SOLD: Beauty Products Dropship eCommerce Store Averaging $71,970 Net Profit Per Month
SOLD: Beauty Products Dropship eCommerce Store Averaging $71,970 Net Profit Per Month
Up for sale is a highly profitable dropshipping-based eCommerce store that sells various types of beauty products. Over the past four months, this cash cow of a store is averaging $271,087 in revenue and $71,970 in net profit per month. (See the P&L and Financial Information section below for more details on revenue and profit.) Over that same time period, the store has averaged an impressive 3.0% conversion rate. The site runs on the Shopify shopping cart platform and has several Virtual Assistants (VAs) in place who handle the vast majority of order fulfillment, customer service and day-to-day operations. The current owner estimates that he only spends ~10 hours per week to oversee store operations and to market the store. The current owner (who is a long-time member of Store Coach) flips eCommerce stores for a living. He enjoys the challenge (and pay-off) of finding golden niches and using his expertise to launch new stores, but he doesn't have any interest in operating them long-term. His plan from the outset has been to sell this store (as he does with all his stores) as soon as it was generating a substantial monthly profit.
- Niche: Beauty products (please sign NDA to see domain name & additional information)
- Store Model: 100% dropshipping-based eCommerce
- P&L Period: May - August 2017 (4 months)
- Store Launch Date: Early May 2017
- Avg. Monthly Gross Revenue: $271,087
- Avg. # of Orders Per Month: 10,298 (335 per day)
- Avg. Gross Profit Per Order: $21.06
- Gross Profit Margin: 80.0% of revenue
- Avg. Monthly Net Profit: $71,970
- Net Profit Margin: 26.5% of revenue
- Avg. Monthly Sessions (5/1 - 8/31): 292,141 (9,501 per day)
- Owner Time Requirement: ~10 hours per week
ASKING PRICE: $690,000
The seller's asking price for this store is $690,000. Here is how the asking price was calculated...
May - August Total Net Profit: $287,881 x 3 to Yield Annualized Net Profit: $863,643 x 0.8 Annual Earnings Multiplier: $690,914 Rounded Down to: $690,000
P&L and Financial Information
Here is the accrual-basis P&L Statement for the four-month period May - August 2017...
Here is a quick summary of the key numbers from the P&L for the period May - August 2017...
- Avg. Monthly Net Revenue (after refunds): $271,087
- Avg. Monthly Cost of Goods Sold: $54,217 (20.0% of net revenue)
- Avg. Monthly Advertising Expenses: $130,393 (48.1% of net revenue)
- Avg. Monthly Other Expenses: $14,506 (5.4% of net revenue)
- Avg. Monthly Net Profit: $71,970 (26.5% of net revenue)
Why the drop in revenues/profits in August? - The owner was on vacation for a full two weeks in August. While he was out of the country, he reduced ad spend pretty significantly (ad spend was ~$42,000 less in August than it was in July) and wasn't able to oversee operations very closely. This, in conjunction with the fact that August is historically a very slow month for eCommerce, resulted in fairly poor results in the month of August (compared to prior months). September revenue and profitability should bounce back and be closer to the levels they were from May to July. If you'd like an update on month-to-date revenue and profits for September, simply request an update using the inquiry form below. Proof of Revenue - The current owner will of course give the eventual buyer the opportunity to do a live "screen-share" web meeting and jump into the store admin panel, payment accounts, Facebook, Google Analytics, etc. to verify and confirm all of the figures shown in the P&L above. But here are screenshots from the Shopify admin panel to corroborate revenue figures for the months of May through July. Note: Click the thumbnails below to see the full-size images in a new tab.
About the Niche & Suppliers
As explained above, the store sells several different types of beauty products. Virtually all of the products in the store are "evergreen" products (meaning they have fairly consistent demand throughout the entire calendar year and are not overly seasonal). The catalog currently consists of about 300 products, most of which range in retail price from $15 to $40. The target audience for this niche is enormous, and the store has barely begun to scratch the surface of its long-term potential. The domain name of the store will be disclosed only to serious potential buyers who first sign an NDA, which you can do electronically here. (Note: In the 'Name or Description of the Store' field, just enter "Beauty Products Store".) The suppliers for the store are very reliable and easy to work with. As mentioned above, this store is 100% drop-shipping based, meaning that the suppliers ship products directly to the customers. This means that you do NOT have to pre-purchase large quantities of inventory, store products in a warehouse, or manually ship out orders yourself. When an order comes in, you (or the Virtual Assistant, actually) simply place the order on the supplier's website (using your customer's shipping address), and the supplier ships the order directly to your customer. Dropshipping is hands-down the easiest store model and completely eliminates the need for working capital as well as the risk of not being able to sell large stocks of inventory you've pre-purchased. The seller will assist the buyer with either taking over his existing reseller accounts with the suppliers or with helping the buyer set up new reseller accounts with the same pricing and terms that the seller has been getting. The current owner never pursued this opportunity (as he was only interested in dropshipping), but it's likely that you could get better pricing from the suppliers and consequently make the store's gross profit percentage even higher if you were willing to buy inventory in bulk and ship out the products yourself. (But as you can see from the P&L above, the store's profit margins using the dropship model are already an incredible 80%.)
Marketing and Traffic
The current owner of this site is an expert marketer on Facebook and has almost exclusively used Facebook to promote the store and its products. In addition to the Facebook ad campaigns he's run to generate traffic to the site, he has also used a retargeting app to "re-market" to people who visited the site recently but who didn't place an order. Retargeting is a high-ROI marketing technique, since someone who has already visited the site and seen the brand and products is much more likely to buy than a brand new visitor viewing the site for the first time. The following screenshot from Google Analytics shows the traffic breakdown for the period May 1 - August 31, 2017. (Click on the image to see the full-size version in a new tab.)
Here are a few key takeaways and items to note from the above Google Analytics report:
- The store has averaged 9,501 sessions per day (and 7,648 unique visitors per day).
- The store has averaged a very impressive 3.0% conversion rate, meaning that 3% of visitors on the site actually place an order. Most eCommerce stores average around a 0.5 - 2.0% conversion rate (oftentimes lower), so a 3.0% conversion rate is very strong.
- The "Referral" category shown in the above report is a little bit confusing. Since the store uses Shopify's "shared SSL" in the checkout process (and also accepts PayPal Express payments), Google Analytics records purchases placed on checkout.shopify.com and paypal.com as "referral" traffic. In reality, most of the traffic and conversions listed under the "Referral" category actually belong in one of the other categories (mostly "Social", but also some to "Other" and "Direct", no doubt). This also explains why the conversion rate for the "Referral" category is so high.
The Facebook marketing campaigns (as well as the retargeting campaigns) are quite fine-tuned and don't require all that many tweaks or modifications on an ongoing basis. You do NOT need to be an "expert Facebook marketer" to obtain the same type of results moving forward. (The current owner will obviously train you on how to monitor and further "fine-tune" the marketing campaigns during the 90 days of training included with the sale.)
The current owner estimates that he spends ~10 hours per week running the store at its current operating level reflected in the P&L above. One reason the current owner is able to spend so little time operating the store each week is that he pays several Virtual Assistants (VAs) a combined $1,750 per month (in August) to handle order fulfillment and customer service (i.e. answering questions about the products, placing orders with the supplier, sending shipment notifications to customers, responding to follow-up questions about order delivery, and so on). This expense has been deducted as a business expense for purposes of calculating the net monthly profit, as you can see in the P&L above. Here's a list of the tasks the current owner performs himself each week, many of which could likely be outsourced to the VAs as well (and probably only increase the monthly cost by a couple/few hundred dollars):
- Accounting and bookkeeping
- Posting on Facebook
- Answering questions about the products on Facebook
- Monitoring advertising campaigns
- Overseeing the VAs and ensuring high-quality work
- Ramp Up Email Marketing to Past Customers & Newsletter Opt-Ins - The current owner has done very little in the way of marketing to the mailing list (comprised of over 41,600 past customers and an additional ~13,500 newsletter subscribers, for a total of over 55,100 subscribers. This huge mailing list presents a huge opportunity for the new owner, as it's typically much easier (and significantly cheaper) to generate revenues from existing customers than it is to find new customers. In fact, it's pretty typical for this type of eCommerce store to generate approximately 40-45 cents of monthly revenue per subscriber in the mailing list, which would result in $22-25k in additional monthly revenue (with a list this size) if managed properly.
- Expand International Marketing - The store has primarily been advertising in the United States. The products sold in the store are not tailored or exclusive for any particular region, and there is no reason why these products shouldn't realize the same kind of success across the globe. Moving forward, the ads should be marketed more aggressively in countries where the cost per customer acquisition is cheaper than in the United States.
- Optimize the Site to Boost Its Conversion Rate - The store itself could be improved in a number of ways, all of which would no-doubt boost the store's conversion rate. The store currently doesn't offer live chat OR a toll-free number to call. Giving visitors a fast, easy way to get their questions answered would certainly lead to more sales. There are several other improvements that could be made as well, including: 1) improving the logo, 2) adding more trust graphics and seals, 3) adding product Q&As, and 4) upgrading to a more professional template, among other things.
- Expand PPC Marketing - Because the current owner is an expert with Facebook marketing, he's only used Facebook marketing up to this point. But there are several other high-potential PPC marketing engines you will certainly want to use to further market the store, including: 1) Google Product Listing Ads (PLAs, also known as Shopping ads), 2) Google remarketing ads (to re-market to previous visitors, similar to what the current owner has been doing on Facebook), 3) Bing PLAs, and 4) Pinterest, just to name a few.
- Work to Achieve Organic Rankings - As previously discussed, the current owner has almost exclusively used Facebook campaigns to market the store and drive traffic to it. He hasn't made much effort to get the site ranked in Google or to search-engine-optimize the site. Obviously, you'll make more profit on orders placed by free visitors than you ever will on orders placed by paid visitors. So it would be wise to reinvest some of the monthly profits from the business into getting high-quality backlinks and optimizing the site's content in order to achieve organic rankings for keyword phrases in the niche.
- Ramp Up Facebook Engagement - The store's Facebook page has amassed over 50,000 "likes" over the past few months (all organically), showing that the brand is quickly growing in reputation and name recognition. Thus far, the current owner has done very little in the way of "engaging" this Facebook following in an effort to generate repeat business and try other products. One big growth opportunity is to regularly post new products and specials/promos on the Facebook page to encourage visits and boost sales.
- Influencer & Affiliate Marketing - This is the ideal niche/product line to use "influencer marketing" and/or affiliate marketing to generate additional traffic and sales. There are literally tens of thousands of related but non-competing sites and thousands of "influencers" (people with tens/hundreds of thousands of followers) relevant to this market who you could pay either a fixed fee or a percentage commission to send visitors to your site.
Included with the Sale
The sale includes all of the following...
- The domain name and website (including all textual and graphical content)
- All social profile accounts associated with the site (including Facebook)
- All customer lists (comprised of ~41,600 past customers)
- The newsletter opt-in mailing list (comprised of ~55,100 email addresses, which includes past customers)
- Transfer of the supplier accounts (or introduction and assistance setting up a new account)
- 90 days of support to train you/your employee on how to run the business, manage the ads, etc. (first 40 hours via phone or live webinar/screen share, then Skype/email support after that)
You can make an offer for this highly profitable eCommerce store here. We'll immediately present your offer to the seller. If he accepts your offer, we'll notify you immediately and update this page to let other interested parties know that an offer has been accepted. Once your offer is accepted, a 3-day due diligence period will begin (during which time other interested parties may place a "back-up offer" in case the sale falls through for whatever reason). During this 3-day due diligence period, we'll work closely with you and with the seller to help you complete due diligence. Among other things, this will include doing a live screen-share web conference meeting so you can review financial information, the store admin panel, payment accounts, sales reports, traffic reports in Google Analytics, the supplier account and invoices, etc. We'll also send you the Contract of Sale agreement for you to review. Once the Contract of Sale is signed and the sale is completed, we will update this page to let other interested parties know that the sale has been finalized and remove this listing from the Store Coach Website Marketplace.
Submit Offer or Inquiry
Disclaimer: Hermansen Brothers Inc. (HBI) is acting as the broker of the sale of this website/business, and StoreCoach.com (owned by Store Coach, Inc.) is merely hosting this sale listing page as a service to HBI. The website/business owner is solely responsible for all figures, statements, claims and information provided on this page as well as all figures, statements, claims and information which may be provided to interested parties during the due diligence process. It is the responsibility of the eventual buyer to review and verify all figures, statements, claims and information provided by the website/business owner.
TABLE OF CONTENTS
- P&L and Financial Information
- About the Niche & Suppliers
- Marketing and Traffic
- Store Operations
- Growth Opportunities
- Included with the Sale
- Buying Process
- Submit an Offer or Inquiry
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