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Ecommerce aggregator Upexi sees 'amazing opportunities' to grow

CEO Allan Marshall breaks down the company's shared services for brands, and the importance of the human element in M&A.

Ecommerce aggregator Upexi sees 'amazing opportunities' to grow

During a long ride as the CEO of the company now known as XPO Logistics, Allan Marshall built a business from the founding stage that became the third-largest freight company in the U.S.

Now, the serial entrepreneur is providing the platform for multiple brands to reach new heights.

Marshall is the CEO of Upexi, which acquires profitable brands selling on Amazon and direct-to-consumer channels. With an eye toward achieving the high-growth and attractive margins that the digital economy makes possible, Upexi provides shared services such as advertising and logistics to help brands scale.

It is producing results: In its most recent earnings report, the company reported a 444% year-over-year increase in revenue to $27.1 million. Gross profit was $10.3 million.

What became an aggregator started with a single brand. When Marshall initially came onboard as an investor, Upexi was a CBD brand. In the operational capacity that the brand possessed, Marshall saw the potential to build a business around not just one brand, but the making and distribution of products from multiple brands.

“In the end, it’s still a service business,” Marshall said. “How do you make the best product? How do you get it to the customer? How do you back up your product after you sell it?”

Seeing this promise, Marshall became CEO in 2019. Now, Upexi has six brands under its umbrella in verticals including health, wellness, pets, toys and beauty. In turn, it divested CBD assets. Upexi also has a liquidation business focused on wholesale, DTC and Amazon.

Upexi's brands each have access to a range of services that move products across the process of development and production to selling and ultimately shipping.

“When I decided to take over the business, we wanted to be totally vertically integrated throughout our business,” Marshall said. “So for our core products, we have our own R&D, we have our own manufacturing. We have our own ad network. We have our own dev teams.”

To power demand generation for its brands, the company also acquired a programmatic adtech platform called Interactive Offers.

“That allowed us to advertise more freely on smaller networks, and build data with more efficiency and less cost for us,” Marshall said.

When it comes time to move the product from the brand to the customer, Upexi offers pick, pack and ship logistics services. The company is opening a new facility in Florida to consolidate operations.

Looking ahead, Marshall sees ecommerce continue to expand to more channels, even as Amazon remains a massive opportunity for sellers. Upexi is building a presence on Walmart, Etsy, eBay and other channels. As more digitally native brands embrace wholesale, Upexi also sees opportunity to expand on in-store sales.

There have also been shifts in the ecommerce aggregator market. With the boom in rollups during the pandemic, Marshall said aggregators funded by massive levels of investment capital were acquiring businesses for outsize valuations. Upexi chose to put its acquisitions on hold during this time. Now, it has fuel to continue to acquire, even after the levels of available capital for acquisitions dipped. It shows how M&A among Amazon-based businesses is continuing, even if the market isn't as frothy as it was in 2020-21.

“We're seeing amazing opportunities at reasonable valuations to grow this business,” Marshall said.

When it seeks to acquire a business, Upexi pays close attention to metrics such as COGS and margins, as well as valuation. The company is also interested in the potential to launch new products, and can benefit from the services and scale that Upexi offers.

Yet it’s most important that the brands are a fit with Upexi as humans. The first thing Marshall does is meet with the business’ owners and team to understand how the business works.

“There have to be synergies between the seller and me, and the seller and our team. So the human element is the number one element we look at,” Marshall said. “No matter what the numbers say, if we can't kind of bring you on board for our journey, then we're not that interested in buying your company.”

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