- Amazon brand aggregator Suma Brands laid off a significant portion of its workforce on March 23.
- The cuts come after the Minneapolis startup raised $150 million in venture capital and debt.
- The layoffs also come after a stellar year for aggregators, which raked in $12 billion in 2021.
Suma Brands, a Minneapolis-based Amazon aggregator, laid off a significant portion of its workforce on March 23, just months after it secured $150 million in new funding to expand its acquisitions and deals team.
“We let a small number of employees go last month, reflecting a strategic decision to reallocate resources internally, but not a fundamental change in our business strategy as we continue to grow our business organically and inorganically,” CEO Andrew Savage told Insider in a Email Statement.
According to one person affected by the layoff, 11 employees have been cut, accounting for 42% of the 25 workforce. However, Savage said the company was not reduced to 14 people. “Our entire team is much larger,” he said, but gave no details.
Suma Brands had roughly doubled its headcount after raising $150 million in August eight months ago, according to employee account information available on LinkedIn and PitchBook. This money was raised through a combination of a Series A equity and debt round co-led by Pace Capital and Material Companies.
The layoffs come after a record year for the Amazon aggregators industry, which Marketplace Pulse said raised over $12 billion in 2021, mostly from venture investors as people began doing the majority of their shopping online during the pandemic. With Amazon controlling nearly 40 percent of the U.S. online e-commerce market, many direct-to-consumer businesses rely on its marketplace to reach customers.
These so-called Amazon aggregators compete to buy the most successful brands on the site and improve their marketing, packaging, and positioning to help these businesses grow rapidly.
According to the person concerned, five of the layoffs affected the Deals team. This was the team the company said it would grow when it announced its funding in August.
Savage is a popular CEO internally, and he and his co-founding team have a lot of experience in retail, direct sales and e-commerce, so some of the recently hired employees have had to take pay cuts to work with him, the person concerned said.
Savage previously worked at Target and Amazon. Other co-founders of Suma Brands include Matt Salzberg, co-founder and former CEO of meal kit pioneer Blue Apron, and Andy Salamon, an early venture investor in Hims and Hers.
But according to this former employee, Suma Brands struggled to turn many of its recently acquired brands profitable after the acquisition. “We drove them into the ground,” said this person.
Savage denies this, telling Insider that “all of the businesses we’ve acquired are profitable,” adding that “every single Amazon store that Suma has acquired is profitable,” but declined to comment when he was asked for more details about the dismissal.
However, industry watchers wonder how many Amazon aggregators can thrive in a crowded arena and predict there will be massive consolidation this year as the industry matures. Some consolidation is already taking place. London-based aggregator Olsam Group bought US competitor Flywheel Commerce in December in what is reported to be a seven-figure deal.
Suma’s layoffs could be another market signal that many of the companies in this space are struggling despite the investment spate.
Savage also pushed the company to buy more Amazon-only brands, which contrasts with the direct-to-consumer nature of most recent hires, the former employee said. “We hired a lot of talent and people and people on the operational side of the company who understood that world but didn’t come directly from Amazon and maybe didn’t understand the Amazon game that much.”
Do you work for an Amazon aggregator? Do you have a tip? Contact reporter Madeline Renbarger via the encrypted messaging app Signal, (+1-512-968-0540), email (firstname.lastname@example.org) or on Twitter (@insider.com)Maddierenbarger) with a non-working device.