At Website Properties, we having been working as internet entrepreneurs for over 19 years. By building our own eCommerce businesses or by helping our clients’ sell theirs, we have always been a part of the fast changing, innovative landscape of the internet; arguably one of this generation’s greatest hotbeds for exercising the entrepreneurial spirit. We’d like to pay our good fortune forward and help others get theirs started!
Each year we offer a scholarship to help out those new entrepreneurs entering post secondary education. Let’s face it, college is not cheap! But its an important first step in laying the groundwork for years of success in business, the arts or whatever field makes you tick. We’ll offer a little help to three students each year to make the trip through the college years a bit more smooth.
Check back each year to see our new scholarship program. We’ll post the winning essays each year so you can see what the new crop of entrepreneurs think about the future of the internet.
Vice President of Marketing and Operations
With over $107 billion dollars in net sales in 2015, 304+ million active customer accounts worldwide and an 81% online user reach in the US, Amazon’s massive presence is undeniable. Its size and continued growth is what attracts sellers around the globe to enter the Amazon space as a sales channel for its products with the hope of capturing a share of its customer base.
With more and more business built around selling products on Amazon, it stands to reason that we’re seeing more and more businesses for sale that are Amazon based (ie. depending on Amazon.com as a sales channel whether 100% or just a portion)
While the fundamentals of an Amazon business differ from traditional website businesses, the process of selling it is similar. It all starts with getting a proper valuation.
As with traditional eCommerce businesses, the factors that will have an impact on valuing an Amazon business includes:
- History – How much history does the business have? The more established the better since a longer history equates to less risk for a buyer and thus is valued higher.
- Cash Flow – Amazon like website business are valued based on a multiple of the Trailing 12 Month total EBITDA and less owner compensation and discretionary items.
- Trend – Is the business growing, flat or on decline.
- Vendor Relationships – Are there any special or exclusive vendor/supplier relationships?
- Inventory Management – Does the business stock and manage its own inventory or does it use Amazon FBA for fulfillment similar to a dropship model of a website business.
- Products Offered – How many products are offered for sale?
- Unique Brand – Establishing unique appeal in the marketplace has become an increasing important element of brand development and holds even greater importance for Amazon FBA based businesses. An established brand can have a significant bearing on getting a better market valuation as well.
Unlike a business whose majority sales channel is its own website, Amazon based businesses don’t have traffic, customer database and search engine positioning to reference as indicators of its performance. Instead it relies on Product Reviews, Amazon Product Ranking and Amazon Keyword Positioning for its success making these markers also valuable for its sale.
Once a valuation has been completed, the next step is to create a marketing presentation of your business to share with prospective buyers. This document is typically called a Prospectus and is an important part of representing your business.
Finding the right buyer and negotiating the transaction toward a closing sale is the last step on this journey. Reaching internet business buyers specifically interested in businesses operating in the Amazon marketplace can seem like a daunting task. Having an experienced internet business broker who knows the Amazon playing field handle the sale of your Amazon business has several benefits. Not only does the broker have the expertise in appraising the business to establish a fair market value, preparing a marketing strategy to maximize the exit price, creating a professional prospectus for prospective buyers to review, but also works knows how to reach the right buyers. Reaching qualified Amazon Business Buyers and being able to discuss the nuances of this particular landscape is truly an invaluable service toward achieving a successful exit.
Vice President of Finance
Website Properties, LLC.
So you’ve decided to take the leap and purchase a website business, perhaps because you would like a career change or want to work from home or you are retired and would like an additional revenue source. Another exciting reason to join the ranks of ecommerce owners might be the attractiveness of the size of this massive market. According to eMarketer, retail eCommerce sales will reach $1.915 trillion by the end of 2016, a growth rate of 23.7% rate for 2016.
The reason for purchasing a website business will be different for everyone, but most would agree that it is the freedom to work from anywhere, the flexible schedule and the opportunity to create a business to suit your specific needs that most people find appealing.
With so many types of internet businesses to choose from and without having any online experience, is this a feasible venture? As with venturing into anything new there is always a learning curve, but it can be done! Here are a few notable tips to get you started in the right direction:
- Start by asking yourself why you want to buy an online business. Are you passionate about your objective? What are your expectations? Be honest and realistic with yourself.
- Then choose the most doable idea, focusing on your strengths. Do not plunge into the most difficult online business, choose a simple model at first. Perhaps an online business that doesn’t stock inventory and one that is well established.
- Next learn the language of the online world. Make yourself familiar and comfortable with the vocabulary of the internet in general and your niche in particular. Understanding the common terms you will hear and deal with will help you gain a strong foothold on the internet and help you connect better with your customers and their needs.
- Consider acquiring an established internet business versus building one from scratch. Typically when purchasing an existing website business, the seller is more than willing to assist and train a new owner for a period of time. You can also continue operations as is until you learn your way and then make changes you desire in order to grow the company.
- Know your audience. Since your business will be focused on an audience, the success of your online business hinges on them. You will then be able to tailor an effective and successful marketing plan. Once you have identified your audience, you must then figure out how to reach them.
- Differentiate yourself. Prove to your target audience that you are the best choice in your niche.
- Now comes the technical side of a website business – analyzing your website visitors and utilizing analytics to optimize your site. One of the greatest tools is the ability to measure, track and test campaigns to see how visitors react and use this to maximize your website’s effectiveness. There are many resources online these days that explain and teach the skills necessary to understand and interpret website analytics, how to optimize your website as well as on marketing, entrepreneurship and business management.
- Promoting your website business and continuing to reach your audience through a purposeful marketing strategy, makes all the difference. There is a great variety of internet marketing strategies available. If you are purchasing an existing online business, the previous owner should have a marketing plan in place for you to follow for the time being. You can then explore and educate yourself on all the available marketing options and which suit your needs in your niche the best.
- Remember, you can always hire employees and contractors short term to deal with key tasks or areas with which you are not yet familiar. Understand what the duties will be, how they will accomplish the tasks, perhaps the roadblocks they may face, and for what length of time you intend to need them – permanent or short term.
- And finally, scaling your business. Develop strategic relationships, work with vendors for favorable pricing and negotiate partnerships that allow the business to scale rapidly. Then be sure you have the systems and processes in place to keep up with the increased demand. Automation through software and technology can ensure a controlled process and speed up the time spent on doing tasks manually.
Don’t expect miracles with your first foray as an online entrepreneur. There is a lot to learn and hard work involved. But as a result of researching and applying the key components of running an online business, knowing and utilizing your strengths, admitting your weaknesses and investing in resolving them, there is no reason why having no online experience should hold you back from success.
Your efforts will bear fruit!
Website Properties, LLC