An E-Commerce accelerator is a service provider that specializes in selling third party products online. Modern e-commerce accelerators focus on managing marketplaces such as Amazon and opening new online channels such as Direct to Consumer (DTC/D2C). Such accelerators also focus on day to day operations, logistics, marketing, and promotion of products within the digital space.
Some accelerators also purchase inventory upfront and become de-facto distributors on specific regions and platforms. This model is attractive to brands as there is no need to be involved in day to day operation of e-commerce websites and marketplace sales.
Once an e-commerce accelerator purchases inventory and becomes the official distributor on a channel the optimization stage begins. The first step is to optimize product images, listing descriptions, and identify the optimal retail price for a channel. This stage encompasses most things a traditional marketing or digital agency would do to improve listing performance.
Unlike e-commerce roll-ups that acquire and own the brands they optimize; accelerators must focus on sustainable growth. This generally translates into a lack of short-term competitiveness against roll-up brands that are loss leaders to gain reviews and grow product awareness. This difference in sustainability versus growth can lead to accelerators driving lower growth figures in the short term.
Accelerators also help monitor and enforce Minimum Advertised Pricing (MAP) to ensure that margins are not eroded by other sellers. This is important given that many customers anchor their price expectations for a product based on an online price, even when inside a brick-and-mortar store.
E-commerce accelerators can also have a mismatch of goals when compared to a roll-up or a brand that controls its own e-commerce journey. Accelerators are rewarded for selling inventory on specific channels such as Amazon, however there are no incentives for accelerators to drive sales towards brick-and-mortar retailers. This inherent conflict of interest must be well managed to ensure mutual long success for the brand and the accelerator.
The ideal e-commerce accelerator should have an omni-channel focus, with a bigger focus on geographies rather than specific sales channels. This region-specific focus enables initiatives to be aligned without risking potential conflicts of interest.
The e-commerce accelerator model is not too different from a traditional exclusive distributor or sales agent. The accelerator is responsible for growing sales inside a specific region and channel by leveraging its know-how, technology, and networks.
We believe that the ultimate winner in the e-commerce accelerator and e-commerce roll-up race will be a mix of both models. With most CPG industries being saturated and fragmented, considerable capital investments will be required to create sustainable DTC relationships with customers. Accelerators will have to ultimately drive the establishment of a critical mass of direct customer relationships that they own across multiple channels to create sustainable brands.
