As 2020 kicked off, online business aggregators began to get global attention from investors and media outlets alike. Businesses with concepts known as Amazon FBA aggregators continue to gain traction after the digital aggregation market reached USD 14 billion, according to Entrepreneur.
Professionals in this industry assert that digital aggregation is just getting started. If this is true, online competition will tighten between aggregators, ecommerce brands, and other companies that conduct business virtually.
Navigating the Current Business Environment
During the pandemic, ecommerce boomed. Everything from shopping and communication, to school and work–all had to be done in a virtual environment. During this time, aggregators like Berlin Brands Group and Razor Group bought up ecommerce businesses–very commonly these were Amazon sellers. This strategy proved to be well-informed–41% of all US ecommerce sales occurred via Amazon in 2021.
With each acquisition, these aggregators furthered a greater strategy to simultaneously grow their brand quiver. The success of this business model kept investors’ money flowing to other aggregators as well.
As ecommerce aggregators like Thrasio purchased profitable companies with already-cultivated customers, other aggregators materialized. Businesses known as “digital demand aggregators” pushed a differentiated business model with goals to acquire, maintain, and grow content websites. For these firms, the most appetizing sites on the shopping list garner a large amount of organic search. The aggregators soon found that by purchasing these types of assets from content creators, they could further develop a site’s brand as well as its income avenues.
During this digital aggregation boom, one startup team known as TreasureHunter emerged inside this “business roll-up” market. With a similar aggregator concept, this team also found a way to contrast themselves from the Amazon FBA aggregators.
In particular, TreasureHunter’s team had goals to buy digital equity in online communities that supposedly influenced ecommerce. Now, a year after startup, the TreasureHunter team has purchased content websites in various categories from entrepreneurial asset owners who are experts in their respective niche(s). What’s more, they’ve set out on a path that has and will continue to carve a different path than the aggregators that came before them.
“With TreasureHunter, we want to revolutionize the digital content segment and give small websites and blogs the exact tools, resources, and partners we could have only dreamed of back when we established our first blogs in 2013,” said Benjamin Schardt the Co-Founder & Co-CEO of TreasureHunter who started his entrepreneurial experience with his own blog.
Virtual Business Aggregation
For years, it’s been a basic business practice for large corporations to buy-up or “roll-up” smaller entities. Yet, the post-pandemic business climate has produced several large digital business aggregators in one short span of time.
Digital roll-ups “are the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value,” according to TechCrunch. “…roll-ups often achieve much greater exit multiples, known as ‘multiple arbitrage,’ so it’s no surprise that the trend is making its way online.”
Aggregators like TreasureHunter acquire websites like sports blogs, digital recipe portals, travel guides, and more. Oftentimes, these websites have been created by truthful individuals who simply aim to distribute information about their favorite hobby or passion. Over the last few years, these content creators have been rewarded by steady growth in their advertising revenue and most recently, the attention of investor-backed aggregators.
Firms acquire content websites to develop the assets into well-oiled, revenue-producing machines. Using larger teams and budgets, aggregators boost productivity around tasks that individual site owners often struggle to complete. Ideally, these aggregators will cut the operating costs of the blogs they buy, increase advertising revenue, and continue to create helpful content that satisfies a site’s unique viewership.
“We are leveraging the strong collaborations with respect to marketing, advertising, content management, and creating synergies between technology our teams are using to enable massive growth,” continued Schardt. “This is growth that would not be possible for the asset, stand-alone.”
What are the Implications of Aggregation for the Internet’s Future?
In 2019, ecommerce advertisement spending in the US reached USD 12.5 billion, according to Statista. In 2021, the total US ecommerce sales reached USD 960.1 billion–an 18.3 percent year-over-year increase, according to Oberlo. As a result, aggregators like TreasureHunter believe profit will be found by controlling online arenas where ecommerce is leveraged.
Today, there are 32 million (and counting) active content sites with audiences around the US, Europe, and beyond. Investors and aggregators alike predict a growth in competition that will drive greater value in digital assets. Furthermore, these firms bet that ecommerce sales, as well as advertising revenue associated with online content will continue to increase. So, aggregators that are rolling-up online entities are also working to build higher quality sites as the internet landscape undergoes this anticipated evolution.
Using investor funding, aggregators will onboard newly-acquired assets website after website. These firms hope that their business model will achieve immediate results as well as continuous profit over the next 5-10 years. These companies aim to control “digital property” on the internet, just like the Amazon FBA aggregators have gained a large portion of control inside Amazon’s online marketplace. But, in the end, only time will tell…