Heyday is not your typical Amazon brand aggregator. In fact, it is not really an aggregator at all.
The aggregation business model is simply about bringing large numbers of different brands under one umbrella. It’s a numbers game, and the more brands that are brought together, the better.
Heyday is very selective with the brands it acquires, and the goal is not just to collect brands, but to grow sales by a factor of ten. To make that a reality, Heyday has a large reserve of capital to invest, and a team of nearly 200 people with skills in logistics, marketing, ecommerce and retail.
But what really sets Heyday apart is that it doesn’t simply separate entrepreneurs from their businesses and take all the future profits for itself. Brand owners who sell to Heyday receive a stake in Heyday, and reap the rewards of growth to come as well as getting a cash payout upfront.
This isn’t just a few shares as a token to sweeten the deal. Entrepreneurs who have sold businesses to Heyday are the company’s third-largest shareholding group today. Heyday aims for them to be its largest group of shareholders in the future.
Clearly this is a company that focuses on partnering with sellers, not just building a collection of brands.
What does Heyday do?
Heyday’s goal is to buy successful ecommerce brands then grow them by a factor of ten.
It looks for entrepreneurs who have created their own brands, then proven the concept by growing sales to five million dollars plus. Often these are Amazon merchants, but they could also sell on other marketplaces or direct to consumers through their own websites.
These entrepreneurs typically reach a stage in their businesses where they need outside help to maintain sales or grow further. The business has simply outgrown their capabilities.
How does that happen? Challenges often arise moving ever-higher volumes of inventory through supply chains and fulfillment centers, for example. And really successful consumer brands need to sell through retail stores and their own websites as well as Amazon.
Another factor is the need for more capital to buy inventory in greater volumes. To be taken seriously by retailers, a large and experienced team is often needed. Specialist knowledge is essential to navigate the complexities of modern global supply chains.
This is where Heyday can help. It has the capital, scale, technology and experience to take successful brands and accelerate them to a whole new level. It does that by acquiring businesses, then using all its resources to enhance sales on Amazon, while building out and growing new sales channels.
How did Heyday get started?
Heyday’s story begins with CEO and co-founder Sebastian Rymarz, who saw the challenges faced by Amazon sellers while working as the Chief Business Officer for FinTech company, Fundbox.
Rymarz quickly learned that the Amazon seller ecosystem was huge, but very fragmented and sellers were underserved in several areas. There were many great brands but they struggled to access capital, manage their supply chains, and keep up with Amazon’s constantly changing policies.
A business of scale could attract capital and hire the best people, to bring all the resources enjoyed by large brands into play for small Amazon entrepreneurs. That business of scale, founded in August 2020, is Heyday.
Today, little more than a year since it began, Heyday has a team of nearly 200 people and more than $250 million in funding.
Why would a successful business sell to Heyday?
Founding a business and growing it into a successful company takes a lot of determination, creativity and hard work. It’s very difficult, and results in failure more often than not. Those who are successful in building a successful small business should be applauded.
However, the skills that are needed in the early stages of business are not the same as those required later on. Entrepreneurs often hit a plateau where they lack the resources and experience to move any further ahead.
Common sticking points include:
- Capital – having cash to deploy to order inventory in sufficient quantities.
- Supply chain management – purchasing, shipping freight, and keeping stock flowing into warehouses and FBA.
- Scaling the team – hiring talented staff, training and managing them, and delegating responsibilities.
Many successful Amazon sellers start their business as a side-hustle for supplemental income, then find themselves with a much larger business than they ever could have imagined. They don’t have all the capabilities needed to grow their business, or perhaps even to maintain it, but can see the opportunity to cash in on their success and create a different life for themselves.
Entrepreneurs are often conflicted about selling their business. They can see the huge potential that their brand has, and would like to continue and grow it to become a household name. But they also recognize the strain it is putting them under, and can see that they might not be the right person to take the business further.
This is where Heyday comes in, buying out the business owner and giving them the freedom to pursue other interests, while maintaining a stake in the future growth of their brand.
What kind of brands is Heyday looking for?
Heyday focuses on quality, not quantity. The goal is to build the household names of the future, not simply to amass a huge collection of brands.
These are the kind of factors that Heyday looks for:
- A proven product, with customers who value and believe in the brand.
- A clear proposition to the customer, with products that work better, solve a problem in a novel way, or have something else to offer that’s unique.
- Social proof such as excellent reviews and ratings, and customers searching for the brand name.
- Upwards of $5 million in annual revenue.
- The potential for driving lasting organic growth.
But it’s not simply a matter of checking the right boxes on a list. After having a conversation with the business owner, Heyday takes the time to analyze the business and ensure they are the right company to grow the brand. Some businesses simply have needs that are not a core focus for them.
Above all, Heyday wants to accelerate the growth of great brands. It seeks to identify the next household brand names that have reached a point in their business where they need to bring in a larger team and a more sophisticated approach, to unlock the next chapter of growth.
What is it like to work with Heyday?
Amazon sellers can request a free consultation call via Heyday’s website. There is a short form to provide details including store name, revenue, product category and contact details.
The next step is an introductory call to learn about the business. Data like revenue trends and reviews are very useful, and Heyday needs to hear directly from the seller what they’ve done to build the brand, what the strengths and weaknesses are, and where they think it can go next.
Heyday is very selective when it comes to buying businesses, but when a brand has been identified that it does want to acquire, it will make sure it is the best buyer out there. That can mean paying more than other aggregators, and pulling out all the stops to grow the brand in the future.
How does Heyday grow brands?
Entrepreneurs who have created and built up a brand on Amazon will often reach a point where they can’t seem to grow the business any further. What has worked for them in the past isn’t working anymore, and it’s difficult to see what to do differently or how to diversify into other sales channels.
If the person who knows the brand inside and out can’t grow it, how can anybody else?
The key is that the seller’s resources and skills to grow the business, even though they worked so brilliantly before, are not the right capabilities for the future. Heyday’s expertise lies in areas which small brand owners often lack. This includes:
- Expanding Amazon-native brands into direct selling on their own webstores, without breaking Amazon’s policies on customer contact and marketing.
- Taking direct-to-consumer brands onto Amazon without damaging their brand image.
- Moving into retail stores selectively and at the right point in the business lifecycle, so more profitable online sales are not cannibalized.
As well as having a large team with experience in those strategies, Heyday has its own technology to address some of the operational challenges of larger ecommerce businesses, such as:
- Robust inventory demand forecasting to better predict future sales and reordering needs.
- Dynamic pricing tools to remain competitive and maintain search rankings, and raise prices when competitors run out of stock.
Heyday also has a lot of capital to deploy, and staff on the ground in China, so it can build relationships with suppliers and make large deposits to ensure it receives priority treatment. It has a dedicated team to deal with supply chain management, which is rarely something that a lone entrepreneur can provide.
How big is the team at Heyday? What experience do they have?
Heyday has grown very quickly and now has nearly 200 people working in the business. As a well-funded startup, it is able to hire talented staff with deep industry experience.
Its technology team features developers who have worked at Amazon and Coupang (South Korea’s largest online marketplace). The supply chain team is staffed with people who have worked in supply chain management their entire careers. The ecommerce brand management team have been selling on Amazon and other marketplaces, and also direct to consumers, for many years.
Across the business, there are dozens of ex-Amazonians, as well as people who have taken startups all the way to listed public companies. The team brings to Heyday a great deal of sophistication, and experience of running ecommerce businesses at scale.
How are Heyday’s acquisition deals structured?
Heyday prides itself on being very flexible in how it does its deals. Sometimes it acquires businesses from entrepreneurs who are retiring, and maximizing the upfront cash payment is often the most important factor for them.
Other times, entrepreneurs want to sell their business while retaining a stake. In that case, Heyday structures deals where the seller continues to share in the future performance of the business.
Heyday also offers equity to sellers. Today, entrepreneurs who have sold businesses to Heyday make up the third-largest group of shareholders in the company. The goal is for them to become the number one group in the future.
This means that not only are they paid when they sell their business, but they benefit from the success of the brand going forward, and in the success of Heyday overall.
Thank you to Chas Woodward, Head of Business Development at Heyday.
This article was sponsored by Heyday, and written with the assistance of Michael Burns.