New here? Read up on our past Websites issues to get the most from this email.
May 9, 2022 | ± 4 minutes
CONTENTS:
- A breakdown of this enticing FBA site in the sports equipment space
- A closer look at the strengths & areas for improvement of the offering
- Our View on this investment opportunity (this part is Insiders Only)
Let’s go!
Table of Contents
Investment opportunity: Sports equipment website
Firstly, (in case you’re not familiar with FBA) ‘Fulfillment by Amazon’ or FBA is an eCommerce model Amazon offers that allows the owner to be relatively hands-off. This makes it popular for many buyers, including the famed FBA aggregator Thrasio.
(We recently wrote about an FBA business within the party supplies niche.)
The business we’re looking at today is another FBA site, this time in the sports equipment space.
It’s five years old and has one core product with 4 SKUs for sports protection for children, in the form of different color variations.
Opportunity at a glance
- Gross profit/month: $2,306 (25% profit margin)
- Gross revenue/month: $9,392
- Users/month: N/A
- Age: 5 years
- Inferred Value: $87,628 (represents an implied multiple of 38x monthly net profit of $2,306)
This business is an online FBA business that sells one product in the sports equipment space.
It was launched in April 2017 and has earned $2,773 in average monthly profit over the past 12 months. The starting price is $101,482, which represents a 44x multiple, multiplied by the 12-month average profit. The site has four active SKUs, all with an average of +4.4 stars.
The business has shown encouraging growth in the past few years and it looks like it can expand to other products fairly easily.
It also has plenty of good reviews (though the fact that it only sells one product at the moment can be a little concerning).
Sports equipment is a stable market
One thing that’s great about this product is the very consistent search demand for it in the past five years, according to Google Trends.
We hide the keyword to respect the privacy of the seller and the new future owner.
Strengths of this opportunity
✅ Aged site – Over five years old, older than most eCommerce sites.
✅ Hands off – the FBA business model requires minimal owner involvement.
✅ Great reputation – Products have great reviews, with multiple having more than 100+ reviews and ratings.
✅ Consistent performance – The site has performed well over the years and has seen significant growth over the last year.
✅ Two traffic sources – organic Amazon search and paid Amazon ads as traffic sources aren’t the most diverse traffic sources, but it’s much better than just relying on one.
✅ Evergreen niche -very consistent and stable niche.
Things that could be improved
- Selling on more than one channel – We’ve said this before but it’s as simple as more sales channels = more sales.
- Selling more products – Launching more products in the same category will be easy, as the niche isn’t too technical.
- Establishing a trademark – Securing a registered trademark protects your brand against copycats, providing tools to prevent someone from using similar signs and riding off the back of your business.
- Exploring Influencer marketing – influencer marketing can do well in this niche.
- Launching a website – this will open up more advertising and sales channels, allowing the business to retain valuable customer data
- Bettering social proof – displaying more reviews and registering with BBB would improve trust in the shop.
- More social channels – This one is a must if the business is to operate with influencers.
Last but not least, our podcast
In this episode, Horacio sat down with Michael Bereslavsky, founder and CEO of Domain Magnate. Michael talks about the nuances of buying online businesses – including the skills needed to start a business and keep it running and what he looks for when acquiring an online business.
