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What’s the endgame for Amazon and Shopify SaaS roll-ups?
Alex Prokofjev & Attila Hardy
August 03, 2023
At $6T in worldwide sales (and growing), the ecommerce market is immense. The B2B opportunity is equally massive, based on the 4M+ active merchants that inhabit the Amazon and Shopify marketplaces. On average, a Shopify merchant uses 6 apps.
Shopify App Store, with nearly 10,000 apps, in particular has become a fertile hunting ground for consolidators. Barely a quarter passes without a new player entering the market.
What’s the endgame? Is there enough upside for everyone, after hundreds of millions in funding has been poured into the space?
For the Amazon SaaS ecosystem, the tipping point was the rise of Fulfilled By Amazon, or FBA aggregators. As Marketplace Pulse put it, “Aggregators brought attention to the ecosystem, which meant investors started looking for other types of companies to fund. The software companies operating in this space were previously in a blind spot.” That said, the fundraising and M&A activity has been concentrated in the advertising and product research verticals.
I wrote this article together with Attila Hardy, the founder of Array Capital, a specialist M&A advisor that supports software entrepreneurs, based in Zurich, Switzerland.
Attila knows his stuff!
Who’s buying these apps?
Our research has identified approx. 20 ecommerce SaaS players that meet either of the following criteria:
Explicit investment strategy of being an ecommerce consolidator
Made 2+ acquisitions in the last 3 years of Amazon and/or Shopify tools
Combined, these businesses have raised $1B+ in capital and made 120+ acquisitions. Not bad for an industry that barely existed 3 years ago!