FOR SALE: 8 Y/O Ecommerce Business with Nationwide College Campus Sales Network
Here are the TOP 10 things you should know about this business...
- The business has a large army of 1,000+ "campus representatives" at hundreds of colleges and universities throughout the United States. These campus reps are invaluable in driving sales and creating life-long customers, as college students are the #1 most coveted target audience for the market the business is in. This network of campus reps also provides the infrastructure for several lucrative "side services" the business offers. Primarily because of this incredibly valuable campus rep network, the owners received a $5.5 million offer for the business (which they turned down) when its revenues were only ~25% of what they are now... and in 2018, a group of sophisticated strategic investors acquired ~8% of the business based on an enterprise valuation of $7.55 million.
- Over the past ~5 years, an amazing 74.2% of product sales revenue has come from repeat customers. The business has ~21,000 customers who have placed multiple orders, including about 2,050 customers who have placed 10+ orders. Part of the reason for this high return customer rate is the fact that the business offers automatically recurring subscriptions, which a lot of people subscribe to. Approximately 25% of total product sales revenue comes from recurring subscription orders!
In 2020, the business generated $2.38 million in revenue and $486,348 in net profit, as you can see in the P&L and Financial Information section below. That's an average net profit of $40,529 per month!
- Over the past 7 years, the business has averaged 63% annualized growth. And this number would have been even higher had the COVID pandemic not shut down virtually all colleges and universities in America (which obviously had a sizable negative impact on this business, which is driven by its network of college campus reps). Remarkably, despite these major setbacks in 2020, the business still managed to basically match 2019 revenues in 2020 and also added a new base of non-college-student customer.
- In addition to reselling (via the dropship model) products from over 80 different brands, the company has also developed its own brand and line-up of products. The profit margins for its own private-label brand are much higher (up to ~70%) than the margins realized when selling other retailers' brands. Over the past year, the company's private-label brand has been the #4 best-selling brand on the site.
The website has a very favorable traffic breakdown. The top 2 traffic sources are Organic Search (63.7%) and Direct Traffic (12.1%). The owners use a little bit of paid advertising to drive additional targeted traffic to the site (including the recruitment of more campus reps), but 3/4ths of the business' traffic comes from a combination of campus reps, faithful returning customers (including recurring subscriptions) and free, organic traffic.
The business has a very solid 20.5% net profit margin. That means that for every dollar of revenue the site brings in, 20.5 cents make it to the bottom line and into the owners' pockets!
- Thanks to the state-of-the-art technology the owners have built and put in place, operating this multi-million-dollar business is quite easy! Order fulfillment is fully automated, as is the process for finding, signing up and "training" new campus reps. A single full-time employee can handle all day-to-day operations of the business. (Note: The cost for this employee is included in the P&L below.)
Revenues are very well diversified among all vendors (brand names) and products. Over the past year, the #1 best-selling vendor (brand name) has only accounted for 11.3% of total product revenue, with the top 5 vendors combining for 40.9% and the top 10 combining for 61.2% of revenue. The #1 best-selling product only accounted for 5.3% of total product revenue, with the top 5 products combining for 17.2% and the top 10 combining for 24.3% of revenue.
- The sale includes a 218,000-person mailing list, which includes over 62,000 people who have placed an order within the past ~5 years. It also includes the verified Instagram account (72,000 followers), Facebook account (41,000 followers) and verified Twitter account (13,000 followers).
Continue reading below for more information about this steady and upward-trending business.
The owners are selling the business in order to focus on another venture that sells high-priced "premium" products (which do not compete with this business). The owners will sign a non-compete as part of the agreement, so long as it does not preclude them from continuing to operate this other non-competing business venture.
- Niche: Will be shared with serious buyers who first sign the NDA
- Store Model: Primary drop-ship (but also using a fulfillment center to sell its own line of products, plus high-profit side services)
- Business/Website Age: ~8 years old (started in 2013)
- Avg. Monthly Revenue: $198,033/month
- Avg. Monthly Net Profit: $40,529/month
- Gross Profit Margin: 40.0%
- Net Profit Margin: 20.5% (after ALL expenses)
- Avg. Order Value (AOV): $70.74
- Weekly Time Requirement: ~40 hours/week
ASKING PRICE: $11,125,000
The seller's asking price for the business is $11,125,000. The key reasons for this premium asking price are:
Extensive Campus Reps Network - The large, well-trained, fully-functioning network of campus reps the business has in place is incredibly valuable. Research has shown that over 50% of college students use the products this business sells, and it's also a time of life when young adults are both a) making decisions about who they are and what's important to them, and b) quite impressionable, especially by their peers. It's for these reasons that many companies (not just in this market, but in virtually all markets) love to target college-age students, particularly indirectly through their peers. Many companies have tried to establish their own campus-based infrastructures, but the vast majority have failed. This business, on the other hand, has a thriving, highly active network of campus reps. This infrastructure is highly valuable and the main reason another company in this market offered $5.5 million for the business several years ago (when its revenues were only about 25% of what they are today). It's also the primary reason a group of strategic investors acquired ~8% of the business back in 2018 based on a valuation of $7.55 million.
Customer Base & Return Customers - The customer retention and return order rates are off the charts! Over the past ~5 years, approximately 3/4ths of the business' revenue is from loyal repeat customers who have placed multiple orders. (This proves how well the college-targeted marketing approach works and how valuable the campus rep network is.)
Relationships & Technology - The business has developed phenomenal relationships with all of its vendors. (These relationships will of course transfer to the new owner.) The business is structured as a technology and marketing company, stocking very little of its own inventory. It has built out proprietary technology, which connects the website's backend to the industry's largest distributors in the USA and pushes all orders to them automatically. The fully-automated system identifies the best distributor to send each order based on factors such as price (including shipping costs), stock levels, shipping options/speeds, and proximity to the customer.
High-Margin "Side Services" - This business is much more than a retailer. As a company that both a) sells dozens of different brands and b) has "boots on the ground" in its corps of campus reps, this business is strategically positioned to sell high-level data to companies in their market (including raw material providers, manufacturers, distributors, retailers and marketing companies). As fast as the industry is growing, it’s changing just as quickly... making high-level data (including industry trends, changing customer preferences, buying patterns, etc.) incredibly valuable. Additionally, the business' network of campus reps at major universities all across America gives the business a unique ability to offer in-box sampling services and product placement services to a wide range of companies (from movie producers to supplement companies to restaurant chains to entertainment services, all of which are hungry to get their products in front of college students). Revenue from these "side services" has exploded over the past couple years (despite the vast majority of college campuses being shut down for most of 2020).
- Recurring Revenue - The business has amassed nearly 1,000 subscription-based customers (and growing), which is virtually guaranteed revenue. Currently, around 25% of total product sales revenue comes from recurring subscription orders!
P&L AND FINANCIAL INFORMATION
Here is the P&L Statement for the calendar year 2020 (click on the image to see a full-size image in a new tab):
Note 1: Discretionary expenses (including travel expenses, office rent, owner salaries/bonuses, etc.) are not shown in the above P&L, as these expenses would not be incurred by the new owner. As noted above, this business could be run by 1 full-time employee. Hence, the payroll expenses associated with the company's operations employee is included in the P&L, but excessive owner salaries/bonuses are not. The business is legally structured as a C Corp (meaning it's a taxable entity that pays corporate income taxes), which is quite uncommon. Corporate income taxes are therefore not included in the P&L above.
Note 2: Product Costs for all of 2020 were $1,014,516, which is 42.7% of 2020's net revenue ($2,376,392). This 42.7% ratio was applied to each month's net product revenue to derive the 'Product Costs' figure for that month.
The owners will of course give the eventual buyer the opportunity to perform extensive due diligence and verify all of the income claims and other information presented in this listing. This will include doing a number of live "screen-share" web meetings to log in and view reports and transactions in the store admin panel, payment accounts, etc.
Here is a screenshot of the "Finances Summary" report from Shopify for the calendar year 2020, which shows just the revenue that was run through Shopify (this doesn't include services revenue or manually processed revenue)...
PRODUCTS / SERVICES & SUPPLIERS
The business has 3 distinct revenue channels:
- Drop-ship sales of over 80 popular brands in the market
- Self-fulfilled sales (using a third-party fulfillment center) of its own private label brand products
- Services (high-level industry data and sample distribution / product placement)
Drop-ship sales are currently the business' #1 revenue source, though the other two categories (which are much higher margin) are gaining steam the last couple of years. The business sells over 80 different brands of products. As mentioned above, the owners have developed proprietary technology for automating order fulfillment, connecting the website's backend to the industry's largest distributors in the USA and pushing all orders to them automatically. The fully-automated system identifies the best distributor to send each order based on factors such as price (including shipping costs), stock levels, shipping options/speed, and proximity to the customer.
Services are the #2 revenue source. Services fall into 2 buckets:
Selling high-level data to companies in the industry - Given that the business a) sells dozens of different brands and b) has a huge network of campus reps keeping their "ear to the ground", it is uniquely positioned to sell high-level data to companies in the industry (i.e. raw material providers, manufacturers, distributors, retailers, marketing agencies, etc.). Several companies are paying thousands of dollars per month for access to this data.
- In-box sample and product placement services - College students are a highly-sought-after demographic for companies all over the United States in dozens and dozens of different industry categories. With the college rep network in place, the business is able to provide in-box samples and product placement services to all kinds of companies. The process is as simple as this... 1) The company wanting to get its product (or brochure) into college students' hands provides the products for free and pays a $20,000 - $50,000+ service fee (depending on the quantity)... 2) The business pays a couple/few thousand dollars to ship the products to its campus reps... 3) The campus reps distribute the products (which they're happy to do, as they are free products/samples and oftentimes generate new clients and ongoing rep commissions for them).
The business' 3rd revenue channel is selling its own private-label brand of products. Over the past year, this brand has become the site's #4 best-selling brand, which is important because profit margins on these products are upwards of 70%. These products are all fulfilled by a third-party fulfillment center (making order processing and fulfillment virtually 100% automated).
MARKETING AND TRAFFIC
The website has a very favorable traffic breakdown, as you can see in the following screenshot from Google Analytics for the calendar year 2020...
As you can see, the website's #1 traffic source is free, organic traffic, which accounts for 63.7% of total traffic. This is completely free traffic to the website due to its solid rankings in Google and other search engines. The #2 traffic source was direct traffic from customers who already knew the domain name and came directly to the site. (Paid search only accounted for 0.8% of total traffic to the site.)
The following table shows Google rankings data from Ahrefs.com as of the listing creation date:
|Rank in Google||# of Keyword Phrases||# of Monthly Searches|
|#4 - #5||410||47,460
|#6 - #10||1,984
|#11 - #15||1,911
|#16 - #20||1,594
The site has 443 "Top 3" rankings in Google, which collectively get 53,490 monthly searches in Google.com (USA)... and 2,837 "Page 1" rankings that get 355,650 searches per month on Google.com (USA).
The following is a screenshot of the Google Analytics "Ecommerce Overview" report for 2020...
The store has a very healthy 1.64% conversion rate (it would be even higher if so many customers weren't on an automatically recurring subscription) and, per this GA report, a $70.74 Average Order Value (AOV).
One full-time (40 hours per week) employee can handle all of the day-to-day operations of this business. The entire order fulfillment process is completely automated (including its own brand of products and all of the drop-shipped brands), and the high-margin services provided are not very labor intensive.
A small amount of this employee's time is spent on campus rep management, but the vast majority of their time is dedicated to customer service.
As part of the sale, the owners will train the buyer on all aspects of running the business. This will include up to 60 hours of "live" training (via web meeting, webinar, Skype, phone, etc.) and 90 days of email support.
- Focus on Expanding the Services Side of the Business - The "side services" are a nice little "side business" right now, but they could easily become the "main event" with the right kind of marketing and promotion. As discussed above, thousands of companies in hundreds of different markets and niches would love to target college students but simply don't have the infrastructure to do so. This business has that infrastructure in place! The business started offering in-box samples and product placement services a couple years ago largely by popular demand, as companies came to them asking if they could do it. Since then, they've done a little outreach here and there, but it's still just a "side business." The right buyer could greatly expand these services by simply doing a better job letting these hungry companies know the service exists! The best part about this opportunity is that the profit margin for these services is close to 100%.
- Start Selling Private-Label Products on Amazon and Other Marketplaces - The owner has toyed around with the idea of selling on Amazon, Jet.com, Rakuten and other major online marketplaces since the inception of the business. But for various reasons (primarily his time constraints, inexperience selling on marketplaces, and not loving the idea of making Amazon and the other "big dogs" even richer than they already are), he's chosen not to sell on Amazon or any of the other huge marketplaces online. But selling on Amazon, Jet.com, Rakuten and other gigantic online marketplaces is an ENORMOUS opportunity for the right buyer to exponentially grow the business! Most companies in this market do the vast majority of their revenue on Amazon, thanks to its enormous audience of willing shoppers. Amazon and Rakuten are particularly exciting opportunities.
- Release More Private-Label Brand Products - As noted above, the profit margin on the company's own private-label branded products is 3-4x higher than the average profit margin on the third-party brands it resells (up in the 60-70% range). While their private-label brand has grown to become the 4th best-selling brand on the site, there's still enormous opportunity for growth (private-label brand products only make up about 7% of total sales). By releasing more products under their private label and steering more and more of their customers towards their own products, the business' profit margin could soar. And with the campus rep network, there's a built-in distribution network that can really push the private-label products.
- Expand College Rep Network to More Universities - This business has building a campus rep network down to a science. What's more, their process of recruiting, enrolling and training college reps is all automated and basically runs on auto-pilot. To this point, they've primarily focused on recruiting campus reps at larger, more prominent universities. But there are hundreds of universities and colleges across the country that still don't have ANY active campus rep in place. There is still a lot of growth potential here.
- Greatly Expand PPC Advertising - As shown in the P&L above, the business currently spends very little on PPC advertising. Whereas most companies in this market have ad spend in the neighborhood of 20-40% of revenue, this business currently only spends an average of $10,794/month on paid ads, which translates to just 5.5% of revenue. The main reason for this is that the owners have focused virtually all of their time and efforts on the campus rep network. But the two are NOT mutually exclusive! There's no reason the new owner couldn't greatly increase PPC advertising (not only in terms of budget, but also in terms of advertising channels) to drive more traffic and sales.
INCLUDED WITH THE SALE
The sale includes all of the following...
- The website's domain name and website (including all textual and graphical content), plus an additional 24 extremely valuable domain names in the same market/niche
- 2 US trademarks: one for the brand name and one for the logo
- Distribution order management technology, which auto-picks which distributor to place each individual order
- All of the intellectual property rights associated with the company's private-label brand and product lines
- All inventory on hand as of the closing date (currently ~$110,000 at cost value)
- All social profile accounts, including Instagram (72k followers), Facebook (41k followers) and Twitter (13k followers)
- Mailing list (containing approximately 218,000 emails, including ~32,500 active customers who have placed an order in the past 24 months)
- 90 days of support to train you/your employee on how to run the business (including up to 60 hours of "live" support via phone or live webinar/screen share)
- Free lifetime membership to Store Coach's "Market Like a Pro" course (if you're not already a member)
You can make an offer for this highly profitable online business here. If the sellers accept your offer, we'll notify you immediately and update this page to let other interested parties know that an offer has been accepted and the sale is pending.
Once your offer is accepted, the official 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. (Please note that if one of the back-up offers exceeds the original accepted offer, the seller is obligated to sell to the original buyer whose offer was already accepted. The seller can't back out of the accepted offer just because a higher offer was later made.)
During this 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 one or more live screen-share web conference meeting(s) so you can verify all financial information by reviewing the store admin panel, bank and merchant accounts, sales reports, Google Analytics traffic reports, supplier invoices, etc. We'll also send you the sale agreement for you to review. Once the APA is signed and the sale is completed, we will 1) update this page to let other interested parties know that the sale has been finalized and 2) remove this listing from the Store Coach Website Marketplace.
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Disclaimer: Store Coach, Inc. is acting as the broker of the sale of this website/business. The website/business owners are 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 owners.