Business Start Date: 2013

Business Price: 4.6M

Sales: $12,678,375

Net Profit: -$1,205,622.21

Business Multiple: .355x of 2022 Sales

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The Opportunity 

This is a FIH.com offering for 2 interconnected highly rated Amazon FBA businesses that sell consumer lighting products/decor for multiple segments. The first business was founded in 2013 while the 2nd was founded in 2015 and they are both owned and operated by the same person. They boast over 13M in sales but are currently unprofitable with over 1M in losses for this year and some debt attached. This is a great opportunity for a turn around to take over the businesses and restore them to their historically super profitable status.

General Highlights

• 2 highly aged (2013 + 2015 founded) and diversified (many selections of products) being offered

• Both rated brands (most products have 4.6/5 or better) included in competitive niche (the brands dominate their niche)

• Business did almost 13M in sales in 2022 and has a very profitable past (although not currently)

• Tremendous asset value in terms of business history, customer trust, and 1.2M in inventory make it a strong acquisition target.

• If new owner converts business to mere 20% profit margin on sales, the multiple of the business would only be priced at 1.77X profit

Niche

The business serves the niche of consumer lighting systems for a wide range of uses - the lights they sell are:

1. Trendy in style (kinda modern and kind of vintage - multiple colored lights available)

2. Differing in length (some are individual lights while others are 100 feet long strands)

3. High Quality (all products are highly rated)

4. Durable (most are waterproof and shatterproof)

5. Differing in technology (some have dimmers while others have bluetooth)

6. Differing in environment (some are meant for outdoor and are solar powered while others are meant for indoors and have plugs)

Customer Base

The customer base for the products represents in general the typical customer on Amazon, looking for high quality quick-arriving goods that have a flexible return policy and have high amounts of ratings. 

In general, the average price of products being sold in the 2013 founded FBA is $36,86 for 2022 and the 2015 FBA had a average sale price of $35.97.This shows the price range of the product is very middle of the road = not too expensive and not too cheap so good for both sides of the demand chain potentially. 

Traffic

The 2015 founded FBA business had 2,391,353 pageviews on their products on Amazon in 2022, resulting in over 155,114 product sales.

The 2013 founded FBA business had 2,781,299 pageviews on their products on Amazon in 2022, resulting in over 192,595 product sales.

To get a product by product overview of traffic, please refer to attached financials.

Revenue Sources

The business makes money purely from selling product via Amazon FBA (in a couple countries) of which they supply and brand from a respected supplier in China.

Financials

Financials have fluctuated for the business as of late due to the macroeconomic environment in China being closed off, higher costs of products and shipping, as well as more competition on Amazon. Due to this, sales have increased overall but profit is down from where it was at 1.4M EBITDA in 2020 (although there is the chance to get back up there). Here is a outline of the sales history:

Sales (USD)

For 2013 FBA store:

2019 Total: $4,321,363

2020 Total: $10,836,435

2021 Total: $10,100,403

2022 Total: $7,110,665

For 2015 FBA store:

2019 Total: $2,086,606

2020 Total: $6,641,630

2021 Total: $8,107,730

2022 - $5,597,770

Profit (USD)

For 2013 FBA store:

2019 Total: 740,228

2020 Total: $2,100,518

2021 Total: $629,008

2022 Total: - $617,917

For 2015 FBA store:

2019 Total: $385,585

2020 Total: $1,395,488

2021 Total: $332,390

2022 - $614,524

Operations

As a typical Amazon FBA business, the owner buys products from a supplier in China and customizes them to fit his specifications. He then ships them to the US to FBA warehouses (and around the world to other Amazon FBA warehouses). Then Amazon ships the product direct to the customer once they buy on Amazon.com, Amazon.co.uk, and Amazon.co.jp. 

The business operates 2 main stores but they have basically the same operations, just different amazon accounts.

Team

The business has 6 sales employees, one purchasing employee, one logistics employee, one financial employee, one designer: the staff will likely stay for at least a few months after purchase.Currently, 8 of the people can stay full time, logistic and one of sales are related to the owner so they may not stay on (their wife works in logistics while their cousin manages Walmart sales).

Marketing

The customers come from Amazon and are funneled to this stores’ products due to their high ranking in Amazon search as well as due to their high ratings. Due to high ratings and age of business, it benefits from backlink referrals, repeat purchases, and word-of-mouth.

In addition, the business:

1. Actively markets on Amazon and spends a lot of money there (cost is shown in attachments)

2. Does work to unify their brand image, for example, make accordant packages and take the videos for every product.

3. Established social media presence with established accounts at instagram, YouTube, Facebook, twitter.

4. Tried laughing advertising on Amazon Fire TV last year for two months.

Partners

The business is partnered with its supplier (who gives its inventory and also provided debt) as well as Amazon.com who handles distribution. They also use G+ ERP software to help run the business.

Main Expenses

Main expenses are cost of product, cost of transport, Amazon advertising, and FBA cost to get the product delivered. There are smaller product costs also related to product creation, development, and alteration that are delivered by different parties in the supply chain. There are also employee costs to have all of the team.

Work and Skills Required

The owner’s main responsibilities are:

1. maintaining suppliers

2. Developing new products

3. Building/managing the team

4. Check the data in ERP everyday

5. Making long term financial decisions.

Who is the ideal buyer for this business?

Ideal buyer could be a FBA aggregation fund wanting to take advantage of track record and scalability of this business to make it profitable again and run it ‘forever’. Potential buyer could just be experienced entrepreneur around the world who wants to use their experience to turn the business around and sell it. Buyer could also be a strategic buyer in the outdoor lighting/electronics decor world who is looking to acquire a smaller brand and assimilate into their model.

What (if any) post sale support is included with the sale?

The owner is happy to stay on in their current role for 3 months after sale and they would consider advising after that period for a additional fee.

Valuation

The valuation of the business is determined by a future forecasting of what profit will be once the business gets turned around - given the business’s high ratings, long business history, extensive customer list, and IP. The business includes 1.2M in inventory (cost basis) but the business comes with 1.9M in debt so the effective amount it will take to take over the business is 5.2M although the owner will only receive 3.3M net for the business. The business did over 3.5M in profit in 2020 and almost 1M in profit in 2021 so considering numbers, the business is fairly priced.

SKU Analysis

The business currently has 20 main SKUs but less than 250 products that it sells (many are inactive).

As per the financials, 2015 founded FBA business currently has 165 SKUs but 25 SKUs of those SKUs produce 82% of the revenue so the rest of them are not necessarily as needed.

As per financials, the 2013 founded FBA business currently has 255 SKUs but 25 SKUs of those SKUs produce 81% of the revenue so the rest of them are not necessarily as needed.

Expansion Opportunities for New Owner

There are many reasons why profit has been trending down into the negatives but the following are how to address each to turn them into strengths soon:

1) Purchasing cost -- Reduce the product cost, the purchasing cost of the top ASINs is about $1.7M, the total cost of them can be $130k less this year. 

2) Low profit products -- The business is going to stop selling lower profit products, and authorized a very big online seller named Spreetail to sell them, the net profit is about 12%, the total sales of our low profit products were about $2.43 million in 2021, the expected sales of this buyer is about $850k, the net profit will be $100k.

 3) Refund Cost -- As the seller located in China, they don't have a warehouse in the USA - in 2021, their refund rate is about 6%($0.6m), if the business can be sold to a US seller who has warehouses and an after sales team, I think the refund rate can be reduced by about 40% ($240k less) - all of the business's returned products were a waste last year as only half of them can be renewed and resold. 

4) Storage cost, we paid around $0.15m storage fee to Amazon last year, I believe that if some of the products were stored at the business's warehouse, the cost can be reduced for about $75k

5) Advertising cost -- As I mentioned above, the business will stop selling low profit products, therefore, advertising cost will be reduced greatly, we spent about a half advertising cost on these products but the total sales are about 30%. Last year, total advertising cost was $1.9m, and they can spend $570k less this year.

6) Shipping cost -- The shipping cost can be 30% less this year = saving $100k

Barriers to Entry

Amazon FBA businesses have a medium barrier to entry in that it is easy to start a FBA store but hard to get established without tons of money in investment into ads, etc. The fact that the businesses are from 2013-2015 time frame give the businesses advantages in the Amazon algorithm so that they rank higher than newer businesses. 

Reason for Sale

Owner no longer has the funds to support the business and they need someone with more capital to come through and fix the business.

Miscellaneous Details

The business gets a lot of sales seasonally from outdoor decor sales. As such, sales are usually lower from January through March while they tend to really pick up in May.

The business has 1.2M in inventory and 1.9M in debt, which is owed to its Chinese supplier and is due in about ½ a year.

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All Assets Included with Sale 

All the things included with the sale. 

1. Inventories of about 1.2M (cost basis)

2. Amazon FBA Account

3. Walmart Account

4. All associated IP including brand, US registered trademark.

5. All Amazon accounts & related files/accounts/etc.

6. A China registered company (but can just be Asset sale if it's preferred for the buyer).

7. Employee Contracts

8. Supplier Contracts

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About the Agent 

FIH.com is a Manhattan-based M&A advisory firm specializing in the sale of SaaS, eCommerce, & Digital Media companies from $1M-$100M. If you are in the market OR you are looking to exit a business that fits these specifications, then we encourage you to reach out to us for a free consultation. We offer 100% success-based services and have a financing arm for international individuals needing acquisition capital. 

FIH.com is proud to have completed $10M+ in sales through Flippa.com in 2022 alone.