Perch acquires Web Deals Direct for $100M+ to boost to its Amazon roll-up play – Stock Market Pioneer

On the heels of raising $775 million earlier this year, Perch has made a big acquisition that will bring on a number of new brands and operations infrastructure to enhance its position in the race to roll up smaller merchants that sell and fulfill sales through Amazon. The company has acquired Web Deals Direct, an Amazon seller that owns 30 brands of its own pulling in $80 million in revenue annually and also operates its own warehouse.

Terms of the deal are not being disclosed but I understand from sources that it was a nine-figure deal valued between $100 million and $200 million.

There are millions of merchants currently on Amazon’s marketplace, leveraging the e-commerce giant’s storefront, search tools, fulfillment infrastructure, payment tools, warehouses and delivery network to sell products to buyers.

Companies like Perch compete against the likes of Elevate Brands (which yesterday announced $250 million in funding), Thrasio, Heyday, SellerX, Branded, Razor Group and many others that are seizing an opportunity to snap up and roll up the more successful of these to bring better economies of scale into the model, while also building technology to better measure and leverage sales analytics and more.

While these companies are, essentially, acting as marketplace consolidators, this latest acquisition is significant because, in a sense, it underscores an interesting shift towards a consolidation of the consolidators themselves.

WDD’s categories span home goods, sports, arts and crafts, pet supplies and office products, and Perch’s VP of acquisitions, Nate Jackson, said Perch was interested in them because they are one of the more successful Amazon merchants. In a market where visibility is based on how well engaged previous buyers are with your products, WDD has picked up some 110,000 reviews and 2.3 million customers.

For WDD the idea is that joining Perch will give it more reach in terms of targeting more customers, and to bring it better analytics leveraging insights and sales from Perch’s other brands, which currently number at around 70 and cover the same categories.

“We took our business from zero to $80 million in sales in 5 short years,” said Adam Feinberg, CEO of Web Deals Direct, in a statement. “But, with Perch, who are proven eCommerce operators, we think the possibilities of growth in the next 5 years are just as exciting. I’ve been so impressed with the caliber of their team, and I trust their long-term vision to steward our business into the next phase of growth. This was a complex deal, but Perch has made the process fair and transparent. I want to thank all of the great Web Deals Direct team members for the organization we’ve built together; our employees could not be in better hands with Perch.”

It’s also a signal of what the next steps might be for these roll-up companies, with Perch gaining a 230,000 square foot warehouse in California and now looking to get more warehouse space on the East Coast. While Amazon might still be an important storefront for visibility, it’s a sign of how these companies may be looking at taking on more of the process themselves on the fulfillment side to grow margins.

“This deal marks a major milestone for Perch,” said Perch founder and CEO, Chris Bell, in a statement. “The complexity and size of the business is a testament to the excellent organization Adam and the entire team at Web Deals Direct have built, and it is a pleasure to work with such inspirational entrepreneurs.”

This is not a completely new area for Perch, and perhaps the writing has always been on the wall that it would eventually bring more fulfillment into its own e-commerce operations to lessen some of the reliance on Amazon.

Before founding Perch, Bell and Perch’s COO designed and built the Wayfair Delivery Network for online furniture company Wayfair — a service that handled 3 million “heavy bulky orders” annually, and did so with a view to speeding up the turnaround time, turning what typically takes a month to deliver into a two-day process. That will be some of what the team now hopes to bring to Perch, it seems.

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