Merging Giants in the E-Commerce Sector
Amazon aggregators Branded and Heyday are set to merge, marking a significant development in the e-commerce sector. This consolidation is a continuation of the trend that saw explosive growth during the Covid-19 pandemic. The merger, which has been confirmed by CNBC, will result in the formation of a new entity named Essor. The name, derived from the French word meaning “take flight,” reflects the vision of propelling brands to new heights through the combined platform.
Details of the Merger Announcement
On Monday, Heyday CEO Sebastian Rymarz informed staff about the merger in a note. He explained that the newly formed entity, Essor, aims to leverage the strengths of both companies to enhance brand performance and scale. According to Rymarz, the merger is expected to generate an impressive annual revenue of $400 million. The official rollout of the new brand name is anticipated in the coming days, signaling the beginning of a new chapter for the combined companies.
Financial Backing for Future Growth
To support the merger and facilitate further acquisitions, Apollo Global Management and BlackRock are reportedly negotiating new debt financing. Bloomberg reported these discussions, citing sources familiar with the matter. The influx of new capital is intended to bolster Essor’s financial position and enable it to pursue additional growth opportunities in the e-commerce space.
Strategic Importance of the Merger
Rymarz emphasized that the merger with Branded represents the culmination of an extensive search for a partner that could help advance Heyday’s mission. He expressed confidence that Branded is the ideal partner to accelerate progress and strengthen the combined entity’s balance sheet. The strategic partnership is seen as crucial for navigating the evolving landscape of Amazon seller aggregators and achieving long-term success.
Impact on Employees and Operations
The merger is expected to have significant implications for employees, with Heyday preparing for a substantial round of layoffs. Reports suggest that up to 70% of Heyday’s workforce could be affected, though this has not yet been officially confirmed. Additionally, Branded will integrate Heyday’s technology team and several of its brands, including ZitSticka, a skincare line, and Boka, which offers fluoride-free toothpaste and other dental care products.
Challenges and Changes in the Aggregator Market
The market for Amazon seller aggregators has become increasingly competitive and volatile. During the pandemic, many companies in this space capitalized on low interest rates and the surge in e-commerce to raise substantial funds. These aggregators aimed to consolidate independent sellers on Amazon’s platform, attracting investments from notable firms like L Catterton, BlackRock, and Jared Kushner’s Affinity Partners.
However, the landscape began to shift in 2022 as venture funding dwindled and e-commerce demand moderated with the return of consumers to physical stores. Aggregators faced difficulties in maintaining profitability with the brands they had acquired. The sector experienced a notable downturn, with prominent players like Thrasio, an early leader in the aggregator market, filing for bankruptcy in February and losing several key executives.
Consolidation Trends and Future Prospects
The trend of consolidation among Amazon aggregators has accelerated in recent months. Before finalizing the merger with Branded, Heyday had explored a potential deal with Dragonfly, which is backed by L Catterton. However, those negotiations did not come to fruition. The current merger with Branded represents a strategic move to adapt to the changing market conditions and position Essor for future growth.
Conclusion
The merger between Branded and Heyday, resulting in the formation of Essor, marks a significant milestone in the e-commerce aggregator space. As the industry continues to evolve, this consolidation reflects broader trends of strategic partnerships and financial restructuring. With new backing from Apollo Global Management and BlackRock, Essor is poised to leverage its enhanced resources and capabilities to navigate the competitive landscape and drive future success in the e-commerce sector.
