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Less than a week after Thrasio filed for bankruptcy, the second shoe dropped. Boston-based aggregator Perch was acquired by Berlin-based Razor Group in an all-stock transaction. 

This strategic merger places the combined valuation of the entity at $1.7 billion, underscoring the rapid evolution and competitive dynamics of the sector. This consolidation reflects a broader trend of continued post-pandemic adaptation and repositioning among aggregators.

The significant VC investment – some of the investors doubling down on both of the parties involved – helped allow for a more aggressive path forward than Thrasio was able to navigate. 

The Richest Man in the World Gets Involved

Razor Group and Perch are notable entities within the aggregator space, having attracted significant investment from prominent firms such as L Catterton – linked to Bernard Arnault, the founder, chairman and CEO of LVMH, the world’s largest luxury goods company. As of March 2, 2024, Forbes magazine had proclaimed Arnaud the richest person in the world, with an estimated net worth of US $230.5 billion. 

The purchase was preceded by intensive negotiations, highlighting the complexities of achieving financial stability and strategic alignment in such high-stakes deals. The conversion of Perch’s debt into equity prior to the merger is a testament to the emphasis on creating a financially solid foundation for the newly merged entity. 

Despite the post-merger valuation being slightly below the collective $2 billion initially raised by both companies, the apparent goal is to use the massively deep pockets of both companies’ investors to forge a stronger and more cohesive entity.

Through this acquisition, Razor Group significantly expands its portfolio, incorporating over 40,000 products across various categories, including kitchenware, fitness, and beauty products. 

What’s Wrong with the Aggregator Model?

The ecommerce aggregation model seemed to have had a lot going for it. Combine the strength of millions of Amazon sellers, take advantage of the economy of scale, eliminate the expensive duplication of processes, and streamline supply chains; what could go wrong? 

The significant issues were the same that have also plagued many Amazon-centered businesses: how to merge operations in cost-effective ways, how to efficiently market multiple brands, and navigating the supply chain disruptions and storage challenges endemic to Amazon’s marketplace.   

Shein and Temu are Influencing eCommerce in Many Ways

When it comes to agility, few companies are able to match Chinese upstarts Shein and Temu. Shein and Temu have functioned as huge disruptors in the ecommerce marketplace with their on-demand business model. In it, orders placed to suppliers can be delivered in days, and rely on real-time data to quickly analyze demand and replenish orders as needed. 

By using artificial intelligence (AI) technology to identify trending products and an online-only model to produce tens of thousands of garments, Shein continues to lean on technology to do things at a scale and tempo previously unimaginable. 

The acquisition of Perch and the resulting merger of the two companies reflects a shift towards the same agile business model, and appears to be attempting to replicate that level of technology-driven success. 

“We are founder-led and that is extremely important, especially with where we are in the cycle,” Tushar Ahluwalia, the CEO and co-founder of Razor, told TechCrunch. “You just need someone who thinks like a founder, not a mercenary. You need heart and soul. I also think our focus has always been around customers and supply chains that are agile to market needs.” 

How Canopy Management Can Help

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