Welcome back!

Today we’re clicking our way through the e-commerce industry, one of the most dynamic and fast-growing sectors in the US 🚀. From the comfort of ordering groceries through Instacart to the convenience of grabbing dinner via Uber Eats, e-commerce has reshaped our lives in ways we couldn't have imagined a decade ago.

But does this make it a golden opportunity for business investment? Can you carve out a niche in this bustling digital marketplace, or is it a game best left to the Amazons and Walmarts of the world?

Whether you're an entrepreneur looking to tap into online retail or just curious about how online retailers grow, we’ve got you covered!

INDUSTRY BREAKDOWN

The E-Commerce Explosion 🛒🛍️

First things first, what even is e-commerce? Think of it as shopping in your pajamas. E-commerce is all about buying and selling stuff online, like when you snag shoes on Amazon or find a pet food subscription that will deliver right to your door. It's the digital mall, open 24/7, where you can buy pretty much anything at anytime.

The e-commerce industry in the United States has revolutionized the shopping experience, becoming a cornerstone of modern retail. With its ever-expanding presence, the question is whether now is a good time to buy into this booming sector. Spoiler alert: the answer is yes! The industry is not just growing; it’s thriving, presenting numerous opportunities for investors.

Industry Trends

The US e-commerce industry is on a significant growth trajectory. In 2023, online retail sales surpassed $1.1 trillion, marking a 7.6% increase from the previous year​. This growth is fuelled by several factors, including the rise of mobile shopping, the increasing popularity of online marketplaces, and the integration of advanced technologies like AI and advertisement software so your computer tells you what you want to buy - gotta love those targeted ads! 🤑

One of the most notable trends is the shift towards mobile commerce (m-commerce). As smartphones have become an extension of the human hand, more consumers are using their devices to make purchases. Social commerce - buying directly through social media platforms like Instagram and TikTok - is gaining traction, particularly among younger demographics​. This has created more opportunities for online retailers to target their products to customers!

The Finances 

The e-commerce industry is robust, with a compound annual growth rate (CAGR) projected to remain strong at around 14% from 2021 to 2026​​.

Investment in e-commerce is booming, with substantial capital being funnelled into both startups and established companies. This influx of investment is helping businesses innovate and improve their offerings, which is essential in a competitive market where differentiation is key. The financial health of the industry is further bolstered by the significant contributions from major players like Amazon, Walmart, and Best Buy, who collectively dominate the market​.

Yes, you read that graph right - by 2025, the e-commerce industry is projected to reach $4.2 TRILLION in revenue. And while we know that Amazon makes up a huge chunk of that, it does show that this online market is getting bigger and bigger. Even if you can't be the next Amazon, there's plenty of room to build a successful e-commerce business in this expanding digital landscape. 💸

Buy or Bust?

TLDR: all signs point towards buy! The market is growing, driven equally by tech advancements that get items to our doors faster than ever and our ever-increasing phone addiction. With just one click, we can have anything we want - from groceries to a Wi-Fi-enabled coffin (yes, that’s a real thing!)​​. Now’s the time to hop in and find your niche because there’s a market for just about anything online.

Check out these e-commerce businesses for sale:

1. High Margin Trendy Home Decor & Apparel E-commerce Shop in San Diego, CA - $375,000

2. Portable Solar E-commerce Company + Dropshipping in New York - $149,000

3. Global Women’s Undergarment E-commerce Brand in Tampa, FL - $4,400,000

Interested in a particular industry? Reply to this email with the industry you are curious about and keep your eyes peeled in upcoming issues. 👀 

DEAL REVIEW

Succulent-Plant E-commerce Brand

This week’s deal is a Subscription and Gifting Succulent E-commerce Brand in Tampa Florida.

Deal Facts 🔥

Green Flags 🟢

1. High Repeat Order Rate: Indicates strong customer satisfaction and loyalty, which is crucial for long-term success.

2. Established Brand: Demonstrates stability and a proven track record, reducing the risk associated with new or unproven businesses.

3. High Monthly Website Visitors: Monthly visitors exceed 288,000/month indicating a strong online presence. It will be interesting to see the breakdown of paid vs. organic traffic.

4. Reduced Dependency on Amazon: The business sells a majority of its products via Shopify over Amazon, which is generally considered better in the e-commerce world. .

5. Strong SEO Performance: High SERP rankings for relevant keywords indicate effective SEO strategies, driving significant organic traffic.

Red Flags 🔴

1. Competitive Niche: The succulent plant market is highly competitive, requiring continuous innovation and marketing efforts to maintain market share.

2. Operational Complexity: Managing multiple sales channels, subscription models, and a large product catalog can be complex, impacting profit margins if there are disruptions to supply chains.

3. Potential Market Saturation: With the popularity of succulents, there is a risk of market saturation, which could slow future growth.

4. No clear strategy: Currently the business sells both B2B and B2C. While some may view this as diversification, it can also be seen as a distraction. Indicating the business has not ‘struck gold’ within a certain go-to-market strategy and is hedging its bets. Focusing on B2B may offer a greater opportunity to expand subscription revenue, driving a higher business valuation.

Watch Our Video Breakdown 

For a more in-depth analysis, check out this video deep dive of the deal by our Founder, Morgan Tate:

Possible Deal Structure: Given the ever-changing macro-economic environment of the e-commerce industry - a Buyer should focus on ways to reduce risk. For a deal like this, putting a 2 year earn-out in place (for up to 30% of the purchase price) can help mitigate against downturns in business performance.

Just as we suspected, almost 60% of you had your eyes on the Reduced to Sell Cafe with 10+ Year Tenure in British Columbia from our last edition. ☕️

Want to learn more about this deal? Reply to this email with a “send me more details” and we will connect you with the broker!

ADVERTISE

Let's chat! 🗣️

Looking to get your ad in front of 5000+ active readers? Look no further. Reach out to us about advertisement or sponsorship opportunities.

TWEET HIGHLIGHT

Having a strong online presence and/or large email list are good qualities of a business (especially e-commerce 👀) - but don’t be fooled into letting a seller up the price tag because of it. 🙅

GOOD READS

Recommended Resources 📚

Below is a list of articles, books, and other resource we recommend for buyers or operators of small businesses!

1. “Mainstreet businesses” is a term we throw around a lot (as you know from the title of this newsletter). But what is the difference between a “mainstreet business” and a “middle market business”?

2. Is it possible to be running a service business from the comfort of your home? And for it to be successful? 🤔

3. You have probably hear the term “due diligence” by every professional out there - but do you know what it really means? Check out this article about mastering due diligence so you can be prepared for your next buyer-seller meeting!

THANK YOU

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See you next time!