Airwallex: Why FBA Aggregators are optimising their payment operations to protect margins for 2024

Fulfilled-by-Amazon (FBA) aggregators acquire successful brands selling on Amazon’s vast online marketplace. Then, they optimize operations to outcompete rivals. Yet, streamlining payment processes is paramount, with high acquisition prices and rising interest rates squeezing profits. Aggregators with the best-in-class financial infrastructure – as offered by Airwallex, for instance – can boost efficiency and global growth while reducing costs and friction.

Pioneers proved the FBA aggregator model’s potential. Thrasio raised over $1 billion by 2020, attracting a valuation of up to $10 billion. Their meteoric rise triggered an FBA gold rush.

However, the good times didn’t last, inevitably. As interest rates climbed in 2022 and 2023, many aggregators laid off staff as challenges piled up. Margins shrank under mounting debt obligations while acquisition prices also ballooned, compressing returns on new deals. 

Amid new pressure, aggregators turn to operational efficiency

Thrasio’s troubles reflect broader pressures on FBA aggregators. With key profit drivers squeezed, optimising payment operations is urgent for survival. Indeed, FBA aggregators relied on two profit engines previously. They are acquiring brands by leveraging cheap debt and optimising the brands’ top and bottom margins by improving their operational efficiency. But, in the current high-interest-rate environment, the first profit engine is gone. Aggregators must now focus on operational efficiency. They can relieve margin pressures by streamlining processes, centralising spending, and automating workflows.

Leading aggregators are turning to financial infrastructure to optimise their payment workflows. Solutions like Airwallex allow them to:

• Onboard new payment accounts instantly per brand to enable rapid expansion 

• Centralise spending and cash flow visibility across entities

• Orchestrate flows to avoid bank fees and foreign exchange (FX) markups

• Integrate systems to automate reconciliation and reporting

• Collect global revenue without conversion fees or delays  

It’s worth examining these five efficiency gains to underline the multiple benefits of partnering with Airwallex.

Lightning-fast payment account opening

Acquiring new brands is an FBA aggregator’s lifeblood. But onboarding traditionally drags, as financial and compliance checks crawl along.

With Airwallex, aggregators can instantly create multi-currency accounts for every new acquisition. Companies simply link their accounting software, sparing tedious manual data entry.

“If you’re looking for a scalable and slick onboarding and setup process for each acquisition, Airwallex is fantastic,” says Sam Horbye, Co-Founder of fast-growing FBA aggregator Olsam. By removing onboarding friction, aggregators facilitate faster deals and geographic expansion.

Centralised cash-flow command and visibility

Scaling any business means tracking multiple income streams and bank balances. For aggregators managing a portfolio of brands, that complexity multiplies.

Airwallex tackles the problem by centralising financial oversight. Its dashboards consolidate accounts, payments, and payouts across all entities. 

From one intuitive interface, finance teams monitor cash flow, pay bills and suppliers, and track revenue collection from global marketplaces. That bird’s-eye visibility enables proactive decision-making.

“Airwallex provides a great interface for viewing a consolidated list of sellers and Amazon stores in a nice dashboard,” explains Horbye. “The design is very helpful for businesses like us.”

Cutting costs through automation

Manual payment processes cost person-hours. But Airwallex integrates with major eCommerce platforms and accounting software - like Xero and NetSuite - automating mundane tasks.

Transactions from Amazon, Shopify, and other marketplaces sync automatically without manual reconciliation. Paying overseas suppliers also becomes one-click.

“The Xero integration is good in that you’ve got timely and accurate bank feeds directing to Xero, which saves a lot of time and means that accounts can be kept up to date more easily,” says Oliver Blackmore, Chartered Accountant at Elver eCommerce Accountants. FBS aggregators can re-invest those time savings into more strategic initiatives.

FX and bank fee eradication

Airwallex helps aggregators eliminate two significant drains on margins: FX losses from forced conversions of marketplace payouts; and bank fees on supplier payments and foreign transfers.

Multi-currency accounts let FBA aggregators receive marketplace payouts in original currencies, avoiding conversions. Wholesale FX rates beat bank spreads hands-down when paying suppliers. Blackmore highlights how Airwallex’s multi-currency account lets clients receive international marketplace payouts without expensive forced conversions. This saves up to 4% in FX fees.

Virtual expense cards also centralise advertising spending across brands, increasing rebates. Olsam’s Finance Director, Martyn Firth, says: “We have great ambitions to grow the business in terms of new territories and to optimize our cash position and the efficiencies we can build.”

Built for global growth

Local accounts provided by regional banks hamper global expansion, while maintaining relationships with those banks is cumbersome.

Airwallex leapfrogs these hurdles by enabling aggregators to collect revenue worldwide into a single account. Compliance is centralised, avoiding repeat due diligence.  

This kickstarts international growth without the legal, operational, and software integration pains of using multiple country-specific banks. “If you want to sell on Amazon in the US, you need a solution like Airwallex to support you,” says Blackmore. “Otherwise, it’s just not going to be possible.”

Ultimately, with margin pressure mounting, operational excellence is now the vital competitive arena for FBA aggregators. Optimising payment workflows and costs through financial infrastructure can help protect profitability. Airwallex empowers high-growth aggregators to onboard instantly, centralise oversight, automate reconciliations, and tap global revenue streams.