The e-commerce sector has seen exponential growth in recent years, meaning many companies want to exploit this growth. Companies wish to acquire brands to expand their reach, differentiate their offerings, and increase their market share. By merging with or buying a brand, companies can benefit from the brand’s existing customer base, product offering, and success strategies.
As such, there have been several acquisitions within the e-commerce space over the past few years. For example, Amazon has acquired Whole Foods Market and Zappos; eBay bought Stubhub in 2007; and Walmart recently purchased Jet.com for $3.3 billion. This is evidence that companies want to capitalize on an increasingly competitive e-commerce landscape by buying or merging with other brands with established customer bases.
In addition to these larger acquisitions, there have been several smaller deals between retailers and digital service providers, such as price comparison site Bizrate Insights being acquired by Rakuten Marketing in 2016 and Twitter’s acquisition of mobile ad network MoPub two years later. These deals show how strategic mergers can help companies better serve their customers while expanding into new markets or verticals.
The e-commerce sector is becoming increasingly competitive, with major players like Amazon taking a strong foothold in the market through strategic acquisitions, which demonstrate the value it brings in capturing attention within an ever-crowded marketplace. As the e-commerce industry grows accelerated, so will additions become more frequent, providing businesses with much-needed resources to tackle disrupting technologies head-on.
Miami-based Unybrands acquires small e-commerce brands looking to scale their operations on and off Amazon
In recent years, there has been an increase in e-commerce brands getting acquired. This trend is due to the many benefits of acquisitions, such as access to capital, resources, and technology for small brands looking to scale their operations on and off Amazon.
This article will discuss the reasons why these e-commerce companies are looking to be acquired.
Access to Resources
E-commerce brands are increasingly being acquired by larger companies for several reasons. One of the main attractions is that the larger company can provide access to its resources, such as financial capital, to help meteoric growth. This access to additional money significantly reduces the risks of scaling up the business financially and operationally.
Other reasons include receiving additional access to technology and personnel, as well as benefit from improved knowledge of the industry and existing customer base. This expertise helps speed up promotions, marketing campaigns, and product launches, resulting in increased revenue generation for a brand. Moreover, an established parent organization can provide effective distribution channels for products or services targeted through an acquisition.
Assistance from a parent company can be advantageous when seeking out efficient supply chain partners or improved customer delivery times. Acquisitions also grant further credibility within an industry to attract customers who may not have otherwise considered utilizing those services or products offered by a smaller platform company separately from its new owner.
Increased Customer Base
The primary reason for an e-commerce brand to seek out or pursue an acquisition is to achieve expansion or growth of its current customer base. By joining forces with another company, they can potentially increase the number of customers they reach and the breadth of their brand offerings. This can help them to capture a larger market share and gain a competitive edge in their respective industries.
Acquisitions also provide opportunities for businesses to access new technology, resources, and expertise that can enable them to serve customers better and improve profitability. Furthermore, an acquisition may bring new revenue sources from existing contracts with vendors, often leading to enhanced operational efficiencies due to economies of scale.
Lastly, acquiring may be another way for a business owner or investor to realize more financial value in the long term.
Leverage Existing Infrastructure
When companies that are smaller in size look to acquire larger e-commerce brands, one primary reason is to gain access to their existing infrastructure. Smaller companies often lack the resources and infrastructure needed for successful growth. Acquiring an established e-commerce brand gives them a ready-made user base, a network of valuable partners, and other important elements of being a larger business. It also gives them access to certain tools and technologies that can help them launch more quickly or realize more operational efficiencies.
In addition, acquiring a well-known brand can give new owners an edge over competitors in marketing and customer acquisition. The reputation of famous brands carries added weight with customers and potential customers, offering their products and services extra visibility in the marketplace. Established brands also have access to more prestigious customer pools that can be leveraged for increased sales. Finally, acquiring an existing brand allows you to tap into the special skillsets or experience of employees who have built up expertise within the target company over time.
Gain Expertise and Knowledge
At the crux of making an acquisition is the need to gain access to expertise, knowledge, and technology that is not available within the company’s walls. This can mean anything from access to a particular market segment that a company otherwise would not be able to enter, or gaining access to a new set of customer insights and technology.
An example can be found in The Home Depot’s 2014 acquisition of Interline Brands. Interline is an e-commerce provider that specializes in parts and tools for professionals, giving The Home Depot immediate access to its vast customer base as well as its deep expertise in this specific industry. The acquisition allowed The Home Depot to enter the MRO (Maintenance Repair and Operations) segment much faster than it could have since Interline had already built relationships with contractors, hospitality companies, and other businesses associated with this segment.
In addition, this type of strategic move often serves as a competitive advantage for companies looking for increased market share or market position—something every brand wants! For example, in Dollar Shave Club’s 2016 acquisition of start-up supply company Boogie Wipes® Baby Balm & Moist Wipes*, they gained entry into retail stores like Target and Walgreens, broadening their product portfolio with complementary natural products and eco-friendly alternatives.
Ultimately, e-commerce brands seek acquisitions to expand into new markets so they can attain expertise and knowledge that they do not possess within their organization to take increased advantage of competitors or create more profitable solutions for consumers.
Unybrands Acquisition Strategy
Miami-based Unybrands has been expanding its portfolio of e-commerce brands by strategically acquiring small brands looking to scale their operations on and off Amazon. Unybrands’ acquisition strategy provides an interesting perspective on maximizing the potential of small e-commerce brands to build a larger, more successful, and expansive business.
This article will explore the reasons behind Unybrands’s strategy, the challenges that come with it, and the potential benefits of this approach.
Identifying Potential Targets
Identifying potential targets is one of the most important steps in Unybrands’ acquisition strategy. They must target companies with complementary cultures, technologies, and products. Furthermore, the acquired company should help advance Unybrands’ growth initiatives, provide access to new markets, accelerate global distribution and expand its product mix.
When seeking out potential targets, Unybrands must consider not only how they can benefit from the acquisition but also how their services can add value to the target company. Unybrands must assess the current technology platforms each company has in place as well as their go-to-market and competitive strategies to better understand how Unybrands can capitalize on them for a successful integration of companies. Additionally, assessing which areas need investment or improvement is key to ensuring that each acquired entity provides long-term value both financially and operationally.
Unybrands must also be keenly aware of any unique opportunities an acquisition could bring such as gaining access to new audiences or new regions without having to build from scratch. This includes opportunities from acquiring complementary technologies and products that do not compete directly with its own offerings but instead enable it to create compelling offers for potential customers or enable cross selling or upselling opportunities. Examining the target’s brand equity is also essential since successful brand partnerships are mutually beneficial; if performed successfully, Unybrand’s reputation will be enhanced while still preserving the equity of acquired companies’ brands and products.
Evaluating the Target
Before any acquisition can be completed, there is a thorough evaluation process that must take place. While the primary focus is on the target’s financials and operational capabilities, much more detailed information is also examined in order to identify any perceived future risks or opportunities.
In the case of Unybrands, part of this analysis will involve evaluating their product portfolio, customer base, channel lineup and brand alignment across global markets. It will also include assessing their technology infrastructure and platform architecture in order to gain insight into how digital strategies can be leveraged as a growth engine post-acquisition. Additionally, Unybrands’ current team structure and capabilities need to be carefully looked at as it relates to specific skillsets that would be beneficial in refining the brand positioning of the combined entity going forward.
Overall, potential acquirers want to ensure that there are strategic synergies present for a deal and that both companies are well-positioned for growth post-acquisition. This requires a close evaluation of all aspects related to Unybrands’ operations and market presence so that any given transaction maximizes returns for both companies involved.
Negotiating the Deal
When it comes to negotiating a deal, there are several crucial elements that should be considered. Each party must understand the terms, objectives and expectations so that a successful agreement is reached.
Negotiations are one of the most challenging aspects of finalizing an acquisition. All stakeholders need to come to an agreement as to the value of the target company, as well as any conditions or limitations associated with the purchase. The price for the target company must also be agreed upon, including how it will be paid out and what type of payment will be used (cash, stock or debt). Finally, any potential contingencies should be defined in order to protect all parties involved in the transaction.
Each party’s legal advisors should also negotiate potential liabilities such as warranties and indemnities. Legal advisors may also look into intellectual property related matters such as trademark ownership and patent law infringements. Other matters such as employee options and contracts, different types of taxes (income tax, capital gains tax) and transfer fees should also be discussed prior to an agreement being reached.
Benefits of Acquisitions for E-commerce Brands
E-commerce brands are looking to scale their operations on and off Amazon are increasingly considering acquisitions as a method to do so. A recent example of this is the Miami-based Unybrands, which has acquired several small e-commerce brands in order to create a network that can leverage a shared base of customers, technology, and data.
In this article, we’ll discuss the key benefits that e-commerce brands can gain from acquiring other companies.
Access to Capital
Access to capital is a major benefit for e-commerce brands that look to be acquired. Many e-commerce companies struggle with access to capital — which is needed in order to put resources and time into new initiatives, stay competitive, and upgrade/scale their offering. Being acquired by a bigger brand offers access to more abundantly available capital, and can open up numerous possibilities in terms of resource allocation and expansion.
One important thing to keep in mind regarding acquisitions is the role of venture capital — if the company has significant VC investments, the majority vote typically controls the M&A process in selecting acquirers who will overlook their vested interests versus those of shareholding founders, employees or minority shareholders. This allows for some flexibility when making strategic decisions about which acquirer would provide the biggest payoff for shareholders.
Opportunity to Scale
The acquisition of an e-commerce company presents the opportunity to scale up operations significantly. By taking a smaller brand and integrating it into a larger business, the potential to increase market share, develop a customer base and expand sales channels can be achieved.
By identifying opportunities to acquire smaller customers, online retailers are able to reduce development time and costs, create efficiencies in their internal operations, reduce competition with competitors and increase access to new markets. Additionally, by acquiring well-established brands with strong customer loyalty that already have existing networks of resellers in place, retailers can take advantage of those resellers for their own selling activities.
Ultimately, the acquisition of an e-commerce company offers retailers the chance to rapidly expand their operations at a reduced cost with minimal risk compared to starting from scratch.
Improved Brand Visibility
Acquiring a well-known e-commerce brand can drastically improve the visibility of lesser-known companies in the market. This is especially relevant in today’s competitive environment with so many brands vying for consumer attention. When a smaller business acquires one which already has recognition in the market, it gains access to that visibility and can grow its customer base much faster. Additionally, establishing a presence or expanding into a new geographic area is made easier when utilizing an already established eCommerce brand’s outreach capabilities and customer loyalty.
Additionally, the merged entity can benefit from leveraging shared knowledge, resources and specialties found in each business to create better customer experiences. Lessons learned from one brand’s mistakes on product development, marketing techniques or expansion opportunities could be applied to their partner’s offerings — leading to greater consistency across the board. In addition, when acquiring an existing company within their sector, a competitive edge over competitors is available from day one — vastly reducing any research and development spend or learning curve required for success within that industry.
In conclusion, e-commerce brands are increasingly looking to be acquired by larger companies as a means of achieving rapid growth and access to more resources. By joining forces with a larger organization, the e-commerce brand can obtain the resources they need to scale up quickly while also protecting their understanding of customer needs.
The larger companies have the funds, networks, and expertise that can help an e-commerce start-up achieve their ambitions in a much shorter timeframe than without this kind of collaboration.
Ultimately, both parties stand to benefit from such an agreement; the larger company can gain new insights into the market through collaborating with the innovative start-up while the e-commerce company can experience long term growth far quicker than they would have managed on their own. Acquisitions provide an excellent way for start-ups to expand their reach rapidly and maximize returns for investors in a relatively short amount of time.
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