This Week in Startups E1094: Thrasio Co-CEO Josh Silberstein acquires & operates 60+ Amazon brands, shares insights on mastering the marketplace, competing with AmazonBasics & more
Aug 11, 2020
Josh Silberstein, Co-CEO of Thrasio, shares his expertise in acquiring and managing over 60 Amazon brands. He delves into navigating the challenges of brand acquisitions, including valuation and operational difficulties. The conversation highlights Thrasio's competitive strategies against established players like AmazonBasics and the importance of product quality. Silberstein also discusses the vital role of third-party sellers on Amazon and the implications of e-commerce giants like Amazon and Walmart on market dynamics.
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Thrasio's Acquisition Strategy
- Thrasio acquires Amazon businesses struggling to exit due to lacking resources for scaling.
- Bigger businesses require more capabilities, making it harder to execute and secure good valuations.
Amazon Seller Margins
- Amazon product sellers typically have 30-45% gross margins and spend 5-15% on marketing, resulting in 20-30% net margins.
- Businesses with less than zero margins exist in highly competitive markets, while some outliers achieve high 40s contribution margins.
Valuing Amazon Businesses
- A business with $1 million EBITDA might only yield $200,000 in cash flow for the owner due to taxes and reinvestment.
- This dynamic leads to lower valuations, with 2-3x multiples being common in the Amazon seller market.