Ecommerce Briefs: Amazon v. Walmart, Prime Members, E.U. Sellers

“Ecommerce Briefs” is my occasional series on news and developments that impact online merchants. In this installment, I’ll focus on Amazon’s omnichannel growth and Prime membership, as well as acquisitions of third-party Amazon sellers in Europe.

Amazon Overtakes Walmart

Amazon’s revenue was expected to surpass Walmart’s next year, but The New York Times reported it has already occurred.

The Times disclosed that consumers spent more than $610 billion at Amazon over the 12 months ending in June, based on data compiled by the financial research firm FactSet. In contrast, consumers spent $566 billion at Walmart during the 12 months ending in July.

While its ecommerce sales rose sharply during the pandemic, Walmart could not keep up with Amazon, and its online sales have sagged in the past few months as customers return to physical stores.

Prime Membership Growth

As of the beginning of 2021, Amazon reported 200 million global Prime members, up from 150 million at the end of the 2019 fourth quarter, a growth rate of 33%. Prime is available in 22 countries. While Amazon does not reveal the number of U.S. Prime members, Consumer Intelligence Research Partners estimates 147 million members in the U.S. as of March 2021, an increase of 25% from March 2020. Growth in Prime memberships had been stagnant until Covid-19 hit. Global Prime membership fees totaled $25.2 billion in 2020, a 31.2% increase over 2019.

According to CIRP, the 2020 holiday season marked the first time in four years that annual Prime memberships increased in the fourth quarter. Previously, many shoppers took advantage of the monthly membership option during the holiday season and then dropped it afterward. That did not occur last year due to Covid-19.

Acquirers of Sellers in Europe

I wrote in December about aggregators purchasing FBA third-party sellers. Since then, buyouts have swelled. Venture capital firms and lenders are pouring money into the acquirers as they expand geographically.

In May, U.S.-based acquirer Perch announced it had closed a $775 million Series A funding round, bringing total funding to more than $900 million. Perch intends to use some of the money to develop a platform to identify acquisition candidates. In July, Perch announced it had hired former Amazon employee Rahul Shewakramani as head of mergers and acquisitions in Europe.

Perch’s portfolio includes more than 70 brands. Roughly 35% sell into the E.U. and other international markets. Perch has committed an additional €300 million to acquire more European sellers.

U.S.-based competitor Thrasio decided to expand into Europe at the same time, focusing on Germany and the U.K. Georg Hesse, Thrasio’s new vice president for the two countries, is a former Amazon employee in Germany.

Thrasio had a portfolio of more than 100 brands in 2020 and was purchasing an average of two to three companies per week earlier this year. In February, it received another $750 million in venture funding. With the additional capital, Thrasio seeks to acquire businesses generating up to $200 million in revenue, an increase from a previous ceiling of $40 million.

Both companies will be competing with home-grown aggregators in Europe, including Berlin-based firms SellerX and Razor Group. Germany is a hub for European FBA aggregators.

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In August, SellerX secured a €100 million Series B round, bringing its total funding to almost €250 million in debt and equity in its first year of operation. SellerX owns 30 brands. Razor Group has raised €362 million, mostly debt, since August 2020. London-based Heroes has raised $265 million, with $200 million coming last month as debt. Heroes will use the money to purchase more brands.

Another German company, Berlin Brands Group, did not start as an aggregator but is now moving into the space. It has acquired 14 companies. This year alone, it has secured $940 million via debt and private equity to purchase direct-to-consumer brands, focusing on the U.S. and the UK. Our podcast recently featured the managing director of Berlin Brands.