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BUSINESS PRODUCTS & SERVICES | Advertising, Marketing & PR
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Founded Year

2020

Stage

Seed VC | Alive

Total Raised

$36.5M

Last Raised

$6.5M | 3 mos ago

About Rainforest

Rainforest is a consumer brand acquirer that buys Amazon FBA brands. It is focused on rolling up these brands in Asia.

Rainforest Headquarter Location

Singapore

Latest Rainforest News

Singapore e-commerce aggregator eyes interoperability across APAC marketplaces

Jun 16, 2021

Apart from acquiring Amazon third-party sellers, Singapore-based Rainforest will look to buy fast-growing brands that sell on Asian e-commerce platforms and build tools to help them centrally manage their transactions across these different marketplaces. Having recently secured $36 million in seed funding, Rainforest is looking to acquire more Amazon third-party sellers as well as fast-growing brands that sell on Asian e-commerce platforms. And it is hoping to differentiate itself by offering tools to help these sellers centrally manage their transactions across the different marketplaces. Since kicking off its operations in January 2021, the Singapore-based e-commerce aggregator had acquired three brands that sold through Fulfilment by Amazon (FBA). These included a Singapore-owned brand that sold bedding products on the US e-commerce marketplace. Founded in 2020, Rainforest last month raised $6.5 million in equity financing and $30 million debt facility from a US debt fund. It said it would use the funds to acquire more Amazon FBA brands, bring in new hires, and develop its technology stack. Noting that Amazon's third-party gross merchandise value topped $300 billion last year, up 50% from 2019, Rainforest CEO J.J. Chai said a large number of the online platform's third-party sellers were based outside the US. Some 30% of those that clocked above $1 million in annual sales were in Asia, including a high number from China. This community continued to grow at a fast rate, with a few thousands of FBA sellers joining the platform each day, Chai said in an interview with ZDNet. These merchants could create their own brand, sell any product that was manufactured from anywhere in the world, and send it to Amazon, which would handle the shipping and logistics. Apart from FBA brands, he said Rainforest also was keen to acquire sellers on Asian e-commerce marketplaces such as Lazada , Carousell , Shopee , and Rakuten , but several issues must be addressed first. For one, there was a dearth of private labels in this region, where different sellers would peddle the same make of one product. This made it tough for third-party sellers to distinguish their offerings. Many also adopted a sales strategy that was price-oriented, Chai said, adding that the e-commerce platforms focused on this aspect as well to attract consumers. It meant that sellers that did not participate in the platform's monthly sale campaign would not be able to move their products. This also deterred them from creating and selling their own private label. Intellectual property (IP) protection remained a sticky issue to resolve, though, e-commerce marketplaces were trying to stem the issue. This would take time, he added. Meanwhile, Rainforest was evaluating two more FBA brands, both of which were in the due diligence stage that typically took 30 days to complete before the acquisition or transfer was finalised. The startup would name the brands it purchased only when between eight and 12 had been acquired. Chai did say that all the brands it had identified for potential acquisition were in the home and pets categories. They also had revenue of between $500,000 and $5 million, with at least 18 months track record of running profit as well as a 15% net profit margin. Potential brands also ranked high in rating, reviews, and ranking on Amazon, including brands that played in small niche markets but were ranked high and had good reviews, he said. Products they sold also would have be relevant to Asia-Pacific markets, he noted. While brands did not need to be Asia-based, he expected at least half of Rainforest's acquisitions to be from this region due to their proximity. Of the three brands it announced last month, two were owned by a Singapore seller while the third was a US brand. Its plans to look at brands from Asia was how Rainforest hoped to differentiate itself from other e-commerce aggregators, including early-market mover Thrasio, which was focused exclusively on Amazon's FBA brand ecosystem. And while Thrasio had more than 100 brands that each sold different things, Rainforest was targeting about 50 to 60 brands. Platform fragmentation must be plugged The Singapore startups also would be looking to differentiate itself by building tools that enabled its brands to more efficiently manage their operations across the different marketplaces. The fragmentation across these platforms was proving increasingly challenging for brand owners, Chai said. Sellers would have to log in and out of each e-commerce marketplace to update their inventory or product information. "Managing multiple marketplaces is a big challenge for small brands, especially when they start looking at [taking their products] global," he said. "Right now, they are [solving the problem by] just throwing people at it, assigning an employee to manage one marketplace each." "One of the more mundane tasks is having to ensure information was in sync across the different platforms," he explained. A product that was sold out after a sale campaign on one marketplace would need to be updated immediately as out of stock on all other platforms. This was critical since sellers typically would be penalised if they were unable to fulfil orders, including receiving a bad customer review. "Managing inventory and pricing across the systems and keeping everything in sync, these are mundane but real e-commerce issues [brands have to deal with]," Chai said, noting that Rainforest hoped to facilitate cross-platform interoperability. The startup currently was developing tools to help its brands better manage this across Amazon's multiple platforms, such as its localised Singapore and US sites. These then would be expanded to include other e-commerce marketplaces, he said. Rainforest also was tapping artificial intelligence, machine learning, and analytics to identify consumer trends early, so the data could be used to acquire the right brands as well as help its brands launch relevant products. Its primary goal was to enable its brands gain greater operational efficiencies across their supply chain, including sourcing, shipping, inventory, marketing, and  marketplace management, Chai said. "We see a world where [there's] a new generation of brand management that is much lighter, automated, and technology-enabled," he said.

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