Tropical MBA: Entrepreneurship & Founder Lifestyle

#778 - Agencies vs. Products + What Happened in the Amazon Aggregator Space?

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Oct 24, 2024

Alexej Pikovsky, founder of Alphawellbrands.com, shares his journey from launching a CBD marketplace to pivoting into an SEO agency and acquiring an Amazon FBA brand. He discusses the challenges faced by Amazon aggregators post-COVID and the declining profitability of direct-to-consumer brands. Alexej unveils insights on acquisition strategies in niche markets, including scented candles, and emphasizes the importance of investor relations for long-term success. He also reflects on navigating fundraising complexities in the evolving e-commerce landscape.

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ANECDOTE

Alexej's Business Journey

Alexej Pikovsky started with a CBD marketplace, pivoted to an SEO agency, and acquired an FBA brand.
These combined businesses generate over $4 million in revenue annually.

INSIGHT

FBA vs. D2C

Amazon aggregators overpaid for FBA brands at peak COVID sales, leading to margin compression and financial struggles.
Many D2C brands are not as profitable as they appear, making FBA brands a better investment.

ANECDOTE

Scented Candle Acquisition

Alexej acquired a scented candle brand for a 2x profit multiple during the aggregator bust.
His team targeted brands with 4.3+ stars, 100+ reviews, and over 1.5 years of trading history.

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This week’s episode is for the business finance and idea nerds.

We’re joined this week in a business breakdown session with Alexej Pikovsky of Alphawellbrands.com. Alexej raised 4MIL to build a CBD marketplace. They were forced to pivot and have currently acquired an Amazon FBA brand and started up a success agency in the process, the combined revenue of both is on track to be over 4MIL this year.

We’ll dig into the Peter Paul problem– how to choose where to focus your energy when you have multiple businesses?

We’ll also cover his perspective on what happened in the Amazon aggregator space. How did so much capital implode so quickly? (Thrasio raised 3 Billion dollars and provided exits to many TMBA listeners). Is there room for smaller roll-ups that work in 2024?

Takeaways
●
● Transition from a CBD marketplace to an SEO agency and FBA brand.
● The aggregator model faced significant challenges post-COVID.
● Many D2C brands are struggling with profitability and valuation.
● Acquiring the scented candles brand was a strategic move in a declining market.
● The agency provides valuable insights but distracts from brand focus.
● Investor relations are crucial for long-term success and exit strategies.
● The e-commerce landscape is evolving, requiring new strategies for success.
● The agency's role in the overall business strategy is under review.
● Future growth may depend on focusing solely on the brand.

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Past guests on TMBA include Cal Newport, David Heinemeier Hannson, Seth Godin, Ricardo Semler, Noah Kagan, Rob Walling, Jay Clouse, Einar Vollset, Sam Dogan, Gino Wickam, James Clear, Jodie Cook, Mark Webster, Steph Smith, Taylor Pearson, Tommy Griffith, Justin Tan, Matt Gartland, Travis Jamison, Ayman Al-Abdullah, Tynan, Lucy Bella Simkins, Brian Balfour, Nick Huber, Mike Michalowicz, Greg Crabtree, Jordan Gal

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