods on Amazon were sold by third-party sellers – a fair chunk more than the 26% from back in 2007. 

The rapid adoption of online shopping – and the resulting proliferation of small online brands – has helped the brand aggregator industry grow at high speed. And because it’s still early days, there’s no single frontrunner – in fact, close to 98 Amazon aggregators are currently competing for the top spot. It’s a good time to be competing too: a higher interest rate environment means it’s harder for small online brands to fund their growth alone, paving the way for well-funded brand aggregators to step in. It’s expected that a few leading companies will emerge as the industry matures, and that’ll depend on the different long-term strategies and competitive advantages of the competing firms, not to mention how they cope with the near-term threats of inflation and higher rates. 

 

Competitive advantages of brand aggregators

Competing brand aggregators need to have a sustainable competitive advantage and long-term strategy in order to stand out and survive. Some may adopt a cost leadership approach, focusing on having the lowest cost product and budget-friendly brands. Others might focus on product differentiation, with less emphasis on cost-cutting and more on providing quality. Naturally, those different approaches impact the way the companies operate: a company that adopts the cost-leadership approach will operate more on the basis of streamlining costs, and scale up in a particular region or category, while a company that prioritizes quality will likely spend more on marketing and be open to buying brands in different categories and markets. 

Brand aggregators also vary in the following ways: the type and size of brands they acquire, the type of funding (debt, equity, or cash flows) they rely on, the channels and platforms their acquired brands operate on, and their reliance on in-house or outsourced functional teams. 

A major part of brand aggregators’ value creation depends on the company’s ability to consistently make returns-focused brand acquisitions. This means being able to spot good brands, not overpay for them, and then growing the business profitably. That often also means having a good plug-and-play operational and logistical network in place to integrate the brands, and to scale them quickly and affordably. And when growth eventually slows down, companies should be able to reign in costs to keep profitability high.  

Now, let’s look at three examples of brand aggregating companies.

 

Case study 1: Upexi (NASDAQ: UPXI)

Upexi is a Nasdaq-listed brand aggregator company that owns and acquires brands across a wide variety of categories in the health, wellness, pet, beauty, and other growing markets. It focuses primarily on acquiring direct-to-consumer and Amazon brands.

The company is data-driven and relies on its in-house, software-as-a-service (SaaS) programmatic advertising technology to keep its acquisition costs down. Plus, it uses consumer data to increase cross-selling between its growing portfolio of brands. 

Upexi posted sales of $45 million for the year of 2022, up more than 600% from $7.4 million in 2020. That’s mainly driven by its acquisitions.

Since going public in June of 2021, the company has not only built out brands in the gummy vitamin, hemp, and medicinal mushroom spaces, but has made significant acquisitions, buying profitable companies in multiple verticals and then continuing to scale them. 

The first was VitaMedica, an online seller of nutraceuticals with a vast portfolio of product offerings. This was a pure brand play with significant growth in Amazon and its eCommerce site.The company then acquired Cygnet Online, a prominent Amazon  reseller of branded OTC, products, supplements, and beauty markets, with $26 million in TTM revenues and a significant footprint as an Amazon reseller and liquidator. 

Upexi also acquired Interactive Offers, a programmatic ad-tech  company, that has brought advertising in-house, and helps Upexi brands scale on exclusive publications across the health and finance industry. One of Upexi’s main aims is to slowly increase its marketing capabilities.  

Most recently, the company made its first foray into the pet care industry when it purchased LuckyTail in August 2022. The company also competes in the toy category with its acquisition of E-Core and its subsidiaries: Tytan and New England Technology. Tytan is a children’s toy brand and maker of popular magnetic tiles and building blocks that has grown 100% over the past two years while New England Technology is a national distributor for branded consumer products. The latter is one of the most competitively priced distributors for name branded consumer electronics in the industry with several innovative distribution models specializing in e-commerce, business to business, and business to consumer marketplaces.

Competing across a variety of categories and markets requires expert operational and logistical know-how. Upexi believes the company’s CEO Allan Marshall brings a lot of that expertise to the table, having previously founded XPO Logistics (NYSE:XPO), a multi-billion-listed freight transportation and logistics company. Upexi is looking to grow by increasingly focusing on building up its in-house capabilities, in a bid to scale its portfolio of brands. 

 

Case study 2: UTZ Brands (NYSE: UTZ)

UTZ brands is a NYSE-listed snack food company that manufactures and owns a whole host of popular snack brands like Good Health, Snikiddy, Boulder Canyon, and TGI Fridays Snacks, among others. While the company may not be a pure-play brand aggregator company, its business model closely resembles one: it started off as a potato chips manufacturer more than a century ago, and soon grew by acquiring a portfolio of snack brands over time. Although it might not claim to be in the brand aggregator industry, UTZ’s business model and historical growth is proof that acquiring good brands in a niche segment, and scaling them up well is not a new fad, but rather a sustainable one.

 

Case study 3: Thrasio 

Thrasio is a privately-held brand aggregator company and one of the biggest players in the industry. The company’s raised over $3.4 billion in funding since its founding in 2018. The company primarily operates by acquiring and scaling up third-party seller brands on Amazon, and focuses on consumer-facing brands in categories ranging from home, cleaning, culinary, to fitness. Thrasio employs a data-driven approach to analyze Amazon rankings, ratings, and reviews when considering the next brand acquisition. 

Thrasio has now acquired more than 200 brands, and has established a global presence in less than five years. However, the company’s huge growth came with a few hiccups: Thrasio’s had to delay its plan to list and lay off staff, and that was during significant turnover in its management. While Thrasio proves the huge growth potential for brand-aggregating companies, its rapid expansion also tests the rate of sustainable growth for them. 

 

  1.  https://www.marketplacepulse.com/aggregators
  2. https://www.statista.com/statistics/534123/e-commerce-share-of-retail-sales-worldwide/
  3. https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/
  4. https://www.statista.com/statistics/259782/third-party-seller-share-of-amazon-platform/
  5. https://www.marketplacepulse.com/aggregators
  6. https://www.marketplacepulse.com/aggregators

 

Download Upexi’s Investors Deck here

 

Disclaimer: This content is for US investors only, if you are not a US investor please ignore this content. This content is a paid advertisement for Upexi (NASDAQ: UPXI) from Interactive Offers and Finimize. This is not Finimize editorial content. Finimize received a fixed fee for producing, hosting and promoting this content on behalf of Upexi, totalling $23,000. Other than the compensation received for this service, Finimize and its principals are not affiliated with either Interactive Offers or Upexi. Finimize and its principals have no ownership in Upexi. The content on this page should not be taken as advice, an endorsement, or a recommendation from Finimize and its principals to buy or sell any security. Finimize and its principals have not evaluated the accuracy of any claims made on this page. Finimize and its principals recommend that investors do their own independent research and consult with a qualified investment professional before buying or selling any security. Investing is inherently risky and capital is at risk. Past performance is not indicative of future results.

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