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Chinese sellers on Amazon in hot demand by VCs and e-commerce roll-ups – TechCrunch


Chinese merchants selling on Amazon are having a moment. The scruffy exporters are used to roaming about suburban factory areas and dealing with constant cash flow strain, but suddenly they find themselves having coffee with top Chinese venture capital firms and investment representatives from internet giants, who come with big checks to hunt down the next Shein or Anker. While VCs can provide the money for them to scale quickly, many lack the expertise to help on the strategic side.

This is where brand aggregators can put their retail know-how to work. Also called roll-ups, these companies go around acquiring promising e-commmerce brands for operational synergies. After taking off in the United States, Europe, and lately Southeast Asia, it has also quietly landed in China, where traditional white-label manufacturers are trying to move up the value chain and establish their own brand presence.

The latest roll-up to enter China is Berlin Brands Group (BBG), which aims to buy “dozens of” brands in the country over the next few years, its founder and CEO Peter Chaljawski told TechCrunch. This will significantly boost the German company’s existing portfolio of 14 brands.

The move came on the back of BBG’s $240 million funding raised from debt and its announcement to commit $300 million on its balance sheet to buying up companies. The firm opted for debt in part because it has been profitable since its inception. The recent funding won’t be its last round and it may use other financial instruments in the future, said the founder.

Chaljawski doesn’t see VC and corporate investors as direct competitors in the hunt for brands. “There are tens of thousands of sellers in China that generate significant revenue on Amazon. I think the VC money applies to some of them, and the roll-up model applies also to only some of them. But ‘some’ is a very, very big number.”

BBG is no stranger to China. The 15-year-old company has been relying on Chinese manufacturers to make its kitchenware, gardening tools, sports gear and other home appliances, with 90% of its products still made in the country today. For the new brand buy-out initiative, it’s hiring dozens of staff in Shenzhen, which Chalijawski dubbed the “Silicon Valley of Amazon,” referring to the southern city’s key role in global export, manufacturing, and increasingly, design.

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Amazon alternative

BBG hopes to offer a new way for Chinese consumer products to scale in Europe and the U.S. beyond being an anonymous brand on Amazon. Sellers may want to break free of the American behemoth to seize more control over consumer data, but building a direct-to-consumer (D2C) brand is no small feat.

Many merchants that are good at operating Amazon third-party businesses lack the infrastructure to go beyond Amazon, like an in-house logistics system, said the founder. In Europe, BBG manages 120,000 square meters of fulfillment centers, allowing it to shed dependence on Amazon.

Chinese brands may also want to find Amazon alternatives in Europe, where the e-commerce landscape is a lot more fragmented than that in the U.S, noted Chaljawski.

“If you look at the U.S., Amazon is dominant. If you look at Europe, Amazon only has 10% of the market share of online retail. So 90% is beyond Amazon. In the Netherlands, you have platforms like Bol. In Poland, you have Allegro, and in France, you have other dominant players.”

To bridge the gap for international brands targeting Europe, BBG operates close to 20 D2C web stores in major European countries, aside from selling on Amazon. Its sales growth in the U.S. has also been in full steam. Currently, over 60% of the firm’s revenues come from non-Amazon channels.

BBG is already in advanced negotiations with “some brands” in China but cannot disclose their names at this stage.



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