Berlin Brands' Amazon Roll-up, Roll-Out, Reel-In D2C Strategy

The Amazon ecommerce ecosystem continues to breed fascinating marketing and business offshoots, not the least of which is the so-called “Amazon roll-up.” These companies, like Berlin Brands Group (BBG) acquire digital native brands that invented themselves principally to sell on Amazon. As General Manager and President Bob Land tells us, this is a wild world unto itself that challenges many preconceptions about what constitutes brand and valuations. BBG uses AI to target the right sellers and aims to acquire them at a apace of one a week. And yet, after that unconventional roll-up, BBG is then using some very traditional tools to capture and retain those Amazon customer sand reel them in as its own. 

We met Bob years ago at our D2C Brand Insider Summit when he built the D2C practice at traditional baby and childrens’ products manufacturer Dorel Juvenile, and also where he learned a few tricks about working with and in Amazon. 



MediaPost’s D2C Brand Insider Summit will convene next week in Scottsdale. Virtual access is still available.

MediaPost: What is the Amazon roll-up or aggregator model?

Robert Land: In general, we all find Amazon businesses, something that may be a single person or up to a team of maybe four or five people. You may say, I’m going to go to Alibaba, I’m going to buy 500 corkscrews, and I’m going to try and sell it for a profit on Amazon.

Some people have gotten really good at that.  In 2-3 years, they've got a pretty good business, and they're selling $2 million $3 million. But they get to a point where they say, wow this is really difficult, I’m really hustling here.

We find there’s an interest on that seller's part to say, it’s time for me to take some profit out of the business and get myself out of this kind of risky situation. And then we come in, and we say, OK, we'll give you three, four times EBITDA, and we'll buy you guys out. And usually that gives them a couple of million dollars typically to go and start their next business with a little more comfort, a little bit the bank to start with.

BBG is a little different than the others, in that we use AI to do our due diligence or the lion's share for due diligence on the seller. And, so, we can really speed up the entire process, get a check cut to that seller really quickly. And the other difference  is what sectors we all focus in. We tend to stay within home and garden for the most part. 

MP: So then what's the marketing plan? What do you bring to Amazon marketing, and what do you bring to these brands that they hadn't been doing themselves?

Land: I was at Dorel Juvenile for eight years. I said hey, guys, we should sell on Amazon, so I went from zero dollars to about $600 million business today. Amazon taught us along the way. They sent a dozen of their logistics and supply chain people into the Dorel warehouses and helped us with everything.

Like they said, hey, you're packing that pallet wrong, turn it this way, try these products that way, you're labeling at the wrong point, you don't have enough points where you're tracking the product. So Amazon actually not only helped us build a much more efficient program, but also immediately helped our Walmart business and our Target business. So it is kind of funny how you’re using the Amazon complexities, the data, the reporting and all of that to really kill it on the other channels, too..

MP: Are there economies of scale within the Amazon marketplace that you realize and have cross-selling opportunities in that marketplace?

Land: Absolutely, and what's interesting is the type of acquisitions. These are called asset-only acquisitions. But we're also buying rank, so [if] a seller has worked really, really hard over the years to get that best seller badge, that’s the easiest way to sell a brand to us, to get that bestseller brand. They've already changed their products, they've got 10,000 reviews over a long-term period, and they positioned it so that all we need to do is, first, not mess up, and, then, do exactly what you're saying.

Which is, now if we can find those SKUs, and they may be from the same supplier in China and abroad, we now have leverage. We can fill a container rather than doing partial containers, so now we can really kick off our power as a global leader and do what the seller really couldn't do. 

MP: All those flags that you're pointing to, like bestseller status or having those piles of reviews -- that's what brand value is within that ecosystem. Not necessarily a name that's recognizable, so much, as these rankings and these followings.

Land: Absolutely, and it's almost to a point where Amazon has to be careful, too, if they don't police those brands, especially since reviews can be spoofed pretty easily. So we hope for a more policed environment. Part of [our] due diligence [is] AI. It looks through all of the reviews, the dates of the reviews, the actual people. Are they verified reviews, in what period of time did they get reviews, does the review count, even match the item volume, the sales volume for that same period of time?  

MPHow do you effectively cultivate relationships on Amazon and then move them to your own site for a first-party relationship?

Land: At Dorel we liked to use the product strategy.  Amazon in every single meeting for eight years would ask us for the entire Dorel catalog. We would say no, thank you. The idea for us was [that] we became much more successful if we could only put out the products that were kind of gateway products on Amazon: high volume, typically not a lot of profit.

But what got people really interested in the brand was when they came to our, let's say, Safety First website, they found all these other great SKUs, extended color, all these other variations, accessories, arts. Just really a much fuller review of the brand and a much better brand experience.

Because that's where Amazon really falls short. They're not delivering brand experiences. The idea is to bring the consumer to D2,C where they really start educating. More than you can do on an A+ page, by the way. A+ pages are great and are a nice effort, but when I’m popping chat windows up with my award-winning customer service team, we're doing like concierge-level buying with you. Amazon is not coming close to that. So it really is kind of a product strategy with Amazon, not to give them everything.

MP: What's the trick to getting them from Amazon to you? 

Land: It's actually offering other product. So we might only sell the certain colors on Amazon, and we want that person to come back to us on D2C. We'll put cards in the boxes. That's the number-one vehicle we had. We have millions and millions of boxes going out the door, so many people don't put a little card in there that say when you open the box -- wait, don't return me to a store, don't return me to Amazon, call this phone number or just contact us. You should register your product with us [because] we have lots more content for you. Amazon was just an entryway into the funnel.

MP: What are the implications for this, for brand generally? There's a staggering amount of clutter, and it's hard to tell what direction this goes in. Are we looking at a state of permanent clutter or greater commoditization or ultimately, all of this starts shaking out, and we start seeing massive aggregation and sort of a re-coalescing around major brands?

Land: It's funny, I think the shakeout is already happening. Just really economic conditions, the supply chain issues themselves, they've really killed off a lot of those small brands trying to get some traction or the few that have gotten traction. The past few years, it's been relatively easy to raise a million dollars for your fledgling brand to get you out of that garage and start you on your way, but incredibly difficult to get the next few million, really incredibly difficult.

So you can get started, but then you're reaching a point where the money just kind of dries up for you. So, again, it's like a scalability issue, like how big can you grow your brand. And there's several examples like Casper. They were big at the time, they raised a lot of money and just couldn't really get there, couldn't reach the level that you need to get to run the marathon. You can run the sprint and not the marathon. I think it’s going to be an aggregators’ market for a while. 

MP: But that still begs the question, will brand still matter? Maybe the nasty way to put this is, are you part of the solution, or part of the problem? Are you devaluing brands through this and commoditizing more and more categories, or are you aggregating into larger brands people will go to and trust?

Land: What's funny is, you would always have that argument with a brand leader, who was always really drinking the Kool-Aid, about the brand, and they thought the brand was unbelievable. And we're like listen there's other SKUs right here that look just as good, that have reviews. So what do you think is in that brand? Or how many brand leaders can you count that really don't understand customer service?

At Dorel, we really put in a full-court press effort only a few years ago in customer service, where we said, wow, that's really where the rubber hits the road. I had a book that I gave to all the customer service reps called “Hug Your Haters.” It's about the joy that you get from turning somebody around, somebody that calls you and is really upset about your product, and the joy you get by understanding them, understanding the issue, and getting that consumer to a point where they love your brand again, because so many brands don't understand that piece. They understand the megaphone piece. I need awareness, but they really don't work on the experience at all. Very few brands really understand experience.

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