Branded and Heyday, two Amazon aggregators, plan to merge as the industry continues to shrink.

• It is reported that Amazon aggregators Branded and Heyday are set to merge imminently, according to CNBC.
• The combined companies will form a new entity called "Essor."
• Since the drying up of venture capital funding, the Amazon aggregator space has faced challenges in maintaining profitability and operating acquired brands.

According to CNBC, Branded and Heyday plan to merge, as the e-commerce industry continues to consolidate during the Covid era.

Essor, which means "take flight" in French, will be the new entity formed by the combined companies, as stated by Heyday CEO Sebastian Rymarz in a note to staffers on Monday. He emphasized that the platform will help elevate brands to new heights, capturing the company's vision.

The new name of the combined companies will be officially unveiled in the near future, and it is predicted that they will generate an annual revenue of $400 million, according to Rymarz.

According to Bloomberg, sources claim that Apollo Global Management and BlackRock are in discussions to provide new debt financing to the combined entity, enabling it to make additional acquisitions.

""Branded is the ideal partner for our merger, which has been in the works for over a year to achieve our mission, accelerate progress, and strengthen our financials, as we've previously discussed," Rymarz stated."

Neither Heyday nor Branded responded promptly to requests for comment, while BlackRock and Apollo declined to provide an immediate response.

It is reported that Heyday may conduct a significant round of layoffs, potentially affecting up to 70% of its employees, following the merger. The source claims that Branded will take over Heyday's technology team and absorb several brands, including ZitSticka and Boka, which produces fluoride-free toothpaste and other dental care products.

Amazon seller aggregators Heyday and Branded are part of a competitive and volatile market. These companies took advantage of low-interest rates and the growth in e-commerce caused by the pandemic to collectively raise over $16 billion from top investors on Wall Street and in Silicon Valley. High-profile investors such as L Catterton, BlackRock, and even Jared Kushner's Affinity Partners showed interest in these aggregators.

In 2022, as venture funding dwindled for cash-intensive startups and e-commerce demand decreased with consumers returning to physical stores, aggregators faced challenges in making a profit from the brands they acquired.

Thrasio, a former highflier and an early leader in the aggregator space, filed for bankruptcy in February and lost several key executives. Consolidation among aggregators has accelerated over the past year. Prior to the deal with Paris-based Branded, Heyday explored a possible tie-up with Dragonfly, whose backers include L Catterton, before the talks fell apart, CNBC previously reported.

WATCH: What's behind the hype and billion-dollar aggregators buying Amazon sellers