Why Is This Company is Buying Up Amazon Businesses? With 30 million of the highest converting consumers online right now, seems like a sound strategy.

Welcome to a new kind of consumer-products company. One that's scrappier and leaner than the old giants like Procter & Gamble because it can outsource all the cumbersome work, such as warehousing and customer service, to Amazon.

While P&G grew steadily, but slowly, over centuries, this one can scale enormously in a matter of months. While P&G has been selling-off brands left and right over the last few years (they were down to 48 in 2018), this one is acquiring brands quickly -- 101 Fulfillment by Amazon brands to be exact.

101 Commerce has gotten a lot of attention lately, and rightly so. Founder R.J. Jalichandra is calling it a "multi-brand platform consumer-goods company." He announced plans earlier this year to acquire the FBA businesses in 24 months.

Related: Why You Need to Think Outside the Box

Let's be clear. This is no small undertaking. To begin, the company evaluated 400 potential deals in 60 days and put eight businesses under Letter of Intent in the same time period. That's some serious activity, and they still have 90+ brands to go.

Why the timing may be perfect.

While building up a portfolio of brands is nothing new, building a portfolio of Amazon brands at this scale -- and this quickly -- is bound to raise eyebrows.

The main question I hear about the business model, besides if it can really be done, is this -- Isn't putting all your eggs in one basket, and one that belongs to Amazon, too risky? Especially at a time when the online retail giant has cemented its reputation for strict data-driven leadership decisions and ruthless relationships with its sellers -- and a time when headlines like, "59 Companies Amazon Could Destroy," are common.

Jalichandra, whose resume includes CEO of Bodybuilding.com, Technorati, and more, seems to be using his own data-driven decision-making process. His answer to the question of platform risk is two-fold:

1. He points to the fact that right now, third party sales account for well more than half of the platform's total package volume. In fact, marketplace sales grew by double the rate of Amazon's direct sales in 2018 (35.6 percent versus 17.5 percent) and accounted for more than a third of all U.S. ecommerce sales in 2018. 101 Commerce is betting that this type of momentum is a great sign for the future of FBA sellers.

2. He also points out that in the world of online business, platform risk is ever-present. Changes at Facebook, Google and Instagram, for instance, all have the power in today's marketplace to shake a business to its core. For Jalichandra, an ecommerce veteran, that sort of risk just comes with the territory.

Add to those two points the fact that the Amazon marketplace delivers 30 million of the highest converting consumers online right now, and you can see that the reasoning behind this acquisition strategy is sound.

Related: It's Time to Rethink the Corporate Pyramid

Furthermore, 101 Commerce is capitalizing on a great opportunity. While anyone can start a business on Amazon and take advantage of FBA, and many can grow that business into a profitable brand, few can afford to scale the business once they've hit on the right products. To do so requires cash, and usually a lot of it. And it's that infusion of cash that many bootstrapped companies, who've already done the heavy lifting and proven market demand, just don't have access to on their own.

That's where companies like 101 Commerce come in. It's sort of like of a match made in heaven, for the entrepreneurs who want to build a brand from scratch for a payoff and for the investor-backed companies who want to run with a brand, scale up and reap major ROI.

If the strategy of building an Amazon portfolio catches on in this seller's market, where money sits waiting for the right deal, entrepreneurs willing to build the right type of business on Amazon stand to profit.

What type of Amazon business attracts buyers like 101 Commerce?

We have a sort of hierarchy at Quiet Light when it comes to the saleability of Amazon businesses, with private-label sellers at the top and retail arbitrageurs at the bottom. That's not to say that any one Amazon model is more viable than another. There are multiple ways to make great money on the platform right now, and all of them -- aside from the hackers and hijackers, of course -- legitimate.

But in terms of building a business to sell, the private label FBA businesses are the most transferrable and therefore the most saleable. Any work the owner has done building a brand increases their value to a buyer because brand loyalty decreases risk and makes the products less vulnerable to price competition.

What does 101 Commerce look for in an acquisition? According to Jalichandra, the company uses three main criteria to evaluate a deal.

1. Healthy gross and net margins. Net margins average around 20-30 percent for private label brands, despite the prevailing myths.
2. A solid, successful review structure. Less than 5 percent of Amazon shoppers take the time to leave a review, so beyond a quality product, a process for generating high-quality reviews from customers is key.
3. A compelling business narrative. Jalichandra points out that no matter what you're selling, the story behind it makes a big difference. And that story also helps the buyer decide if the business owner is someone that they'll want to invest time in and work with to complete a deal. Trust is critical.

Related: 5 Ways to Minimize Early-Stage Business Risk

While the journey at 101 Commerce has just begun, it'll be interesting to see how it unfolds over the next 18 months and how many brands they'll find that match their criteria and fit in with the overall strategy. With Amazon, it does seem that anything can happen, but at the same time, the growth potential on the platform is impossible to ignore.