The media reported that the private company Apollo Global Management is currently reviewing its investment in the brand aggregator Amazon Perch.
In 2001, this firm undertook to pay up to $500 million of debt to Victory Park Capital, which invests in several aggregators, including Perch.
According to the information that was published by the media at the end of last week, Victory Park is currently seeking a buyer for Perch. The journalists received this data from insiders who are aware of these commercial intentions. Media sources also noted that Apollo is actively involved in organizing the sale process since Victory Park is still a business that has not demonstrated any success.
At the same time, at present, a slowdown in growth rates or the absence of positive dynamic at all are characteristic features for the entire segment of aggregators. The emerging trend is the result of several factors, including a decrease in consumer demand in the virtual commercial space, rising costs, and a consistent increase in interest rates by financial regulators, which so far has no signs of prospects for a reverse movement.
Apollo has not yet commented on the media information about the intention to sell Victory Park.
The current situation in the industry is significantly different from the state of affairs that was observed in 2021, when Thrasio, Perch, and Elevate Brands were able to raise investment funds worth more than $2.3 billion to acquire and expand third-party brands.
Adam Feinberg, CEO of WebDealsDirect, said that during the boom period, venture capitalists provided hundreds of millions of dollars to untested companies in order to acquire Amazon’s small business. At the same time, he noted that no one trusted the e-commerce giant’s business as much as possible. According to him, investors perceived their commercial actions to provide financing as a risky undertaking.
In 2023, the situation turned out to be completely different. The current state of affairs has become a kind of period of responsibility for the decisions taken two years ago. Currently, many companies are seeking to ease their debt burden and are exploring merger opportunities. The current situation indicates that the boom in a particular sphere ends with a period that, from the point of view of symbolic comparison, resembles the time when it needs to collect stones.
Last week it became known that the e-commerce company Benitago, which is based in New York and acquires small third-party sellers on the Amazon virtual platform and manages them as a group, filed for bankruptcy. The media reported that this firm was in a difficult situation due to the fact that there was a change in consumer preferences. Also in this case, a negative factor was the reduction of the e-commerce market after the peak of the virtual trade space during the coronavirus pandemic.
Financing for buyers in 2022 decreased by 88%. According to the results of the first five months of this year, only five financing transactions were completed. CB Insights, a business analytics company, claims that the e-commerce market is in a state of unraveling and notes that aggregators faced with the problem of huge debts have put investors at risk.
At the same time, Shopify expanded its partnership with Amazon last week. As part of scaling up cooperation, sellers paying for Shopify e-commerce tools have been given the opportunity to use the retailer’s logistics network. The development of this partnership demonstrates how logistics and fulfillment can become what connects the platforms.
As we have reported earlier, Apollo Global Management Assembling Bid to Buy Silicon Valley Bank.