On Thursday, January 27, VCM welcomed Dr. Oliver Dlugosch, Co‑Founder and SVP‑Operations of the unicorn Razor Group, to the digital Let’s Talk.
Here’s what you should know about Oliver
Oliver studied physics in Düsseldorf, his hometown, and in New York. What attracted him to physics was the chance to dissect and solve problems. Because he also had a growing fascination with the business world, which was still new to him, he joined McKinsey. After completing an accelerated business fundamentals program at the consulting firm, he began his work in consulting. At the same time, Oliver earned a summa cum laude PhD on “Smart City Analytics.”
After his PhD, he started working in strategy and marketing at Fortuna Düsseldorf. When the COVID‑19 pandemic hit and the football club was forced into a hiatus, Oliver and four co‑founders launched the e‑commerce startup Razor Group with the goal of building a large company quickly. The business model: buy already profitable Amazon FBAs, then develop those brands and their products—e.g., improve supply chains and marketing—to increase value creation.
Promise and goals of Razor Group
Razor Group’s promise is that the entire sales process will be completed in no more than six weeks. This is made possible by a largely automated and standardized purchasing process. What isn’t standardized is the goal of analyzing each company individually and understanding why the founder wants to sell his FBA now, also to protect against the few “black sheep” FBAs. Currently, Razor Group purchases about 5–10 companies per month. Over time this has resulted in diversification across more than 80 brands, encompassing roughly 8,000 products in total, for example in the Home & Living and Pets categories.
Razor Group’s profit margins are 20–30 %, and the acquired brands grow by as much as 150–200 % per year thanks to the unicorn’s high leverage from external capital. This allowed the company to be profitable already last year, unlike many classic startups that spend years in the red. Because several of the five founders had previously started companies, the fundraising went smoothly. Today, investors such as BlackRock and Victory Park Capital are on board.
This is how Razor Group’s corporate structure is organized
The corporate structure consists of many functional teams that interact dynamically, which continually motivates Oliver to keep pushing and to support the company’s growth. The headquarters are in Berlin, but the biggest market is the United States, with an office in Austin. There are also locations in London, New Delhi and Hangzhou, China—although the Chinese site doesn’t sell products, for example. Additionally, each acquired brand is managed by a single person who collaborates with all teams and experts across various functions to boost the brand’s performance.
Global supply chains are refined by dedicated teams, and supply‑chain issues are addressed by quickly adjusting the logistics flow, so that the delivery and logistics challenges during the pandemic—while incurring extra costs—did not cause major outages. A smooth outcome was also helped by the backup inventory stored in warehouses, allowing the company to offset supply shortages for several months.
A competitor in the German market is SellerX, but Razor Group is the market leader in Germany—and arguably across Europe. The global leader in acquiring Amazon FBAs, Thrasio, is based in the United States.
The goal of the Razor Group for 2022 is to triple its business. We're curious whether the Berlin‑based company will reach this ambitious target.
Finally, the Let’s Talk with Oliver gave a super interesting insight into the business with FBAs and into the whole Razor Group.
