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Berlin Brands Group invest in Amazon

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Berlin Brands Group (BBG), one of the leading platforms for direct-to-consumer e-commerce brands in Europe, announced its investment of €250 million (304 million USD) in e-commerce brands internationally.

The targeted companies are primarily active in the garden, home & living, sports, electronics and household appliances sectors and are expected to generate a turnover of between €500,000 and €30 million. With this investment push, Berlin Brands Group is pursuing its goal of becoming the largest acquirer of direct-to-consumer brands in Europe.

The company is ranked among the top market sellers on Amazon globally. However, the majority of the revenue is generated outside of Amazon, mostly through its own direct-to-consumer webshops. BBG has a track record in growing direct-to-consumer brands, having built 14 brands that sell over 2,500 products across more than 100 channels (their own webshops, marketplaces, price comparison sites, search engines etc.) in 28 countries. This opens up great opportunities for up-and-coming brands, especially in the European region, where the e-commerce market is particularly fragmented, with Amazon having a comparatively low market share of only around 10% .

“The decision to sell one’s own company is a big step in life, which makes it all the more important to find a reputable buyer. We started building our brands in 2005, for which we needed to create our own set of tools and with them, we learned how to substantially grow our brands. This investment and our expertise of over a decade enables us to help brands around the world to scale up by becoming a part of our global e-commerce platform active in 28 countries. Our investment is a big step towards bringing together the most successful brands of tomorrow in one strong group.” – Peter Chaljawski, Founder and CEO of the BBG.

With BBG’s core brands, Klarstein, blumfeldt, Capital Sports and auna, the group has over 2 million email subscribers and more than 700,000 followers on social media channels. The company ships over 3.5 million packages per year. On peak days, more than 40,000 shipments are processed. The founding team around Peter Chaljawski built up the company, by not only utilizing Amazon’s strength but also by building up their own channels to drive revenue. The company has been profitable since day one.

In and exclusive interview with BBG, we talk about the  share of the D-to-C sales versus Amazon sales “they already make  the same amount of sales in DTC channels as we do on Amazon. However, this has not always been the case. Our share of DTC (own shops) increased over the last years. Even though we are also growing on Amazon, our own shops have been grown even stronger in the last years”. Amazon is not the only marketplace you can sell products on, we also use more specialized players like “Mano Mano”

The Future of Berlin Brands Group

With its financial growth, infrastructure, logistical processes, distribution channels and product expertise, BBG offers brands an opportunity to take their business to the next level. The company promises that a transaction process can be completed in just 40 days – from the first meeting to the final payment. Companies benefit from the entrepreneurial spirit and the entrepreneurial experience of the professionals at BBG.

They already have and strategy looking forward to 2025. According with Berlin Brands Group “We just communicated to now start investing $304 Million to acquire online retailers and Amazon merchants. With that investment, we plan to become the largest acquirer of e-commerce brands in Europe. So, we have quite a lot to do here for the near future. However, looking a bit further in the future we definitely consider LATAM an extremely interesting market for us as well. With a perspective of 5 years, I would not be surprised if you find us in the LATAM market, too.

 The Advertising Strategy In Amazon

Building an eCommerce advertising strategy is no simple task.Talking with Berlin Brands Group about the advertising strategy in amazon and the implications they said:

As we always work towards the most cost effective push of products into a market, we advertise different products on different channels. As an example: we tend to more aggressively advertise smaller items through Amazon FBA because the logistics costs are lower for some of these product categories. Bigger items, which are often cheaper to handle through our DTC channels, we then strongly push in our shops.

In general, we do not see channels like Amazon as direct competitors. There are customers who prefer to buy on Amazon and others prefer to buy in shops directly. The crucial factor here only is to be active where your target audience is.

We know that many companies refrain from listing their products on Amazon because they lose the customer data and touchpoint with the customer. We think this strategy is a mistake and will most likely fail for most players in the market. We believe in developing new ideas in order to stay in touch with the customer, regardless where he or she buys the product. This is also why we created our own IoT (Internet of Things) products and app. Regardless of where you buy our app-controlled air conditioner, you will always be connected to us and our app.

Challenges of  Crossing Brands

COVID-19 changes online shopping behaviours. Last year the most ecommerce companies saw their online revenue increase during the global lockdown. According to BBG  “This will be a big trend for the next few years, Covid-19 even accelerated the e-commerce trend. Brands coming from classic retail spaces often have a hard time to understand how Amazon and other marketplaces work. It is a completely different strategy than placing your products in a retail space.

Here for example, retailers need to look into getting “virtual shelf space” (high ranking) for your items is often a combination of listing hygiene/ intelligence (images, keywords, bullet points) and highly dedicated marketing activities on marketplaces which are not comparable to offline.

On Amazon for example, still most searches are generic search terms and not brand terms. This means that you need to compete with a lot of sellers which might be smarter in securing better positions.

It is for certain that more and more sales will shift from classic retail to ecommerce and therefore marketplaces. New specialized marketplaces like “Mano Mano” will push this trend even further. In the end, you need to go where the potential customer is looking for your products and in many cases, this might be Amazon or other specialized marketplaces.

The strategy for retail and marketplaces is also different across countries. In the US, selling mattresses online is a stronger trend than in other countries. Germans, for example, prefer to test them before they make the purchase. This led to a combined retail space/online concept for many sellers in Germany.”

 

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