SOLD: Outdoor Power Equipment Dropship Store - Own Part/All of This Business Passively
SOLD: Outdoor Power Equipment Dropship Store - Own Part/All of This Business Passively
Averaging $20,357 Net Profit / Mo
Top 10 Things to Know
1. This business is being sold with an operations contract in place, meaning that you can be a 100% PASSIVE OWNER of the business (or a share of it). Click here to learn more about how the operations contract works and how it's possible for you to own part or all of this business but not have to run it yourself.
2. The business is 10 years old and has a long history of consistent (and increasing) traffic, sales and profits. As you can see from the 'Monthly Revenue' graph above, revenues have steadily increased over the past three years (subject to regular seasonality).
3. In 2018, the business did approximately $2.65 million in sales and just over $288,000 in bottom-line net profit. That's an average of $24,028 net profit per month!
4. The store exclusively uses the dropship model. This means that all of the products are shipped from the manufacturer's warehouse directly to the customer. You never see or touch the product! What's more, you don't need to have any working capital to pre-purchase large stocks of inventory or deal with warehousing and shipping out products yourself (or worrying about whether all of the products you've purchased will even sell).
5. The Average Order Value (AOV) is a whopping $1,393. With an average gross margin of 16.3% (after shipping & delivery costs), the average order generates $227 of gross profit. With such a large profit margin, there's plenty of room for marketing and advertising.
6. The site has 165 #1 rankings in Google, which are collectively searched for 16,550 time per month. It also has 95 #2 rankings (14,900 searches/month), 113 #3 rankings (8,030/month), 127 #4 rankings (36,500/month), and 123 #5 rankings (45,910/month). All told, the site has 623 top-5 rankings in Google (collectively searched for 121,890 times per month). SEMrush.com estimates that it would cost ~$12,000 per month of Pay-Per-Click ad spend to generate as much meaningful traffic as the site currently gets FOR FREE each month due to its strong organic rankings.
7. The site's traffic profile is very strong, with 63.2% of traffic being free, organic traffic from Google and other search engines. Direct traffic (i.e people who already know the site's domain name and type it directly into their browser's address bar) is the #2 traffic source, accounting for 16.1% of total traffic. In 2018, paid traffic (from PPC advertising campaigns) only accounted for 14.6% of overall traffic.
8. The business has strong, long-standing relationships with each of its suppliers. This gives the business stellar relationship- and volume-based pricing and the ability to run exclusive sales throughout the year with some suppliers.
9. The business boasts an A+ rating with a Better Business Bureau (BBB) and a 4.8-star rating with Shopper Approved (based on over 1,700 reviews). Customers are extremely satisfied with the products and the level of professional customer service they receive.
10. There are huge barriers to entry in this market, as almost all of the manufacturers will no longer set up reseller accounts for new retailers. This greatly reduces (if not completely eliminates) the risk of new competitors entering the market and stealing market share.
The owner (who is a long-time member of Store Coach) is selling the business because he's looking to step back and partially retire. He's put an enormous amount of blood, sweat and tears into building up and running this business over the past ten years and is ready to step back a bit at this point. As discussed below, though, he will be part of the operations team that will continue to operate the business, thus giving the new owner(s) the benefit of his vast experience and expertise. And if the business ends up being purchased by a buyers group, the current owner would like to retain a 10-25% portion of ownership himself.
SBA Loan Pre-Qualified
We've already provided this sale listing, along with several years of financial reports and tax returns, to an experienced eCommerce business SBA lender, who has provided an official 7A SBA loan pre-qualification letter signifying that this business acquisition will qualify for an SBA loan.
- Niche: Outdoor Power Equipment (please sign NDA to begin due diligence & get additional information)
- Store Model: 100% Dropship (no inventory)
- Business/Website Age: 10 Years (started in January 2009)
- Avg. Monthly Revenue: $220,605/month
- Avg. Monthly Net Profit: $20,357/month
- Avg. Order Value (AOV): $1,393
- Avg. Profit Per Order: $227
- Avg. Orders Per Day: 5.2
- Avg. Visitors Per Day: 957 (29,116/month)
- Top 5 Google Rankings: 623 search phrases (121,890 searches per month)
- Weekly Time Requirement: NONE (operations contract in place)
Asking Price: $1,095,000
The asking price for this business is $1,095,000, calculated as follows...
$244,282 Net Profit in 2018
x 4.5 Annual Earnings Multiplier*
Rounded Down to $1,095,000
* Given the business' longevity (10+ years), upward trends in revenues & profits, stellar organic rankings, favorable traffic breakdown, and high AOV and profit per order (among other favorable factors), Store Coach has assigned a 4.5x annual earnings multiplier to this business.
P&L and Financial Information
Here is the accrual-basis Profit & Loss Statement for 2018 (click the image to view a larger version of the P&L in a new tab):
Here's a summary of the key numbers from the P&L...
- Avg. Monthly Revenue: $220,605
- Avg. Monthly Cost of Goods Sold (including product and shipping costs): $184,710 (83.7% of revenue)
- Gross Profit Margin: 16.3% of revenue
- Avg. Monthly Net Profit (after all expenses): $20,357 (9.2% of revenue)
The current owner will of course give the eventual buyer(s) 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, advertising accounts (Google, Bing, etc.), Google Analytics, etc.
Following is a screenshot of the Ecommerce Overview report for 2018 from Google Analytics, which shows $2,650,711 of revenue (just a couple thousand dollars more than the annual revenue figure in the P&L above). This report also shows a total of 1,903 transactions for the year (which is an average of 5.2 orders per day) with an Average Order Value (AOV) of $1,392.91.
About the Products & Suppliers
The store sells various types of outdoor power equipment, with the majority of sales being for one particular type of equipment. After you electronically sign the NDA and complete a simple buyer verification process, we will disclose the domain name of the website to you.
The website currently carries 21 brand names, with 4 brand names making up ~75% of sales (and 8 brand names making up 90%+ of sales).
The demand for the main product line is extremely steady, as you can see from the following report from Google Trends for the #1 search phrase in this niche. There is, of course, an annual cycle causing demand to be higher in certain months, but the year-over-year search volume (representing demand) is holding steady over the past 5 years and, if anything, increased a bit over time.
Over the past 10 years, the business has built up extremely strong relationships with all of its suppliers (especially the top suppliers making up the vast majority of sales). These relationships have resulted in getting special pricing with several suppliers and the ability to occasionally run exclusive sales throughout the year.
Marketing and Traffic
The site has A LOT of Page 1 rankings and consequently gets A LOT of free, organic traffic from Google (as well as other search engines). In fact, organic traffic is the site's #1 traffic source, accounting for 63.2% of total traffic in 2018. The following table shows rankings data from SEMrush.com as of the listing creation date:
|Combined # of
In summary, the site has:
- A total of 373 "top 3" rankings (with a collective 39,480 searches per month)
- A total of 623 "top 5" rankings (121,890 searches/month)
- A total of 1,174 "top 10" rankings (192,190 searches/month)
(Note: After you sign the NDA below, you'll be able to download the SEMrush organic rankings report to see full details about the site's organic rankings.)
SEMrush.com estimates that it would cost ~$12,000 per month of Pay-Per-Click ad spend to generate as much meaningful traffic as the site currently gets FOR FREE each month due to its strong organic rankings.
Free, organic traffic from search engines is already the site's #1 traffic source (accounting for 63.2% of total traffic). And as you can see in the Organic Traffic report below (from Google Analytics), organic traffic has continued to increase over the past three years (subject to seasonality) as the site's rankings have continued to climb.
Here's a screenshot of the 'Acquisition Overview' report from Google Analytics that shows the store's overall traffic breakdown over the past year.
As the above report illustrates, the traffic breakdown is as follows:
- Organic Search - 63.2%
- Direct Traffic - 16.1%
- Paid Search Ads - 13.8%
- Referral - 5.0%
- Social - 1.0%
- Display Network Ads - 0.8%
- Email Campaigns - 0.1%
- "Other" - 0.0%
Here's a screenshot of the Audience Overview report from Google Analytics for the past year.
In addition to the country-by-country visitor breakdown (which shows that 92.2% of visitors are from the USA), there are several important things to note from the above report:
- Over the past year, 26.7% of the site's visitors are returning visitors (meaning they've been to the site before and are visiting it for a 2nd/3rd/4th time). Most eCommerce sites cannot boast such a high returning visitor rate.
- The average visitor spends 2 minute and 22 seconds on the site, more than twice as long as the average visitor duration for most eCommerce sites.
- The average visitor looks at 2.43 pages on the site, a very high number. It's quite uncommon for a site to have such a high pages-per-session number.
The above numbers are referred to as User eXperience (UX) metrics, which are one of the biggest (if not THE biggest) Google ranking factors. The site is doing extremely well across the board for these UX metrics. Visitors clearly love this site (as evidenced by the fact that many visitors return for additional visits, spend a fairly long time on the site, and visit several pages each visit), and Google's algorithm continues to place greater and greater emphasis on how users interact with the site. Bottom line: The site's organic rankings should continue to climb due to its strong UX metrics, leading to more and more free, organic traffic over time.
As mentioned above, in 2018 approximately 14.6% of overall traffic was paid traffic (13.8% paid search ads + 0.8% display network ads). These Pay-Per-Click ads were highly profitable. As you'll see from the Google Ads and Microsoft Bing Ads reports below, the average acquisition cost (i.e. Cost Per Conversion) through Google ads was $90.21, and the average acquisition cost through Bing ads was $71.39. Given the fact that the average profit per order for the store is $227, the average Google-ad-driven sale netted ~$137 of profit and the average Bing-ad-driven sale netted ~$156 of profit.
Google Ads Report (2018)
Bing Ads Report (2018)
This business is being sold with an operations contract in place. This means that you (either by yourself or as part of a small buyers group) can OWN the business but not have to worry about operating and marketing it. Your ownership can be 100% PASSIVE!
For the first 6 1/2 years of the business' existence, the owner ran the business completely on his own. Then, about 3 1/2 years ago, he simultaneously 1) contracted with one of Store Coach's sister companies to help with/consult on SEO and advertising, and 2) hired a Customer Service (CS) person to help with processing orders. The labor costs for both of these services are included in the 'Contract Labor' line of the P&L. But even with this help, the owner has still had to work full-time on the business himself.
This sale proposal includes a full-blown operations contract to make it possible for the buyer(s) to own the business and collect on its profits but NOT to have to run the day-to-day operations of the business. The owner (or owners group) would of course direct the operations team on how they'd like the business to be operated/marketed and would "meet" (typically via web conference) with the operations team periodically to review sales & financial reports and discuss "big-picture" strategies and make decisions. But the operations team would completely run the business from day to day.
This proposed operations contract would be with Hermansen Brothers, Inc. (StoreStream's sister company, which has been providing SEO & marketing services for the business) and would also include the existing CS person and, most importantly, the current owner himself. The operations contract would include all core operational functions, including:
- Website and catalog maintenance
- Order processing (fulfilling orders, dealing with returns, etc.)
- Customer service (pre-sale questions, post-sale support, etc.)
- Search Engine Optimization (SEO)
- Pay-Per-Click ad management
- Accounting and bookkeeping
The proposed operating fee would be a flat 5% of revenue. The following shows what the owner of this business would have received in 2018 had this sale happened back on 1/1/18 and the new owner had the operations team running the business the past year (2018)...
2018 net profit (per P&L above): $244,282
Add back 'Contract Labor' (since that expense would be included as part of the operating contract): +$44,053
Subtract 5%-of-revenue operating fee: -$132,363
Equals 2018 net profit after operating fee: $155,972
Thus, had the new owner(s) paid the full asking price of $1,095,000 back on 1/1/18, their 2018 earnings (after paying the operating fee) would have been $155,972, which is 14.24% of the purchase price of the business... a very impressive return! And given the business' upward trends in rankings, traffic, revenue and profit over the past several years, it's very reasonable to expect that earnings in future years would be even higher than 14.24%.
One final thing worth noting here... If the business ends up being purchased by a buyers group (rather than purchased by a single business/individual who buys it outright), the current owner would like to retain a 10-25% portion of ownership himself, given how much he believes in the growth potential and future outlook of the business.
Included with the Sale
The sale includes all of the following...
- The primary domain name and website (including all textual and graphical content)
- An additional domain name and website (which generates additional sales and profits)
- All supplier accounts
- All social profile accounts
- Customer list & mailing lists
- Operations contract (as discussed above)
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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.
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