OpenStore’s demise marks endgame for once-booming e-commerce aggregator market

Keith RaboisGetty ImagesWhen venture capitalist Keith Rabois got into e-commerce, he couldn't stop buying brands

Now, everything must go.OpenStore, co-founded by Rabois in 2021, is shutting down nearly all of the 40-plus Shopify stores it acquired, and it's in the cess of liquidating any remaining inventory by offering steep discounts to move merchandise.Earlier this week, the company announced it plans to focus solely on growing Jack Archer, the menswear brand it bought for $837,000 in 2022

Bloomberg previously reported on the financing round and some of the reorganization details.OpenStore's existing backers include General Catalyst, Lux Capital and Khosla Ventures, where Rabois is a managing director

Rabois didn't respond to requests for .It marks the example of the decaying e-commerce aggregator market

He posted on Twitter (now X) in April 2021, the "best talent i have ever worked with is joining Openstore." a year later, Insider quoted Rabois in a story saying, "We can absolutely handle acquiring a in a day," and that "I eventually want to get to one an hour, but that is definitely a challenge."As recently as June 2024, Rabois d a post from the company and wrote, "We're hiring! Come learn the future of commerce online."By that point, the broader aggregator market was in free fall

Unybrands, backed heavily by Jared Kushner's Affinity Partners, also cut jobs around the same time.OpenStore rolled up dozens of Shopify stores offering an asment of hairbrushes, neck pillows, fine jewelry, skin wands and other goods.By last year, the had come under significant pressure

It was becoming increasingly difficult and expensive for some of OpenStore's brands to attract and retain customers.Last August, the company tapped the brakes on new acquisitions, and cut jobs across the company, according to people familiar with the matter who asked not to be named because of confidentiality.Jack Archer and a selection of other brands, Future Kind supplements, Sweat Tent portable saunas and EXO Drones, were viewed as standouts

But many of OpenStore's other ducts failed to grow their sales, while they required costly digital marketing campaigns and new duct development that burned through cash, the people said.By the beginning of this year, employees in OpenStore's supply chain division were putting together a liquidation list, said one person involved

The first step was to turn off the brand's Shopify store, then either sell remaining inventory at a discount or donate it, they added."It was just way too many different brands to make them all work the way Jack Archer did," the person said.watch now6:0806:08Shopify president: So far, we're seeing no slowdown from the tariffsSquawk on the StreetAs part of the restructuring, OpenStore laid off more employees in June, the people said

Among the teams that were impacted was a group working on an automated customer support service, called OpenDesk, they said.Several top executives have also departed the company, including OpenStore co-founder and chief Jeremy Wood and Trenton Riggs, the company's president.When OpenStore was getting started and scaling, some investors with limited domain expertise in e-commerce were attracted to the opportunity because of Rabois' long history in startups and venture capital, according to a person familiar with the matter who asked not to be named in order to discuss private information

They were less enticed by the of rolling up small online retailers, the person said.Before his career in venture at Khosla and Peter Thiel's Founders Fund, Rabois had key roles at Square, LinkedIn and as part of the so-called PayPal mafia, and he made notable angel investments in companies including YouTube, Airbnb and Palantir.Rabois, who served as OpenStore's CEO, won't be involved in Jack Archer's day-to-day leadership

He will remain on the company's board, another person familiar with the matter said

The person asked not to be named in order to discuss private information.Last month, the company named Emma Crepeau, previously growth chief at apparel company Rhone, to be Jack Archer's CEO as it enters the "next chapter of growth." Jack Archer, which has seen triple-digit net sales growth year to date and "strong" customer repeat rates, plans to relaunch its brand in the fourth quarter, the person said."We're doubling down on what matters most: purpose-built design, modern essentials, and a community of men redefining what style can look and feel ," the company wrote in a LinkedIn post. "Emma's leadership will be a key part of that evolution."As for Rabois' current view, he's still finding a way to mote the company

In response to s on X some of the developments, he wrote last month, "Not a failure — 10x focus on what is anomalously great."— CNBC's Ari Levy contributed reporting to this story.Don’t miss these insights from CNBC Nvidia gets price target hike from Goldman Sachs ahead of earningsA bearish 'double top' pattern just formed in the Dow