This piece explains Amazon aggregators—companies that buy third-party seller stores on Amazon. The guest argues the market is undervalued: ~$300B revenue with high margins, but only ~$8B capital has entered, leaving room for early movers. Key holdings: Thrasio (pioneer, admired), Wonder Brands (invested, focuses on Latin America), and Helium 10 (a seller analytics tool, recently acquired). The idea: buy stores' reviews and rankings, scale operations, but risk Amazon's ad policy changes breaking the moat.
This report examines Amazon Aggregators as an emerging investment category, arguing that these companies build unique moats and achieve high growth by acquiring third-party seller stores on Amazon. The report notes that the market generates approximately $300 billion in annual revenue, growing faste
Guest Ali Hamed (Partner at CoVenture) deconstructs the emerging investment category of Amazon aggregators. The core thesis: by acquiring third-party seller stores on Amazon, aggregators build unique moats and achieve rapid growth, yet the market remains severely undercapitalized. The most impactful judgment of the episode: the market generates approximately $300 billion in annual revenue and roughly $60 billion in EBITDA, but only about $8 billion in financing has entered — this capital misalignment means early entrants still have enormous arbitrage opportunities.
Ali Hamed argues that Amazon aggregators are essentially acquiring "digital real estate" on the Amazon platform — a moat built on reviews and rankings.
Amazon third-party sellers fall into three categories: resellers (low margin), suppliers (selling to Amazon for resale), and the most critical FBA (Fulfilled by Amazon) sellers — who design their own products, source from OEMs, store inventory in Amazon warehouses, and sell via Amazon's storefront. Aggregators acquire all assets of these FBA stores (ASINs, SKUs, inventory, reviews, rankings) and then operate them at scale.
The market size far exceeds most people's perception:
Hamed notes that the P&L of these stores is highly variable: for every $100 in revenue, roughly $30 goes to COGS, $40 to Amazon FBA fees, and $10 to management fees — fixed costs are extremely low, and a 10% drop in revenue reduces EBITDA by only about 12%.
Ali Hamed argues that small-scale Amazon sellers face a "death spiral" risk, which is the fundamental reason aggregators can acquire them at low multiples.
The core driver for sellers to exit is not poor business performance, but the difficulty of operations:
Acquisition multiples: typically 3-5x EBITDA. Hamed emphasizes that despite capital inflows, the growth in sellers' willingness to sell "keeps pace with the speed of capital entry," so multiples have not risen significantly — only structurally adding earnouts and seller notes.
Ali Hamed argues that the core competitive advantage of aggregators is not brand building or vertical integration, but a deep understanding of the Amazon ecosystem — "This is a business of 1,000 little secrets, not one big secret."
Why vertical integration is not the focus:
Real value creation lies on the revenue side:
Organizational structure: Operates on a "brand manager-team" model, with each team managing a set of ASINs. The most distinctive functions are the supply chain team and the finance team — the latter must simultaneously handle M&A, financing, inventory financing, accounts receivable financing, and other multi-layered capital structures.
Ali Hamed argues that Amazon has no incentive to "steal" aggregators' business, but changes in advertising policy pose the greatest risk.
Why Amazon will not directly compete:
Risks that truly warrant attention:
1. Ad slot expansion: If Amazon increases the number of ad slots on search results pages from the current count to 10, it would fundamentally alter ranking logic—well-funded sellers could "buy" top positions, undermining the review moat.
2. Rising FBA fees: 40% → 41% → 42%, steadily eroding profits like a thousand cuts.
3. Supply glut: Too many entrants flooding the third-party seller market, leading to ever-finer category segmentation and intensifying competition.
4. Rise of other platforms: Third-party seller platforms such as Target and Home Depot may divert traffic.
Hamed suggests Amazon adopt a franchise model similar to McDonald's to set the rules—allowing aggregators to exist while preventing any single entity from monopolizing a category.
Ali Hamed argues that most VCs miss out on an asset class capable of generating 20–50x returns simply because "it's not a software company."
Why VCs should rethink:
Hamed's screening criteria:
Analogy: This is more like a franchise business than a tech startup – much like McDonald's franchisees, each looks similar on the surface, but some make substantial profits while others lose money; the difference lies in execution details.
| Position | Guest Stance | Key Data |
|---|---|---|
| Thrasio | Pioneer, admired | Founded in 2018, drove the creation of the entire category |
| Wonder Brands | Invested | Latin American aggregator, focused on Mercado Libre |
| Aquico | Invested | Specific data not disclosed |
| Benetago | Invested | Specific data not disclosed |
| D1 | Invested | Specific data not disclosed |
| Powerhouse 91 | Invested | Indian market aggregator, benefiting from China-India trade restrictions |
| Helium 10 | Industry-standard tool | Acquired by With Assembly (Providence→Advent) |
| Jungle Scout | Industry-standard tool | Summit investment |
| Tyrion | Referable public company | Product creation and distribution, partially involved in aggregation |
1. "This is a business of 1,000 small secrets, not one big secret." (Ali Hamed) — The core competitive advantage of aggregators is not a single breakthrough, but being 2-3% better than competitors in every link, including supply chain, advertising, inventory, and international expansion.
2. "If you spend six months agonizing over 3.25x versus 3.5x, you go from potentially being a billionaire to needing to start a second business." (Ali Hamed) — Speed is the core variable in this market, and early-mover advantages are irreversible.
3. "These assets themselves have high barriers to entry, but there is almost no differentiation among aggregators." (Ali Hamed) — The investment logic is: buy the moat of the asset itself (reviews + rankings), not the brand of the aggregator.
4. "Amazon makes 40% from third-party sellers and bears no inventory risk — that's much better than doing it themselves." (Ali Hamed) — Amazon has no incentive to "steal" aggregators' business, because the platform model offers higher margins and lower risk.
5. "If Amazon increases the number of ad slots from the current count to 10, the entire ranking logic changes." (Ali Hamed) — The biggest risk is not Amazon's own retail, but a change in advertising policy that renders the "review moat" ineffective.
6. "VCs don't invest in aggregators because they forgot why they invest in software companies — not because of the word 'software,' but because of high growth, high barriers, and low equity needs." (Ali Hamed) — Aggregators possess these attributes, just in a different form.
7. "The P&L of these businesses is highly variable — a 10% drop in revenue leads to only a 12% drop in EBITDA." (Ali Hamed) — The structure with extremely low fixed costs provides downside protection, which is the fundamental difference from traditional retail M&A.
8. "You can 'transplant' 50,000 reviews from the US site to the German site and immediately become the #1 ranked seller." (Ali Hamed) — International expansion is the most undervalued value-creation tool for aggregators, something small sellers cannot accomplish on their own.