The Amazon Aggregator Crash of 2025: How Thrasio’s Valuation Bubble Burst

The 2020–2021 e-commerce gold rush saw Amazon aggregators like Thrasio raise $12.3 billion in funding, promising sellers 5–7x EBITDA multiples for quick exits. By 2025, however, 87% of these aggregators had either collapsed or undergone restructuring. Thrasio’s bankruptcy—with $1.2 billion in debt and 200+ failed acquisitions—exposed a harsh reality: valuation bubbles, reckless acquisitions, and operational missteps can destroy even the most promising business models.

For U.S.-based Amazon sellers and eCommerce brands, understanding this cycle is critical. Whether you’re considering selling your business or scaling through acquisitions, the lessons from Thrasio’s rise and fall offer invaluable insights into discipline, capital efficiency, and operational excellence.

The Amazon Aggregator Model: How Thrasio Sparked a Revolution (and Then Imploded)

Amazon aggregators aimed to consolidate third-party sellers into portfolios, leveraging economies of scale to streamline operations, boost margins, and accelerate growth. Thrasio pioneered this approach, raising over $3 billion in 2021 alone and acquiring 200+ brands. Investors bet on multiples of 5–7x EBITDA for sellers with proven Amazon track records.

But beneath the surface, cracks formed rapidly:

The Capital Bubble: How Free Money Distorted Valuations

The aggregator boom coincided with a historic capital bubble fueled by:

  • Zero-interest-rate policies: Cheap debt made leveraged acquisitions irresistible.
  • COVID-19 e-commerce surge: Online shopping growth inflated seller revenues, creating unrealistic expectations.
  • FOMO investing: Over 100 aggregators entered the market, driving bidding wars.

Thrasio’s co-founder, John Hefter, admitted in a 2025 interview: “We started paying 2x EBITDA for quality brands. By 2021, we were paying 7x for ‘Chinese vaporware garbage’ just to hit growth targets.”

Marketplace Pulse data confirms this:

  • 2021: Aggregators raised $12.3 billion (75% debt).
  • 2024: Funding dropped to $1.5 billion as debt covenants tightened.
  • 2025: Valuations normalized to 2–3x EBITDA, but profits remain elusive for many aggregators still digesting overpriced portfolios.

The result? A death spiral of overleveraged portfolios and unrealistic expectations.

Acquisition Strategies Gone Wrong: Why Thrasio Failed

Thrasio’s downfall wasn’t due to a flawed model—it was due to execution under extreme conditions. Key mistakes included:

1. Overpaying for Low-Quality Assets

Competition forced aggregators to buy brands with declining margins, niche products, or compliance issues. Many required heavy reinvestment just to maintain sales. By 2024, Thrasio had written down over $500 million in “goodwill” from failed acquisitions.

2. Speed Over Substance

Thrasio scaled from 4 founders to 1,600 employees in 2.5 years, acquiring 200 brands. But rapid growth led to:

  • Inventory chaos: A single ordering error cost hundreds of millions when a “test” purchase was accidentally processed for the entire portfolio.
  • Cultural clashes: Merging teams with divergent playbooks created operational friction.
  • Burnout: Managing 200+ brands across 10 countries strained even the most experienced leaders.

3. Underestimating Competitor Sophistication

While the number of active Amazon sellers declined, the number generating $1M+ in annual revenue grew to 120,000+. Aggregators found themselves competing against battle-tested sellers with deeper pockets and better data insights.

“Some aggregators were worse at running Amazon businesses than the sellers they bought,” Hefter noted. “By 2024, many sellers had built their own in-house teams and were less willing to sell.”

Operational Excellence: The Missing Piece in the Aggregator Puzzle

Thrasio’s collapse underscores a critical truth: Consolidation works only when operational execution matches ambition.

Contrast Thrasio’s fate with software aggregators like Threecolts ($200M raised) and Carbon6 ($210M sale), which thrived by:

  • Focusing on high-margin SaaS tools for Amazon sellers.
  • Avoiding physical inventory risks.
  • Leveraging automation to scale without linear cost increases.

For physical goods aggregators, operational excellence requires:

1. Disciplined Valuation Metrics

Stick to 2–3x EBITDA multiples for proven brands, avoiding “growth at all costs” traps. By 2025, the most successful aggregators are those that waited out the bubble and now acquire at rational prices.

2. Technology-Driven Integration

Use AI to streamline inventory forecasting, ad optimization, and customer service. Thrasio’s manual processes couldn’t keep pace with portfolio complexity. Modern aggregators are investing in proprietary tech stacks to automate 80% of routine tasks.

3. Cultural and Operational Alignment

Ensure acquired teams share a playbook. Hybrid models (e.g., keeping original founders on board) can preserve expertise. By 2025, the best aggregators treat acquisitions as partnerships rather than takeovers.

The Future of Amazon Aggregation: Discipline Over Hype

Despite the carnage, the aggregator model isn’t dead—it’s evolving. Success now demands:

  • Niche specialization: Focus on categories with high barriers to entry (e.g., private label, DTC brands).
  • Capital efficiency: Use equity over debt to fund acquisitions. By 2025, the most stable aggregators are those with cash reserves and no debt.
  • Seller-centric terms: Offer earnouts or revenue shares to align incentives. Sellers are now more skeptical of upfront cash deals and demand performance-based payouts.

Hefter believes the model could revive at 2x multiples with better tech infrastructure. But the bar is higher: Amazon sellers are more sophisticated, and platform algorithms reward agility over scale.

What U.S. Sellers Should Learn from Thrasio’s Mistakes

  • Don’t chase valuations: Sell when your business is profitable and scalable, not when investors are euphoric. By 2025, sellers are waiting for at least 12 months of consistent profitability before engaging with aggregators.
  • Prioritize operational fit: If you’re acquiring brands, ensure you can actually improve their performance. The most successful aggregators in 2025 are those with proven track records of increasing seller revenues by 20%+ post-acquisition.
  • Build resilience: Diversify revenue streams and avoid overreliance on Amazon’s whims. By 2025, the top sellers generate 40% of revenue from non-Amazon channels like DTC websites and retail partnerships.

Call to Action

Ready to scale your Amazon business without repeating Thrasio’s mistakes? Our team specializes in data-driven acquisition strategies and operational optimization for eCommerce brands. Contact us today for a free portfolio audit and discover how to maximize growth while minimizing risk.

FAQs

Q1: What is an Amazon aggregator?

An Amazon aggregator acquires and consolidates third-party seller businesses on Amazon, aiming to streamline operations and boost profits through shared infrastructure.

Q2: Why did Thrasio fail?

Thrasio collapsed due to overpaying for low-quality assets during a capital bubble, rapid scaling without operational discipline, and competition from sophisticated sellers. By 2024, the company had burned through most of its cash reserves and was forced into bankruptcy.

Q3: Is the Amazon aggregator model still viable?

Yes, but only with disciplined valuations (2–3x EBITDA), operational excellence, and niche specialization. Software aggregators focusing on Amazon seller tools have proven more resilient. By 2025, the most successful aggregators are those that survived the 2021–2024 bubble and now operate with lean teams and rational acquisition strategies.