Ingrid: [00:00:07] Hello and welcome to Infinite Shelf, the human centric retail podcast. I'm your host, Ingrid Milman Cordy. Today's episode is one I truly think we can have no less than a hundred seasons about alone, and that's because we're talking about Amazon. There are a lot of things going on within the Amazon world at all times, but this episode is dedicated to what it means to be a "brand" on Amazon, what that looks like going into 2022, and the epic growth of Amazon consolidators aggregator machines that have raised over $10 billion in venture capital since April of 2020 alone, according to Modern Retail. I invited a good friend and colleague of mine, Garrett Bluhm, to help us wrap our heads around the topics. Garrett and his company, Drafted Commerce, are what I consider Amazon wizards. They have been expertly observing, analyzing, and operating within the Amazon ecosystem for many years and have developed a highly efficient way to assess businesses on Amazon for some of the biggest private equity firms in the world. Like I said, this topic is enormous, and if you get to the end of this conversation and want more, hit us up. Let us know. Also, if you haven't yet, please give us a rating on Apple Podcasts and let us know if you've been enjoying the season so far. We care deeply about your feedback and appreciate your time with us. Ok, Garrett, let's do it. Welcome. Garrett Bluhm, the CEO and Founder of Drafted Commerce. Why don't you give our listeners a little bit of an overview of what you guys do over at Drafted?

Garrett: [00:02:23] Sure. At Drafted Commerce we do a couple of different things. First one is mostly private equity focused where we actually run a lot of due diligence, underwriting processes, model developments for private equity groups. So we do this pretty consistently. I think we've run about a thousand different due diligence projects in the last year. We also get pulled in almost like a rent a COO type of role for a lot of these types of brands that are being acquired to help implement a lot of the tactics, the various types of methods that we've kind of highlighted throughout that due diligence process of where there's opportunities to grow or where there's opportunities to lean out. So we get pulled in on that from an operating perspective on occasion. And then we also operate, on the second half of our business we do a lot of Amazon services. So the data that we leverage for our private equity due diligence side of things is actually mostly a byproduct of what we would use ourselves if we were running our own brands or running brands on behalf of larger companies. So we typically will use those data sources to help implement better advertising, better controls over Amazon presence, as well as several other underlying kind of growth tactics within the Amazon platform.

Ingrid: [00:03:44] Yeah, and that totally makes sense, right? Because you've already created the modeling and all of the systems for the work that you do with MPE to then be super useful and actionable for brands to be able to then use you guys to help them with their Amazon businesses. So totally. Those two businesses make total sense. So there is a lot going on in the Amazon world these days. I feel like you could say that at any time in the past five to 10 years, but I think it's particularly true right now. And one of those things that I've been interested in following is just all of the consolidators and aggregators and just the amount of, frankly, money and capital that's being poured into these companies that are ultimately buying up smaller mom and pop shops on Amazon and brands and then consolidating them into a bigger machine for profitability and just understanding what is growing. So tell me a little bit about what you think about all of these consolidators and aggregators and what that's doing to the Amazon ecosystem.

Garrett: [00:04:55] Yeah, it's been a wild year and a half. The funny part is my business partner and I have launched brands in the past and we sold off three of them. This is like pre 2016. And at that time, we were getting two x multiples on EBITDA. We launched a product, launch a couple of products, various niche categories where we saw some metrics through some of the underlying data we were looking at that was screaming at us like, "Hey, build this product because there are people who want this product and nobody has a good product that fits this kind of niche. So we did that for a couple of years. And, you know, it really kind of led into a lot of how we would look at due diligence and how we would look at underwriting because we've done it ourselves. We know how brands can be really scrappy. We know how brands can be super gameable to the point where they're exiting at a peak, and the next day, the next moment they're going to probably tank, or they're going to plateau, or they're going to start to decline. So that's been a lot of the fun part about the last couple of years here, like with the advent of Thrasio doing large capital rounds initially and then dozens of other followers of this consolidation kind of movement. It's really fun and interesting watching the... We look at some of the brands that they're acquiring, and we'll do some of our own underwriting and see would I buy that brand or not? So like we almost like can grade them based off of are they doing a good job? Do they really understand what they were buying into?

Ingrid: [00:06:30] Would I buy this if I were Thrasio?

Garrett: [00:06:32] Exactly. Exactly.

Ingrid: [00:06:33] So good. Yeah, I'm dying. This is just like, you have to tell me everything. {laughter}

Garrett: [00:06:39] Sure, I unfortunately can't share like the names of some of the brands, but I can give you some examples. And this is like the true, I think that we need to discuss this just because brands that are being acquired, let's just say brands is a loose term. We did due diligence. This is about June. I'll share this specific example. So we did due diligence on a brand that was looking to be acquired, and this specific brand was having a lot of challenges and issues with essentially like their distribution at the time. So they were kind of plateauing in sales. And because of that, they started doing a lot of lightning deals to kind of keep those sales back up. They were comping from a 2020 number where this brand was seeing massive growth, and 2021 was kind of started like decline a little bit. June comes along. They're looking to exit. We're working with this private equity group doing due diligence. We start talking to the Founder. It's a twenty seven year old who launched this brand two and a half years ago. They acquire all of their products from a contract manufacturer in the United States that makes vitamin supplements. The vitamin supplements that they see or the contract manufacturer prints the labels, has all of the work done essentially, and then they ship it directly to FBA. The founder said he hadn't seen one of his own units in about a year.

Ingrid: [00:08:01] Oh my God.

Garrett: [00:08:02] The real question is like, I'm like, struggling, like, OK, so how do you build your labels? What is your branding like? How do you build brand awareness? He's like, "We run Amazon really well. I've looked at a lot of forums. I followed a bunch of Facebook groups, and like they told me how to like, boost my products up." And he's really good, really good at moving the needle.

Ingrid: [00:08:17] So like general...or something.

Garrett: [00:08:21] Exactly, exactly. You watch those shows with the guy with the Lamborghini. And you know, that's basically the epitome of why private equity stayed out of the Amazon game for so long is because it was kind of like this really ugly stepchild of the market that no one really wanted to touch because it just seemed like it was a bunch of hipsters jumping into the game and trying to make a quick buck. But during that diligence call, this is a brand that's making 13 million in revenue. I mean, that's more than I've ever done with my own brand. So I'm like something to be applauded. We started looking at just how broad their catalog had expanded. This is one of the metrics that we use when we're judging whether or not there's opportunity for a brand post acquisition if somebody has already tapped into, I mean, it's a vitamin supplement, right? They were in seventy five categories.

Ingrid: [00:09:13] Wow.

Garrett: [00:09:13] That means they've pretty much tapped out every single aspect of where their contract manufacturer develops products, and they've already kind of like grown to their full extent across every single category that they could with their current contract manufacturers. Sure, they could probably go get other ones, dive into some other potential industries, but they're unknowns. They're don't have the same type of pricing. There's a lot of kind of complications around it. So we started to see it like, OK, that's a negative score. Even though it's a really positive for them, they grew to their maximum potential essentially.

Ingrid: [00:09:43] Yeah.

Garrett: [00:09:43] And now they're trying to exit. But me looking at an investment lens, I'm saying, "Where's the growth going to come from after we acquire these guys?"

Ingrid: [00:09:52] Right.

Garrett: [00:09:52] They already tapped out. So yeah, it's kind of interesting seeing the lens from that kind of point of view.

Ingrid: [00:09:59] I really I love that, and I think there's so many correlations to what we see in traditional retail where, OK, well, you've gotten national distribution with all of the retailers. And so unless you're going to grow into now eCommerce or Amazon or some of the other channels that you can sell, where is your growth going to come from? And so it's just this totally different but very, very familiar path of having worn down some of your biggest growth opportunities. What would you say is, you mentioned like, oh, you noticed that they were launching all these lightning deals? What's maybe a canary in the coal mine when you're looking into a business like this that maybe has peaked and has done a fantastic job in scaling, but is probably not long for its days in growth?

Garrett: [00:10:49] That's a good question. I think some of the things that people overlook on occasion, at least when they're acquiring a brand, is really around the point of how steady has the brand been over the last couple of years at least, right? There's always noise in data, but understanding, are they continuing to grow? Do they have seasonality shifts? Second, closer to the point of exit look at their reviews. We did another project on a brand. This is like later last year kind of timing. This brand had phenomenal reviews. There were 4.3 On average, I think, but some of the products were really high. We started digging into individual review metrics based off of timelines, and we saw that after I think it was like July of last year reviews went from an average of a 4.5 that were being left on several of their top selling products to about a 3.7. So the average review rating started to drop. But in an aggregate, the full review was still showing a 4.3 or 4.4. So we started to notice that and we did not get any material details from them saying that there was any product changes, nothing that happened over that summer. So we started digging into the reviews and like looking at why some of these potentially negative reviews are starting to come in, and that's been a factor for about three and a half months now. I mean, that can have massive impact down the road if it continues that trend. So we wanted to see if it was a fluke, something with distribution. We started looking into it and there was that specific product had a major ingredient change, which this product had been really, really well known for Keto. And at that point when that change happened, it no longer was meeting a lot of the consumers Keto satisfaction. I guess they were like people that were testing their blood and it was they were getting a bunch of their hardcore followers that were kind of dropping off the listings at that stage and like moving to other products or other brands that would meet those needs. So that was an interesting one, kind of predicting what might happen in the future, right? We see these trends through past historical data that was a huge red flag. We obviously passed on that.

Ingrid: [00:13:54] Rule number one, two, and three in any type of consumer facing business is please don't assume that your consumer is stupid. {laughter} And just like if you're going to change the actual quality of either the ingredient or the item, or even just the shipping experience and all of that, just the whole lesson that we've even observed from Amazon is when you are singularly focused on the consumer experience, that is pretty much the key ingredient in a recipe for success. And so that's just a good lesson I think that applies broadly, but I love that that's a component in your analysis for determining whether a brand is going to continue growing or is having a tougher time.

Garrett: [00:14:46] Yeah, I think we've codified out over a thousand different kind of data points that can be just pulled from raw data, right? And then there's also taking a look with an analytical lens of what trends have been happening. So, you know, seeing a review count drop, that makes a ton of sense, and that's just straight data numbers and bullets. There's also factors of pricing, price elasticity in the market. Did they have any price increases over the years? What did that do from a sales perspective over those specific periods of time? Are they doing a lot of discounting? If they are what type of discounts are they doing? How consistently? Are they seeing steeper increases? Some of the brands that we see that are kind of like plateauing, they'll try to do a bunch of lightning deals or a bunch of coupons. And then if we're not seeing best seller rank kind of decreasing or sales started to increase, they're basically discounting to maintain their sales, which means that there's probably a trend that after a consolidator... Consolidators are super super EBITDA focused. They're going to focus on profit. They're likely going to get rid of most of the discounting that was happening before. They're probably going to run advertising super lean because they don't have... I mean, there's occasions and there's definitely some outliers, but majority of them are going to try to run things from a profitability perspective, because that's the metrics that they're giving to the money that's funding them, that they're going to be able to achieve, whether it be debt, whether it be equity based, they want to show consistent bottom line growth, not just top line growth. So those are some of the nuances, I think, that are very specific to the consolidation kind of aspect. And it's weird how like, it's getting pretty broad now. Consolidators, you can call them that, there's also just traditional private equity groups who own maybe a large brand and they're thinking about, can we consolidate some smaller brands with this large brand, just maybe one or two to increase our capabilities? So if you're a dog food company, maybe I want to buy that freeze dried dog treat company because I don't have that capability, and they obviously do. They've obviously got the connections. We get something kicked off really fast versus launching a brand new innovation, and we're able to do it in a cheap and affordable way because EBITDA to us, we should be able to expect as it's rolled up into our larger profile brands, we'll be able to have a much higher valuation on that acquisition post that money exchange.

Ingrid: [00:17:10] And you're also learning about this other part of your business and diversifying your product offering. And you and I talk about this all the time where it's like Amazon is just the greatest place ever to do a/b testing and to just learn what consumers really want and need. And then you can build that out into a larger product strategy that goes across all of your channels.

Garrett: [00:17:37] Completely. Yeah, I probably share this... I don't think I can share it enough, but we really believe that Amazon is the biggest sample size of consumerism of the North American market and arguably European market.

Ingrid: [00:17:52] Yeah.

Garrett: [00:17:53] And what that means is that the trends that are happening on Amazon are going to directly reflect everywhere else. So just as you're mentioning, there is a lot of shifts and changes that happen on Amazon, but looking at search volume on Amazon and then looking, that's actually going to probably pertain better than any Gartner or any type of large kind of consumer report that you're looking at. And it's going to tell you directly, "Hey, there was a like 30 percent dip in traffic this month on this type of product." That's going to probably represent all of North America everywhere. And I mean, last year was super super obvious with we were working with a brand in the face mask category and huge, huge, huge spike in the spring. Summer, they were like the top selling product in the children's kind of face masks and that kind of traction drives a lot of attention. And we saw, I think that there's a cycle for most brands. If you're a new brand or if you're acquiring a brand, really, really important to understand where your brand is at or where your product is at within the lifecycle of Amazon. Because there's a stage where you're launching a product, there's going to be a bunch of white label followers if you were the first to market type of thing. The white label followers will bring down price. Everybody is going to start to liquidate because there's too much inventory and then at a certain stage, it starts to normalize again. The masks market was basically a super fast version of that because usually it takes years for that. The masks kind of aspect of things happened over months. We saw a very limited supply and then everybody buying it, everybody's selling it. And then it became, oh, now we're selling two hundred packs of cloth masks and things like that. So it just started to get consolidated into liquidation mode. So prices were dropping. A lot of brand saw a ton of inventory left on hand that they weren't able to get rid of. It's one of those categories that we saw tons and tons of disruption and you could be the best seller and the next week completely lose all of your momentum if you went out of stock for a day. It was just wild, wild.

Ingrid: [00:20:02] So can you use that as, obviously sped up, like a roadmap for just basically all of the bubbles and bursts within the Amazon trends? Like how do you use that use case? Yeah. How do you use that to apply to making better brand decisions and item decisions?

Garrett: [00:20:25] It really comes down to focusing on your products and your brand and being differentiated. If you're a brand that is hoping that your Alibaba white labeled product with your logo on it is going to be there forever, you're not thinking clearly because that is not going to last longer than that life cycle of when that timeline happens, right? So and those life cycles can happen. I mean, in the past for electronics, it was like years, now it can be months. So it's just very, very dynamic within those types of orgs. And then you get a lot of the I mean, the distribution side of things has gotten pretty outrageous as well. Like Chinese manufacturers are going direct on Amazon, there's teams at Amazon that are focused on helping Chinese manufacturers sell direct on Amazon. So cutting out you as a third party reseller of their products, they're just going to go and build their own brand and knock off their own product, I guess, and sell it on the market as well at a cheaper price. So I think that the biggest key and I think the lesson to learn from this is that white label products, sure, they can work for a time, but there's usually a lifecycle on them. Products that have more type of R&D, engineering, products that have some type of unique factor around them, anything with a patent, anything that's like custom formulas, things like that that are a little bit more distinguished, have a little bit more challenge to make, it's not something that Joe Schmo can make in his basement in 30 minutes because I've seen brands created in 30 minutes like that. You've got to have some type of differentiation, and then it's really about building up your... So there's aspects on Amazon that also trickle off of Amazon. Some of it's building up your brand, the product's lifecycle when you're building a brand. I would probably start with testing out your products on Amazon. It's very easy place to throw up a product, wee what the reviews are, if it comes back super negative, stop selling that one, reiterate, start again and try that until you get and nail the products that you want to launch. Then once you do that, now you can start building up your website. Now you can start. I mean, most people focus way opposite. They say, "Oh, I need to put a bunch of money into my website, and I need to put a bunch of money in these things." Like they're not testing their products before they start investing.

Ingrid: [00:22:40] Right.

Garrett: [00:22:40] And then a lot of those brands go under because they were like, "Oh, I committed so much of my capital to this." The other brands on the other side where you're just testing out products, you're like, "Oh, I failed on five, but the seventh and eighth one works," type of thing, and you're now in a position where I'm out my COGS, maybe, or maybe I broke even by liquidating them, and now I've got my new SKUs, where now I can focus more marketing efforts and brand building and trying to get consumers to start searching for my brand name within Amazon versus just finding me on a vitamin C type of phrase, because that's temporary as well. So it's about building up some brand defensibility. It's about building up, you know, getting those stages. And yeah, I'll pause there because I think that's a good segue way into the next phase of a brand's journey. But that's definitely a key of interest for most brands that are starting up right now.

Ingrid: [00:24:42] We've never had the opportunity to understand that there is this ecosystem that is run by Amazon that is completely souped up and designed for discovery, and that brands can utilize Amazon as a test and learn platform for their products, for the trends that they're seeing to make sure that their copy and the way that they're setting up their items are optimized toward those trends and then going and investing in brand. And it really is flipping everything on its head. But the thing that I'm hearing you say that is something that I think is really key here is that earlier in the conversation, we talked about how brand is a loose term and it's mostly just it's very item driven on Amazon because you can't really, it's not set up to like, go to a brand page and then shop all the items on that brand. It's very specific to the individual item that you're searching for. But just because it's design that way does not make it irrelevant or not another accelerator component to having a strong brand. It's almost it's required, but you just have to do the due diligence of proofing out that concept and that item. And then the next step is to just double down on then creating a brand around it and then expanding your product catalog against the brand. Is that a good way of me interpreting what you just shared?

Garrett: [00:26:19] Yeah, that's spot on. And this is why we're seeing tons of investments starting to flow into incubators into what are like traditional accelerators, where they invest in a brand that's small and then they provide services to kind of help them grow. I mean, that space is booming right now. And if I was like just getting into this space or was like working at a brand and thinking about a side hustle, I mean, you can launch brands for under five thousand dollars now. It's not super hard. There's very low barrier to entry. Obviously you need to know the path to get there. But the outcome of having a brand for 18 months while you're working at another company... I mean, there's an actual example of a friend of mine who he was working at a CPG company. He launched a brand on the side and the brand did $6 million in revenue last year. He left the company in September of last year. His wife and him were running this thing. This year, they're on track. They're mostly DTC oriented and they're really, really good with influencers. So they were really good at driving demand. But it does show that like they've got this niche down. And so thinking outside of like your own brand, like if you're doing something that you know works for your brand that you're working at, like running something on the side that's not competitive to your brand, obviously, could be a test in and of itself that could turn you into an entrepreneur. So those are definitely some things. I think they're on track to do over 50 million this year, just outstanding work by them.

Ingrid: [00:27:53] And I think that that's actually a really helpful thing to consider when it comes to sometimes we get very jaded when it comes to all of these big retailers that just come in and have the ability to drive prices down because they have supply chain and they have all of these ways to develop products. But we always get worried, oh man, innovation is really going to to suffer. But I think that it's always part of this cycle where, OK, well, now the barrier for entry to create a brand and bring a product to market has been lowered so far that obviously that's going to open up the floodgates and there's going to be just a whole bunch of like frankly crap that's added to Amazon. I think we're a little bit in that world right now.

Garrett: [00:28:39] Very much.

Ingrid: [00:28:39] Then the cream is going to essentially rise to the top. And I think if I'm hearing what you're saying correctly, that main distinguishing element, aside from the again, point one, two and three, which is to develop a product that people love, is going to be that brand that carries your product message and your place in the market to a very clear use case and loyalty to the consumer. Is that a fair assessment?

Garrett: [00:29:10] Yeah, you can get decently far without that on Amazon, but you're going to plateau and you're going to see things, you're going to have aspirations and really high growth metrics. If you want to achieve really large growth, you've got to really focus on that brand.

Ingrid: [00:29:29] I love that. I think that's great. Ok, so now just let's flip this on its head. We've talked a lot about the humans behind brands and bringing products to market on Amazon and how to build long lasting businesses. What is all of this consolidators and all this innovation and all of these activities that are happening within the Amazon ecosystem, what does that mean for the consumer?

Garrett: [00:29:54] Yeah, it's interesting. I think that there's a couple areas that the consumer is going to see from just the consolidation piece, I mean, this is taking aside the cost increases that everybody is getting. I mean, exports from China containers cost twenty five to thirty thousand dollars where once they were twenty five hundred bucks. So I mean, this is like in the course of two years, so costs are going up. People are less discounting. I mean, I think we all saw that over Cyber Weekend that there weren't as many super, super steep discounts that were going on. A lot of brands opted out of doing any kind of promotions. That's going to get to a point where inevitably you're going to have to pull that back into sway. But I think that the demand has been so high for a lot of these products that most of them are having a hard time keeping up with inventory.

Ingrid: [00:30:42] Exactly. Yeah. Just a quick stat that I saw on that real quick. I was flabbergasted by this. It was like a 186 percent increase in out of stock messages on DTC websites, not on Amazon, but on DTC websites compared to pre-pandemic periods.

Garrett: [00:31:03] Wow. Insane.

Ingrid: [00:31:04] One hundred and eighty six percent during the most important weekend of the year. So yeah, I think that the inventory component and the pricing component is major.

Garrett: [00:31:14] Yeah, and there's a couple of factors around that. Consolidators are really harping on, and this is just generally because most small brands, oftentimes they'll be the ones that have really lean inventory positions because they don't have a large budget or anything like that. Consolidators are willing to invest so long as the products not expiring or the shelf life kind of, as long as it's shelf stable, and they'll buy up additional inventory. So one, consumers are going to feel that effect, that the consolidators likely are going to have a better handle over supply chain just because they've got more experience and more capital to be able to invest into those orders on the units that they're purchasing. So that's one effect a consumer will feel. Another one, consolidators just by nature of being a consolidator, you're going after EBITDA. You're trying to grow your bottom line. I think I mentioned this earlier. Bottom line means less discounting and less really, really expensive or nonsensical advertising pushes or media pushes, things like that. They're going to probably, a majority of the smart ones at least are going to probably try to figure out how to be as conscious and how to push as mildly as possible to obtain the highest revenue targets that they can. So there's going to be obviously test periods during that. But what consumers are going to feel from that is probably some of the brands that are on Amazon may not be discounting as much. I know several consolidators opted out completely. Some of them did no discounts on a lot of the brands that they work with over the holidays. Other ones are doing five percent, 10 percent off. But Amazon's metric for Prime exclusive discount or their best deals are like 20 percent off. So you're not seeing them show up with those bright orange banners as frequently. And so from a consumer side, it can be considered a negative. Obviously, there's hundreds of other brands that they can go choose from, but it is something that is to be kind of gleaned upon as a potential consumer factor there.

Ingrid: [00:33:16] Yeah, that's interesting, because I think there's it can only go one of two ways. When you've added people or institutions into this already, I would say, not particularly margin rich business in general on Amazon, because just the nature of working through Amazon is not the highest profitability or to the same extent that we can see on a DTC business, for example, that there's going to be some kind of squeezing. So I would rather see the discounting reduced versus seeing the actual products getting reformulated or reduced in quality to then make those margin positive increases. So we just have to be careful if we do continue as consumers seeing products that are always on sale and all of that, we have to probably question what the actual quality of that product is.

Garrett: [00:34:16] Yeah, I think that there's two fold there. Larger brands, obviously, who are looking for more lifetime value, they're probably going to continue to push either way, but you're spot on. For a lot of the like the white label or like the products that are just kind of me too products, those are going to see... Yeah, probably the ones that are owned by individuals are going to see some emotionality because they're trying to drive increase in sales. The ones that are driven by consolidators are probably going to see lighter discounts. They'll probably continue to do them. Subscription's a big thing. Repeat purchase products are probably going to still see a bit of ad spend in a bit of this lifetime value type of concept that's intricated there. I know that there's a debate across a lot of the consolidated around should they, the ones that are Amazon only brands, should they develop out a DTC site and try to build that side up? And a lot of them do. It's way different, the unit economics are completely different for that kind of a model. The fulfillment side is way more complex. Using multichannel fulfillment is way too costly. So there's just dozens of things that have to be considered if you're going about that. There's also consolidation happening. I think I've seen consolidators talking about, "Shopify Consolidator blah blah blah," and then every consolidator tries to distinguish themselves. You know, there's a lot of them try to tout some type of black box technology. I start to question, I'm like, "How long have you been around like a year or two years?"

Ingrid: [00:35:50] {laughter} What kind of technology are you developing after a year?

Garrett: [00:35:52] Yeah, what kind of technology is developing? And likely it's more of a pitch than anything. So it's more just for the money side and more for like, "Oh, we're going to acquire these brands, so we have to court them." I mean, on average, most brands right now that are looking to exit are talking like at least five, maybe 10 consolidators about their potential exit. So they're getting offers, probably from multiple consolidators, and it's just because there's so much competition.

Ingrid: [00:36:19] And there's just so much capital. There's just so many. We keep saying this, but capital has become a commodity, and it's just so true. And so that's why there is all this competition for being an aggregator, consolidator. And so you're being courted by all of these people because now all of these people have the money to then pay five, 10, 15 x EBITDA for your business. And it's a good time, definitely to be an Amazon business owner. I'm curious what the end game is going to be with all of this capital that is being infused in these aggregators, in a world in which you don't own the train tracks. Amazon is a unique and wild and untamable beast sometimes, and there's just so much volatility. I'm frankly concerned about what this is going to mean downstream for, like the larger economy.

Garrett: [00:37:16] Yeah, there's some really good debates on that. I've had several of them myself with people, but in the last four months, we've seen a ton of purging by Amazon bots basically getting rid of listings, classifying things as a product compliance issue. Some of them probably Black Hat led, some of them just Amazon's bots scraping. You don't have any control over that as a brand or as a consolidator or PE group. I've seen one product in particular that was purchased in about August. No, sorry, it was purchased in May, and in August they had the product was shut down and it needed to provide these three different tests. One of the tests took two months to get. The product lost all of its sales. It was our top seller of this brand, and I mean, that's three months of sales gone, and they worked very, very intensely to try to get it back live. But Amazon wouldn't budge about having this test and the test in and of itself, it was a topical type of product, required two months or two and a half months of actual testing to be able to pass through. So there's definitely another input on, I guess, more of... {laughter} That consolidator learned a lesson. They're requiring those safety documentations on any of those types of brands that they're buying now. But Amazon was deemed liable by California for several sellers.

Ingrid: [00:38:46] Good.

Garrett: [00:38:46] I think the marketplace, I think they're liable for things that happen on the marketplace now. So they're having to double down on getting the right COAs, the right child certificates and safety kind of compliance certificates, SSI certificates, things like that, which is going to have an impact on consolidators more heavily than it would on a normal brand because the normal brands probably got lots of other distribution. Smaller brands, yeah, it's going to be a huge blow to them. Consolidators, huge blow because you just bought that product for five, maybe six times what it's doing in revenue right now or what it's doing in profit right now. Excuse me. So you're going to see a larger kind of impact to those types of consolidators and those are things that you can't control. I mean, Amazon at the end of the day, whether you're a reseller, whether you're brand yourself, whether you're buying up brands on Amazon, you have like five hundred seller accounts. It doesn't matter. Amazon owns the platform. They can shut all of them down at any time.

Ingrid: [00:39:42] Exactly. Yeah. And that's I think you bring up an interesting point, too, which is, I think, another ding for not just the consolidators, but those repackagers that haven't seen or tested their products in over two years or whatever. When Amazon, and not if, but when Amazon continues to actually start creating more and more systems for checking quality and matching what is being sold versus the actual marketing of it and holding people accountable and removing accounts and things like that, that's another big ding for them. They're not going to last longer. And so in summary, I feel like we've just been circling in some really fascinating pools, but frankly, all leading back toward, "Hey, can you just create a great product? Can you not assume that consumers are dumb and then also create a brand that people can relate to and create trust and loyalty toward?" And even with all of these fancy new tools and everything that Amazon has to offer, the fundamentals of running a business are exactly the same as when we first started as like cave people.

Garrett: [00:40:54] Exactly.

Ingrid: [00:40:54] It's just like create a great product and then be reliable. And I think Amazon is going to reward you handsomely with a sustainable business.

Garrett: [00:41:04] Couldn't have said it better myself.

Ingrid: [00:41:06] Well, Garrett, it's always a pleasure. I hope you'll come back soon. I could talk to you for another six hours straight.

Garrett: [00:41:12] It has been very, very enjoyable. Thank you so much, Ingrid.

Ingrid: [00:41:15] Okay, talk soon.