Ecommerce Aggregator Thrasio to Lay Off Up To 20% of Staff and Appoint New CEO
Leaked internal memos revealed that ecommerce aggregator pioneer Thrasio is set to lay off up to 20% of its staff and will appoint a new CEO amidst the sluggish growth in the ecommerce aggregator space which the company helped develop.
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Peaked Too Soon?
As of writing, Thrasio is valued at somewhere between $5-10 billion, and it boasts more than 200 ecommerce acquisitions under its belt—it’s the biggest ecommerce aggregator thus far and has since itself become a top 5 seller on Amazon.
It would seem that Thrasio’s torrid pace in acquisitions since its founding in 2018 came back to bite the company, with the memo saying that its “hypergrowth” made it hard to build the infrastructure to support such growth.
TechCrunch reports that the company “made the decision to reduce the size of the Thrasio team.” Thrasio has not confirmed exactly how many employees are going to be affected, although Business Insider puts the estimate at up to 20% of the company’s current staff.
The layoffs are a consequence of tough challenges that aggregators like Thrasio have faced in recent memory, including major supply chain disruptions, general inflation in retail goods, and, not in the least, the slow growth in the industry as the online retail market normalizes from the blistering pace during the pandemic.
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In the same breath, Thrasio announced that its current CEO and only remaining founder Carlos Cashman will be replaced by Greg Greeley, a long-time Amazon executive whose previous role had him running its Global Prime Program and who was most recently president at Airbnb. Greeley will step into his new role at Thrasio this August, while Cashman will remain on the board as a director.
The Thrasio Model
Ecommerce aggregators search for successful and potentially successful ecommerce brands (mostly on Amazon) and seek to acquire them whether totally or in part, as sometimes the original owner can be brought on as executive to make sure the small company’s vision is realized. This M&A model banks on the economies of scale brought about when multiple ecommerce brands are brought into the fold. Aggregators aim to scale their acquired brands by introducing things like their supply chain expertise, marketing and analytics, as well as technology and software capabilities.
As of writing, the aggregator space was estimated to be an over-$10-billion industry, with Thrasio being among the largest Amazon aggregators in the space.
Before this slowdown in growth, Thrasio had planned to go public to raise more capital for expansion. However, its SPAC deal was delayed and ultimately scrapped following a series of exits by top-level executives in 2021.
Seller Beware
This news comes as a cautionary tale not only to other ecommerce aggregators who are gobbling up small ecommerce brands at a very high rate, but also to ecommerce sellers eying a profitable exit by working with these rollups.
It’s more important than ever to have clear priorities when selling your business to an aggregator, particularly in terms of your selling multiple and how the brand is going to be operated and scaled. Equally important is knowing when to work with an ecommerce business broker to make sure you won’t be leaving any money on the table and actually get your company’s worth.
Prior to the interview with the Thrasio team member on Ecom Crew. The observational experiences we had from clients that were acquired by Thrasio. Were that they essentially ran the businesses much more poorly then the previous owners. And is what we saw from the 2 client acquisitions that we were personally a witness too.
Absolutely no one that we ever dealt wit in the organization was a decision maker. And also the company had a culture of being non-responsive to emails, and it was unclear what role’s anyone we dealt with did.
Quite frankly I’m not surprised by this update. I was well aware of the positive press releases and the cash amounts associated with the meteoric rise. But ultimately from all interactions with them. We saw vey little in the way, of good organizational management, communication and basic operational execution. What they were certainly good at, was raising capital and releasing press releases.
Buying company’s and raising capital is one thing. But running such a large variety of companies is not a skill that Thrasio has truly learned to excel in yet. Now I’m sure there are some exceptions where they have grown the businesses they’ve acquired. But I’d be willing to bet if someone had a peak into their financials, most of their acquisitions are performing less effectively post acquisition.