The Race to the Bottom: How People Persevere in the Midst of Crisis

In the cutthroat world of ecommerce, the rise of Amazon aggregators was heralded as a game-changer. Companies like Perch, Thrasio, and others each raised hundreds of millions, totaling billions to gobble up smaller brands and scale them into retail powerhouses. But as we’ve seen, the excitement has been tempered by the reality that not all aggregators could sustain the momentum. Many have started to buckle under pressure. So, what went wrong? Were the challenges foreseeable, or was it simply bad timing? Grab a seat as we dive into the heart of this crisis with insights from Nathan Sieminski, formerly of Perch, to uncover what really went down.

📉 Aggregators Aren’t Failing for Lack of Trying

Amazon aggregators, at their core, weren’t about taking the easy road. The failure of some aggregators wasn’t due to laziness or lack of innovation. In fact, they were laser-focused on growing brands using the endless flow of data Amazon offered. With this data, they could quickly expand product lines, rework underperforming products, and target specific customer segments with the precision of a surgeon. That’s one thing they got right—leveraging data to scale up quickly.

Yet, the competitive nature of ecommerce, coupled with the sheer magnitude of managing multiple brands, made it impossible for some aggregators to keep up. There were expectations, and then there was reality. Managing multiple brands across Amazon’s ecosystem turned out to be much more complex than initially thought.

🔍 The Amazon Ecosystem Is a Beast

One of the biggest miscalculations aggregators made was underestimating Amazon’s complexity. Working within Amazon’s vast ecosystem, with its dynamic rules, fees, and processes, can feel like navigating a labyrinth. Sure, they had access to data, but understanding how to use that data within Amazon’s ecosystem is an entirely different challenge.

Nathan Sieminski shares that working with Amazon is a game of adaptability. Brands might see incredible success one quarter, only to face unexpected logistical hurdles the next. From sudden rule changes to algorithm shifts, aggregators struggled to keep up with the ever-changing landscape. It wasn’t just about launching products; it was about understanding the intricacies of fulfillment, advertising, and navigating relationships with Amazon as a platform.

🕰 Timing is Everything

The aggregators weren’t just battling Amazon’s complexities. Timing played a significant role in their downfall. When interest rates started to rise, and ecommerce growth began to slow, many aggregators found themselves caught in a perfect storm. Investors who had once thrown money at these ventures began to tighten their belts, making it harder for aggregators to raise the necessary capital to weather the storm.

The initial excitement surrounding aggregators masked the economic shifts that were happening in real-time. When you combine higher interest rates with a slowdown in online shopping, it created a cocktail that was difficult to swallow. The market conditions changed, and many aggregators simply couldn’t adjust quickly enough.

🛒 Walmart Plus vs. Amazon Prime: The Next Big Battle?

While Amazon was dealing with its own internal struggles, another giant was lurking in the shadows, making waves. Enter Walmart Plus. Walmart’s subscription service is not only growing but attracting a younger, higher-earning demographic at double the rate of Amazon Prime. These Walmart Plus shoppers are spending more, shopping more frequently, and giving Amazon Prime a run for its money.

This surge of growth in Walmart Plus is likely what’s driving Amazon to be more seller-friendly. Amazon is feeling the heat from Walmart, which is why we’re seeing more efforts to improve relationships with sellers. Competition breeds innovation, and in this case, it’s a win for both sellers and consumers.

🤝 Amazon’s Shift Toward Seller-Friendly Policies

It’s no secret that Amazon has had a contentious relationship with its sellers over the years. From unpredictable fees to sudden suspensions, sellers often felt like they were playing defense. However, in the face of growing competition, Amazon is making moves to become more seller-friendly.

We’re seeing initiatives designed to help sellers thrive, from enhanced advertising tools to more transparent fee structures. Why the sudden change? It’s simple: Amazon needs its sellers more than ever to maintain dominance in the ecommerce space. With Walmart aggressively expanding its ecommerce offerings and Amazon’s own ecosystem facing scrutiny, keeping sellers happy has become a top priority.

🎯 Conclusion: A Lesson in Resilience

As we wrap up this discussion, one thing becomes clear: business isn’t for the faint of heart. Whether you’re an Amazon aggregator, a small business owner, or just trying to find your place in a shifting economy, perseverance is the key to survival. The failure of some aggregators doesn’t necessarily mean the model is broken. Instead, it shows that, like in any industry, those who adapt will thrive, while those who don’t may fade away.

💡 Ready for more insights? Follow our page and catch the full Episode 18 conversation here to dive even deeper into the world of ecommerce and the future of retail!