The third generation Amazon FBA model

How it works

Overview of Amazon sourcing flows

• Go North operates brands that sell on Amazon with orders being fulfilled by Amazon. Hence FBA sellers outsource their logistics, delivery and customer service management to Amazon as well as utilise its tech tools such as Seller Central.
• Compared to traditional online merchants, FBA natives generally have a better understanding of the Amazon platform and underlying dynamics as well as knowledge how to lever Amazon Seller Central insights and analytics.
• Many of the operators of FBA brands are typically entrepreneurs running their business independently and often struggle to scale their operations due to limited resources and capabilities.
• Larger FBA sellers benefit from economies of scale and better capabilities compared to smaller independent sellers, as well as being able to develop an organisation revolving around the Amazon ecosystem including tech and human resources.
• Amazon made a policy change in 2018 that allowed third party sellers’ Amazon accounts to be owned by legal entities, which has led to a wave of consolidation − FBA aggregators raised USD ~16bn between 2020-2023YTD to consolidate the market, however many of these are now fully invested and have internal focus.
• There are over 10,000 3rd party sellers in the US alone that are appropriate targets for acquisition. Moreover, because of low competition, they trade for far lower multiples than traditional e-commerce or brick and mortar retailers. (Source: Marketplace Pulse, Statista, Business Insider, Company information)