This Issue's TLDR...

• Details on Thrasio's bankruptcy, directly from the court documents.
• A powerful new tool against Black Hat sellers
• The dark underbelly of Amazon Automation

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BEST from Me

After months of rumors, it finally happened: Thrasio filed for Chapter 11 bankruptcy protection.

Many will take victory laps saying "I told you so." Many will Monday morning quarterback the situation and try to attribute a complex event to 1-2 causes. Still others will demonstrate their lack of understanding of what Chapter 11 bankruptcy *really* means, and declare Thrasio to be dead.

Anyway, my own view is:

• No, actually, most of these people did not see this coming, and were just as bought in to the Amazon Aggregator zeitgeist as the rest of us. But, whatever, let those people write their personal revisionist history.
• Complex systems produces outputs that are nearly impossible to trace back to singular inputs. So, no, it wasn't "bad MBA hires" or "ZIRP" or "above-market purchase prices" that did Thrasio in. It was all of those things, and probably a dozen others.
• They're not dead, just going through a court-supervised restructuring, and could come out the other side.

I've just started to dig into the bankruptcy filing this morning, so I don't have any deep thoughts or insighgt (yet). Instead, I'll just share a listicle of my Top 10 favorite(?) data points from the filing (everything in italics is a direct excerpt):

1. Holy Bank Accounts, Batman. As of the Petition Date, the Company's Cash Management System is composed of 376 Bank Accounts that are owned by the Debtors and certain non-Debtor affiliates. The Bank Accounts are held at fifteen (15) banks across five (5) countries utilizing seven (7) different currencies.
2. Still a Big Employer. As of the Petition Date, the Debtors employ approximately 415 Employees, 414 of whom are employed on a full-time basis. In addition to the Employees, the Debtors' workforce includes approximately 74 Independent Contractors, who perform a variety of necessary services for the Debtors.
3. The House Always Wins. And, by "house," I mean, Amazon. Approximately 95% of the Debtors’ marketing budget is spent on Amazon advertisements and marketing initiatives or third-party marketing initiatives that drive web traffic to Amazon. Also interesting: The Debtors obtain approximately 50% of their total sales through some form of advertising and is a critical part of the business.
4. Selling Dollars for 90 Cents. Thrasio is projecting $97 million in revenue over the next 13 weeks, against $131 million in operating and non-operating (i.e., interest on debt, restructuring) costs, for a net operating loss of $35 million during that period. To bridge that gap, it is going to have to draw on $70 million of Debtor-in-Possession (DIP) financing
5. Sweet, Sweet Credit Card Rewards. On average, the Credit Card Obligations amount to approximately $2 million in the aggregate per month, all of which is typically paid by Debtor Thrasio, LLC. This is honestly smaller than I would have expected. I'm guessing they have Amazon PPC spend deducted from their seller disbursements, rather than billed to credit cards.
6. Massive Operational Footprint. Each year, Thrasio markets and sources inventory for over 24,000 unique products through a highly complex network of over 350 contract manufacturers, 35 third-party warehouses, and numerous third-party fulfillment centers, including Amazon and Ware2Go, among others.
7. Leadership Matters. The Amazon world was surprised when Thrasio founders Carlos Cashman and Josh Silberstein suddenly departed. They were replaced by a new Executive team, helmed by CEO Greg Greeley (ex-Amazon, ex-AirBnb). The new leadership reduced the Company's annual net operating loss from $680 million in 2021 to $419 million for 2022.
8. Where Goods Become...Dead Stock. Thrasio cites inventory over-purchasing and over-reliance on Amazon as contributory factors to its current position. At the end of 2022, Thrasio estimated that it had approximately $425 million of excess inventory on hand.
9. We've All Wondered About Thrasio's Cap Table. That is, amidst the funding announcements, what was actually raised as debt vs equity. Well, as of the Petition Date, Thrasio has approximately $855.2 million in funded debt outstanding and approximately $2.3 billion of outstanding preferred stock.​
10. A House of Brands? Since inception, Thrasio has acquired over 200 brands and provided over 250 sellers with an "exit" from the brand they founded. (By the way, if you want the full list of Thrasio brands, plus those brand owned by ~20 other Aggs, you can download my database. If not, you'll have to settle for this infographic.)

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PS: This is the single, most detailed Twitter/X thread that I've seen on Thrasio's bankruptcy filing. Go have a read if you want more stats, but don't want to sift through the 100s of pages of legal docs.

Ari Ozick @ariozick Thrasio BK Breakdown: [TLDR: Lots of Debt. Couldn't pay $25 million due in September. Couldn't find a buyer, investor, or merger partner. Grew too fast, acquired too many things, had way too much debt] This is a pre packaged bk. They have already filed the plan with the court.… https://twitter.com/i/web/status/1763194233513476562 7:27 AM • Feb 29, 2024 3 Retweets 20 Likes Read 9 replies

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PPS: If you to go deeper on bankruptcies amongst Amazon Aggregators, I suggest you re-read my newsletter issue on Benitago's bankruptcy.

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BEST from Everyone Else

Best from the B@A Community

I think one of the reasons that being an Amazon seller is so traumatizing is because we:

1. See the malfeasance on the marketplace
2. Report it to Amazon with the naive expectation that Amazon will take swift, decisive action against Black Hats in the same way that Amazon takes swift, decisive action against honest, well-intentioned sellers; and
3. ...See nothing happen.

It's infuriating.

When I was running 3P Consumer Electronics at Amazon, ~1k sellers had a direct line to me, and I encouraged them to report malfeasance. I also personally assured them that, if the appropriate team didn't investigate (which I could see in a particular tool), then I would personally escalate to that team's Director.

What a lot of Amazon policy teams fail to realize (I think), is that sellers are a valuable source of frontline intelligence on abusive marketplace behavior. Great partnership with sellers -- notably, taking seller reporting on marketplace abuse more seriously -- directly impacts the customer experience (and here, I'm referring to end consumers as customers AND sellers as customers).

Anyway, I'll get off my soapbox and get to the point. Which is...

An anonymous B@A reader recently shared this lesser known abuse reporting workflow for when you, as a customer, e.g., receive a product with an insert that promises an Amazon gift card in exchange for a 5-star product review.

I tested this last week with a product that my wife bought from a seller that had a blatantly ToS abusive insert and, lo and behold, I saw the seller's listing disappear! (That's not to say that's the likely enforcement action; just what happened in my case)

Point is, perform test buys from competitors, look for inappropriate review solicitation in their post-purchase messaging, and take them down with this tool.

Best from my Inbox

Just one man's opinion, but I think the subscription service model is going to be under increasing pressure in the coming decade.

As a consumer, I will always choose a software tool with a one-time payment over a subscription-based tool. (That's why I use TidyCal for my booking calendar -- it only cost me a one-time fee of $19 to have paid booking links vs Calendly, which would have cost me $10/month for an equivalent plan)

Anyway, if you're like me and you prefer one-time payments over subscriptions, check out Once.tools. (Not an affiliate link, I just think it's useful and cool)

Best from X

I have a confession to make.

I regularly fantasize about infiltrating an Amazon Automation business to grift the grifters.

The people that run these scams are garbage human beings but, to the detriment of society, they're often quite savvy in marketing and legal matters.

I often been curious what their legal agreements look like and, thankfully, my internet friend Chris Potter, recently got his hands on one.

Worth a read if you're interested in this despicable corner of the Amazon universe.

Chris Potter | Tax & Bookkeeping for eCom @ChrisPotter361 I reviewed an "Amazon Automation" contract this morning. Here are the top 14 things I found that show these things are an absolute scam. 9:16 AM • Feb 27, 2024 8 Retweets 34 Likes Read 14 replies

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Updates to the Amazon Private Label Pathway

If you want to read all 189 pages of the (main) Thrasio bankruptcy filing yourself, I've added it to the Amazon Private Label Pathway.

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Back Story on the Amazon Private Label Pathway, ICYMI...

A few months back, I had a small group of coaching clients that were at the same point in their Amazon seller journeys.

I found myself answering the same questions, and pointing them to the same resources, so, in true Amazon fashion, I asked myself "What's the 1-to-Many solution here?" and built a Notion page of helpful resources, which I've called "Amazon Private Label Pathway."

You can get access to it here: https://auxo.gumroad.com/l/amazonpathway (it's free; but if you want to buy me a beer, I won't object)​

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Amazon Questions? Amazon isn't easy. Everyone needs a little help from a friend sometimes. If you ever have a tough Amazon question, I'm only a phone call away. Let's Chat

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