Ecommerce is increasingly present in our daily chores. Electronic commerce has advanced by leaps and bounds in recent years and the COVID-19 pandemic has only increased this trend.
In this context, the role of aggregators in ecommerce payments It’s fundamental. Aggregators are services that combine several payment channels and hire individually with all of them. In fact, they are not only the entity that technologically puts the seller in contact with the financial institution and delivers the funds, but they also maintain a contractual relationship with the financial institutions on behalf of all the sellers they represent.
In this way, the sellers have a contractual relationship with the aggregators, but not with each of the financial entities or alternative payments that the buyers use to pay them. It could be said that aggregators are, at least for the initial and middle stages of an online business, the best options to receive paymentssince they eliminate existing contractual and technological barriers when it comes to receiving payments, as confirmed by Payment Lab.
In other words, they are platforms that collect various offers in their shop window and that, at the time of making the sale, redirect traffic to the seller’s website.
The case of Amazon
Aggregators have a very defined role. In this sense, Amazon has been able to generate industries completely new with its development. The retail giant posted almost €294 billion in net revenue from January to September 2021, representing an increase of 28% year-on-year. The income of external sellers that are listed and use their warehouses, which is the space where the aggregators are located, increased by 38%, reaching 64.6 billion euros.
In this case, aggregators are often run by former Amazon sellers or company executives. In 2021 they have been able to attract 5,000 million euros in the US and Europe of private equity firms, according to data from Crunchbase, which is collected by Business Insider. This represents a spectacular increase with respect to the 823 million euros injected into the sector the previous year.
In 2021, Spaniards spent an average of 2,336 euros in purchases on-line, an increase of 11% compared to 2020 and a market growth of up to 50% is expected during this year 2022. Digital commerce already represents more than 19% of sales in Spain. Thus, the third party markets and the phenomenon of the aggregators are promoting this growth, which had an investment of 4,424 million euros in Europe alone in 2021.
According to the co-founder and COO of Brandhero, Lucas Villanueva, in statements to PR News, “An aggregator is a company that acquires and consolidates D2C brands online and then, thanks to economies of scale and industry experience, is able to increase sales and profitability. Most aggregators focus more on acquisition strategy than brand building».
And it is that, the fact that an aggregator looks at a brand means that the firm is doing things right. If an aggregator focuses on an organization, its probability of getting paid for its investment increases considerably. From a long-term standpoint, an aggregator will have more resources to grow a brand from one to 10 than a solo entrepreneur to grow it from zero to one. Which means that, with the help of an expert aggregator, it is really possible to see a project grow to dimensions that only a very select group of solo entrepreneurs can.
«The concept of aggregator is very recentHowever, we are already starting to see a change in the market. Aggregators that have been able to raise large amounts of capital to acquire several hundred companies now have to transition from a large-scale investment/acquisition team to an operational one. This means focusing less on the quantity of targets and more on quality as well as doing a full immersion into the entire inner workings of the operation.” Villanueva added.