Inside the Trillion-Dollar E-Commerce Trend Boston Tech Is Building

Acquiring third-party sellers on Amazon is an industry growing faster than anyone’s wildest dreams. Two of its key players — Thrasio and Perch — are HQ’d here in Boston.

Written by Ellen Glover
Published on Sep. 21, 2021
Inside the Trillion-Dollar E-Commerce Trend Boston Tech Is Building
amazon aggregators boston thrasio perch
Image: Shutterstock

There’s a trillion-dollar, modern-day gold rush taking shape. It’s not happening in the foothills and creeks of the American West, but rather the vast landscape of And the much sought-after “gold” isn’t gold at all, but it is valuable: a successful Amazon third-party seller.

Acquiring Fulfilled by Amazon (FBA) businesses has become an increasingly popular trend, with dozens of “roll-up” companies cropping up throughout the world. In a nutshell, they purchase third-party sellers for thousands and even millions of dollars, and then take over the ins and outs of the business. These private aggregators have scooped up hundreds of third-party sellers and attracted billions of dollars in venture funding over the last few years, and two of the top dogs are located right here in Boston: Perch and Thrasio.

Although they haven’t been around very long (Thrasio was founded in 2018, Perch in 2019), these two startups are considered to be some of the fastest-growing unicorns in the country. Thrasio has raised more than $1 billion total in funding in 2021 alone, and is said to be the largest acquirer of Amazon FBA brands ever, with more than 100 third-party sellers under its belt so far. Meanwhile, Perch has acquired more than 70 brands, raised nearly $1 billion in funding, and has plans to open a massive new office in Back Bay.

Of course, this level of success isn’t happening by accident. This is a trend that’s been years in the making, fueled by the pandemic and commerce’s longtime migration online (thanks largely to Amazon itself). These days, consumers’ attention has shifted from big, expensive Super Bowl ads to user-generated content like reviews, making the barrier to entry for a new business to be much lower. Any entrepreneur with a little bit of money and an idea can launch their own small business not only on Amazon, but also Etsy, eBay, and the bevy of Amazon’s international equivalents.

“This is a sea change. People are changing how they shop, and consumer product companies are changing how they innovate,” Perch’s founder and CEO Chris Bell told Built In. “[This is] just a really fun, interesting space that I do think could be worth trillions of dollars over time. It feels like we’re in the first pitch of the first inning, and we’re already off to a roaring start.”


A ‘Win-Win’ for Entrepreneurs

Customer data is an essential piece guiding how industry leaders like Perch and Thrasio figure out which companies they should acquire. Bell explained that Perch only buys companies that are branded and selling in the top three or five slots within their given niche. Exactly what the product is doesn’t really matter — it could be reusable straws or air fryers — as long as the company has a low return rate, has plenty of positive reviews, and is profitable, they’re a good candidate for acquisition, Bell said.

“We only buy great products. We invest in them, we make sure they’re high quality,” he explained. “We read reviews and improve the product based on those reviews. We work to take costs down if there’s ways to do that without impacting quality. We often price competitively. And we have good customer service. We stand behind our products.”

Thrasio follows a similar model, choosing products, in part, based on their popularity and longevity, explained the company’s chief operating officer, Stephanie Fox.

“Thrasio has always aligned ourselves with Amazon’s core values, and one of those core values is customer obsession,” Fox said, adding that the company looks for highly rated, high-quality products that are evergreen. “We’re not as interested in fast fashion or the next fidget spinner. While [those products] can make you really good money short term, we’re looking for things that are going to stick around because we’re a company that’s going to be around for a long time.”

We make entrepreneurs’ dreams come true, right? You start a business, you want to sell your business and have this payday, and we’ve done that.”

Once these businesses are acquired, the aggregators essentially help them scale, taking over tasks like marketing and supply chain management to make their already popular products even more popular (and profitable).

In fact, Fox said Thrasio has managed to make dozens of these founders millionaires over the last couple of years. For instance, she said the company is working with a man right now who used to drive for Uber and sell his own line of ping-pong paddles on the side. Thrasio bought his product and, because the company has offered an earnout component in their contracts, he is continuing to reap the rewards of the product’s success. Another entrepreneur Thrasio works with has sold the company three different businesses over the course of three years.

“It’s all about win-win at Thrasio,” Fox said. “We make entrepreneurs’ dreams come true, right? You start a business, you want to sell your business and have this payday, and we’ve done that.”

Big picture, Jason Boyce, a longtime third-party seller on Amazon and recent co-author of The Amazon Jungle, said this model isn’t just lucrative for third-party sellers and the companies that acquire them. It also stands to impact the entire direct-to-consumer market going forward.

“I think the aggregators are a part of this D2C group that’s going to sort of take over the world of brands in the future,” Boyce told Built In. “The future of billion-dollar brands will have started on Amazon.”


thrasio team boston
The Thrasio team. | Photo: Thrasio

What Is an Amazon Third-Party Seller?

Before we go any further, let’s take a closer look at what it means to be an Amazon third-party seller, and how they fit into the business at large.

It’s no secret that Amazon is big. Its founder and former CEO (and recent space cowboy) Jeff Bezos is literally the richest man on the planet. A recent CNBC analysis managed to work out that, according to its 2021 Q1 earnings report, Amazon makes about $837,330 in revenue a minute — that’s more than Alphabet, Microsoft and Tesla combined.

But Boyce said earnings reports are just the tip of the iceberg. A more accurate picture can be found in the company’s gross merchandise value (GMV), which is the dollar value of goods sold on its platform. Incidentally, Amazon is not legally required to disclose this number to the Securities and Exchange Commission, so it doesn’t. But analysts have crunched the numbers and estimate Amazon’s GMV was about $490 billion last year — much higher than the $21.3 billion in net revenue the company officially announced.

Exactly how third-party sellers fit into that number is a little murky, but it’s safe to say that they make up the majority of it. After looking at its SEC reports and spending more than a decade as a top 200 third-party seller himself, Boyce estimates that Amazon takes about 15 percent of every sale, and that’s all they’re reporting to the SEC so they “look much smaller than they actually are.” But if you take that seller fee and mark it up to an estimated GMV, he explained, third-party sellers made Amazon about $300 billion last year, which accounts for between 40 to 60 percent of the entire online market share in the United States, depending on who you talk to. For context, Walmart, the largest retailer in the country, is in second place behind Amazon at 7 percent, Boyce said.

“In terms of goods sold, Amazon is it,” he said. “I don’t believe Amazon would be what it is today, nor will they continue to be what they are in the future, without the hard work, grit, capital and creativity of the third-party seller.”

Although they are arguably the most important aspect of Amazon’s business model, third-party sellers don’t get a lot of support from the company, Boyce explained. To succeed, you not only have to have a good product, but also plenty of good reviews for that product — “if you get 20, 30, 50 one or two-star reviews, your product is toast and will never survive,” he said.

You also have to really know your stuff when it comes to advertising so you can drive traffic from the larger Amazon site to your specific listing, Boyce explained. You need a strong marketing and merchandising background too, in order to create listings that convert to sales better than the competition (including Amazon’s own products). And that’s not even mentioning things like customer service and fulfillment needs.

“Amazon is a different platform, it’s not just another sales channel where you throw your product over the fence and then Amazon will take it from there and grow it. It’s a do-it-yourself platform, so there’s a lot of unwritten experience and knowledge that you need to have,” Boyce said. “Amazon won’t do it for you.”

That’s why he started a consulting firm called Avenue7Media, which helps third-party sellers list their products, drive traffic to those products and generally survive the dog-eat-dog world of Amazon’s marketplace.

“When I first started [selling on Amazon] back in 2003, it was really easy. You could put a mirror under somebody’s nose and if they fogged it up they could be an Amazon seller,” Boyce said. “You could hire a kid out of high school, who’s tech savvy, and they could run your Amazon business. Now, at my agency, we have eight different departments with experts in each of those departments that are necessary to maintain success on the Amazon platform.”

In short, Boyce said “it’s a necessary evil to be a seller on Amazon in today’s world.” That’s why, for the most part, he likes what Amazon aggregators like Thrasio and Perch are doing. In fact, he sits on the board of directors for Unybrands, another Amazon aggregator based in Miami that just raised $300 million in funding.

There’s another way to look at this relationship between Amazon and its third-party sellers, though. In many ways, Amazon has created this industry, and the entire e-commerce system it lives in. And if third-party sellers made Amazon $300 billion last year, like research suggests, then a lot of that money has also gone into the pockets of mom-and-pop shops and bootstrapping entrepreneurs too.

“Amazon is a big company that sometimes gets a bad rap just because they’re a big company. But what Amazon has done for entrepreneurship in America is unbelievable, and they should get more credit for it,” Fox, the COO of Thrasio, said. “People still think, ‘Oh, I’m buying from the big, bad Amazon.’ But, no, you’re actually supporting, you know, Stephanie’s spatula company or something. You’re buying from an entrepreneur, a small business.”


Their Road to Success

Fox herself is an entrepreneur. In 2013, she founded jewelry company Bravelets, and bootstrapped it for about six years until she met Carlos Cashman, one of Thrasio’s co-founders and co-CEOs. At the time, he ran a Facebook ad agency in Boston that Bravelets used, and was developing an idea for an e-commerce roll-up company, which would buy up standalone businesses like Bravelets and improve them.

“Those businesses are just a lot harder to operate, though,” Fox explained, adding that, with a 10-person team, Bravelets was making about $4 million a year while two-person companies on Amazon were making $10 million. “When we saw that opportunity, we said ‘OK, nevermind, e-commerce roll-up is not the direction. It’s an Amazon FBA roll-up.’ And then it was kind of off to the races.”

Around the same time, Bell thought of the idea for Perch when he was running supply chain and logistics for homegoods retailer Wayfair, another rising star in e-commerce and a big name here in Boston.

“Every e-commerce company eventually becomes a supply chain company,” Bell explained. “Think about why people buy from Amazon. It’s not because they have the sexiest website. It’s because of same day, next day, two-day shipping. It’s because they have the biggest assortment, which is enabled by their supply chain. And the lowest cost, which is also largely driven by their supply chain capabilities.”

He decided to apply that same focus on supply chain to his own company, and brought on Alex Finkelstein, a general partner at VC heavyweight Spark Capital, as an early investor.

“[Perch] was very quickly EBITDA positive,” Finkelstein told Built In, meaning that the company was profitable at an operating level. “It’s pretty rare to be able to invest in a company that you get to scale very quickly that’s also EBITDA positive. Usually in the venture world you don’t invest in something that’s profitable. It may not be profitable until 10 years later.”

This is especially true in the e-commerce world, mainly thanks to the very company at the center of this industry in the first place: Amazon. Other e-commerce companies like Shopify, Wayfair and Etsy have certainly carved out successful businesses for themselves, but in many ways Amazon is still king, and it’s hard for anyone else to really compete.

Bell said he “definitely” didn’t expect Perch to get as big as it has so quickly. In fact, he remembers a time when, not too long ago, it was nearly impossible for Perch to get funding. He estimates he had about 40 conversations with investors before Finkelstein gave him a term sheet. And believe it or not, the third-party sellers were even harder to sway at the time.

“Generally, most entrepreneurs — very rightfully so — are very cautious and leery of people who are promising to give them millions of dollars and things like that. So we just had to do a lot of education and trust building to get people to talk to us,” Bell said, recalling an instance when he actually had to get Spark Capital to write a letter to a seller explaining that Perch was, in fact, a real company and that this wasn’t some kind of trick.

Meanwhile, Fox said Thrasio has become synonymous with rapid growth.

“I pinch myself every day. I remember our first month of operation where we hit a million dollars, and I thought we had just made it, you know? And then we had our first million-dollar day. It’s just growing and growing and growing like crazy,” she said. “Out of the entire entrepreneurial community of America, how many businesses are started every year? And how many even make it to a million dollars annually? It’s a tiny, tiny percentage.”

Like Bell with Perch, Fox attributes a lot of Thrasio’s success so far to its team, which seems to be growing just as quickly as its business. Both companies are in the midst of massive hiring pushes at their headquarters here in Boston, and both plan to continue to become an even bigger part of the city’s fabric by investing in its schools and broader community.

“It feels like Perch is on a path to being one of the next foundational companies in Boston,” Finkelstein said. “I think it’s great for the city.”


perch boston nasdaq
Perch team members posing in front of the Nasdaq Times Square Tower. | Photo: Perch 

What About Amazon?

So, it appears that the existence of these aggregators is good for entrepreneurs, good for Boston, and certainly good for the investors who have dumped millions of dollars into them. The elephant in the room here is Amazon, though. Does Amazon like what the aggregators are doing?

As far as Fox is concerned, “100 percent, yes.” In fact, Thrasio has met with individuals from Amazon’s legal, compliance, supply chain and marketing teams, and she said the company has “great relationships with them.”

“We try to be helpful to Amazon,” Fox said. “We see a lot, we’re involved in seller communities, we hear the pain points that Amazon sellers might have. We own over 150 businesses, we’ve spoken with thousands of sellers over the last year, so we actually can be this really helpful conduit of information into Amazon.”

Like Fox, Bell said that, in the conversations Perch has had with Amazon’s team so far, they seem “generally happy” with the work Perch and other aggregators are doing.

And, as far as Finkelstein is concerned, Perch is “professionalizing” Amazon’s third-party marketplace, likening it to the “wild west.”

“With Perch, if we’re really nailing supply chain, logistics and manufacturing, things should always be in stock. That’s good for Amazon,” Finkelstein said. “Amazon wants that. They want high-quality products, in stock, that can get to your house in two days or less. Because of our sophistication in supply chain, logistics and manufacturing, we can enable that to happen better and better and better for all the companies [Perch acquires].”

But Jason Boyce of Avenue7Media doesn’t foresee this amicable relationship between Amazon and the aggregators lasting too much longer, especially as these companies continue to grow. The way he sees it, Amazon likes having a bunch of million-dollar sellers on its platform, because it gets a slice of that pie. But once these businesses start reaching billion-dollar valuations, they’re much more powerful, and they can start potentially taking business (and money) away from Amazon.

“​I think the aggregators that raise a lot of money who think they are going to develop a great relationship with Amazon are mistaken. I just don’t think Amazon is that kind of a company. They’re not a relationship company, they’re a tech platform,” Boyce said. “Just because you’re big doesn’t mean Amazon won’t cut you off ... [Amazon] pushed half-a-trillion dollars worth of goods on their channel last year. They’re growing at double-digit rates. A billion dollars isn’t all that much for a company with a $1.7 trillion valuation.”

If they so choose, aggregators like Perch and Thrasio could even take it a step further.

“Think about it, these aggregators are buying products that are competing directly with Amazon Basics products, and directly with the thousands of listings that Amazon itself is selling,” Boyce said. “So my question is, as the aggregators get bigger and stronger and more powerful, what’s to stop them from spinning up their own marketplace platforms? Or their own e-commerce platform?”

Also in BostonThese 10 Boston Tech Companies Raised $2.7B+ in 2020


Will They or Won’t They?

What indeed? Again, Perch claims to be one of the fastest U.S.-based profitable unicorns ever, and Thrasio managed to raise more than $1 billion in venture funding in a matter of months. These are some pretty powerful companies already, and they just seem to be getting stronger.

Bell said creating its own marketplace of products isn’t out of the question for Perch. In fact, he said the company has already begun doing this, and has written in its 12-month roadmap that it will continue building its direct-to-consumer presence.

“Is our goal to be, like, truly a competitor to Amazon? Probably not. I don’t think we’re trying to disintermediate Amazon because Amazon is a force unto itself,” Bell said. “But I do think we want to be a balanced, omni-channel retailer. And to the extent that consumers love our products and love what we have to offer, we absolutely want to own that customer relationship directly. It’s something that we’re doing in a small way today that I expect will continue to grow over time.”

Fox has a similar take, asserting that Amazon makes up a “vast majority” of its business and “is and always will be a huge part” of Thrasio’s story.

“But, there’s a lot of ways where you could see where our brands could graduate up into becoming true, standalone household-name brands. We have a couple of them already in our portfolio,” she continued. “I think, probably, the short answer is yes. But in some form. There’s a lot of ways that you can grow. We want to be a partner with Amazon, though. We’re not interested in being a competitor.”

It’s the new way of shopping and it’s the new way of retail.”


‘Just Scratched the Surface’

Whether they eventually become Amazon competitors or not, both Perch and Thrasio seem to just be getting started.

Spark Capital’s Finkelstein said Perch has already begun to replicate what it’s been doing on Amazon’s platform on other sites like Walmart, Target and Best Buy; and Bell said the company could easily expand onto other e-commerce sites like Etsy, Wayfair, Walmart and Shopify. And then there are Amazon’s international equivalents like Mercado Libre (South America), Flipkart (India), Ozone (Russia) and Jumia (Africa) to consider.

“The deeper I get in this space, the more convinced I am that this is huge. It’s the new way of shopping and it’s the new way of retail,” Bell said.

Meanwhile, Fox said Thrasio is growing internationally, focusing on every market and every marketplace both online and offline.

“There’s companies that we’ve acquired that have grown 6x in the first year of us owning them. And that’s only on Amazon U.S. We’re now taking those same products and those companies and we’re looking at D2C, and other marketplaces and international expansion,” Fox said. “There’s just so much growth potential. And I think that’s where this will become a trillion-dollar industry. We’ve really just scratched the surface.”

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