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- 〽️Your Guide to Online Marketplaces
〽️Your Guide to Online Marketplaces
Welcome to another issue of The Club Acquire Newsletter,
This weeks issue is sponsored by
If you’re here, I can probably guess a few things about you:
You’d like to be able to work from anywhere.
You want digital leverage and unlimited upside.
You want to choose when you work, what you work on, and who you work with.
If you have a boss, you want to fire them (before they fire you).
As a digital entrepreneur it’s not about working longer hours on harder problems; it’s about taking back control of your time, money, and enjoyment with smarter leverage than you are currently employing.
How does Club Acquire fit in? It’s all about acquiring whatever will get you there.
Keep that in mind as we jump into this week's issue.
On the deal docket this week:
🧠Idealation: Guide to online marketplaces
💸Riches In Niches: High flying snowboarding site up for grabs
♣️Deal Me In: An e-commerce business with a legitimate moat
🔗Helpful links: Annual shareholder letters
🔓5 more deals for VIP members: Big opportunity in the Tattoo niche
🧠Idealation
Online Marketplace Breakdown
The private business-buying marketplace can be a chaotic landscape.
Here’s what you need to know about the players involved:
Motion Invest: Specializes in lower-priced content sites, some of which may not yet be monetized. Auctions are conducted using a Dutch auction process, offering opportunities to move up the revenue chain by introducing new products and services.
Flippa: The most popular site with over 4000 listings. While there are many good businesses, buyers need to conduct thorough due diligence as Flippa does not verify listing details.
Quiet Light: A brokerage marketplace offering vetted listings of higher average quality, typically with deals exceeding $1M. Some listings are SBA pre-approved, attracting a competitive set of buyers.
Empire Flippers: Curates listings, maintaining a slightly higher average multiple. Listings tend to be harder to get listed here, ensuring quality.
Website Closers: Specializes in larger average deal sizes.
Investors Club: Offers good due diligence and information but tends to have smaller deal sizes on average.
Acquire.com: Formerly Micro-Acquire, it primarily sells SaaS companies but features listings of various types. Mid-size deals are common, with many seven-figure listings. SaaS companies typically sell at higher multiples.
Duuce: A newer newsletter marketplace with fewer quality businesses due to the somewhat nascent stage of the newsletter market.
Media Acquire: Focuses on all types of media accounts, such as Instagram and Facebook groups. Useful for strategic acquisitions but requires careful due diligence due to potential challenges in measuring traffic quality.
While this list isn't exhaustive, it's a good starting point. Creating accounts on these platforms can help you familiarize yourself with listings and identify patterns that reveal genuine opportunities.
💸 Riches In Niches
This site has been around for 14 years but only started monetizing in 2021. Revenue primarily comes from display ads (10%) and affiliate marketing (90%), with nearly 10 different affiliate sources (and more opportunities available).
As you might expect, this niche is highly seasonal, but it boasts 5 or 6 months of solid earnings every winter.
Key Stats:
Reasonable valuation
Highly seasonal page views
Domain Authority: 34
150,000+ Instagram followers (sponsored promotions = $500 per post)
6K YouTube subscribers
Risks:
While the site itself is aged, the monetization is fairly new, raising uncertainty about longevity and its resilience to Google updates.
42% of traffic comes from paid search, which might pose challenges if the affiliate economics change but it probably helps SEO efforts as google favors sites that are willing to pay to play.
Opportunities:
Expand social media presence with more YouTube and TikTok videos.
Act on inbound requests from brands for sponsored posts (potential earnings of $1000 per post).
Increase ad density (potential to 2-3x ad revenue according to the current owner).
Develop a unique product to transition from content to commerce, diversifying and scaling the business.
Allocate revenue to hire content writers to boost SEO.
Perks:
$15k in free gear annually for review.
Offers from hotels to cover entire trips in exchange for site reviews.
The site features well-designed reviews and snowboard sizing and style guides. However, the lack of data on its future sustainability suggests a structured deal with seller financing or reduced upfront payment would be prudent. Nonetheless, there is potential for expansion in the mentioned directions.
Questions for the Seller:
Would you consider offering seller financing for a portion of the deal?
Why was the site not monetized until 2021? Was it recently acquired?
How frequently do you post sponsored Instagram content, and what is the ratio of sponsored to non-sponsored posts?
Are you currently accepting any sponsored posts on the website?
In your view what is the biggest risk to this business?
♣️Deal Me IN
This under-managed e-commerce business, built up over 20 years, boasts a vertically integrated supply chain that would be difficult to replicate. The retiring owners, needing to prioritize health, have laid a solid foundation. With main roles including expenditure approval, second-tier customer support, and inventory procurement (20 hours per week), the business has maintained consistent demand for its product line over the past decade.
Key Stats:
Asking Price: $595k + $350K of inventory
Profit Margin: 22.3%
Age: 20 Years
Team: 6 full-time employees and several consultants
Email List: 170k subscribers
Risks
Geopolitical risks associated with the Chinese office and suppliers.
Full-price inventory purchase presents a significant risk, warranting negotiation for a better deal.
Despite established systems, understanding the business thoroughly is crucial for effective management in challenging situations.
Opportunities
Marketing:
The business's fixed costs and established processes offer scalable opportunities to boost sales.
Explore SEO, social media, and paid advertising channels to identify effective strategies.
Enhance direct email marketing efforts.
Product Expansion:
Cash investment can facilitate expansion into other product lines such as gold, diamonds, and precious metals.
International Expansion:
Create and localize new websites for different European regions to take advantage of great shipping rates already established within the business.
Perks:
Tax write-offs for travel to Japan, China, and Tahiti.
Plus buying face to face usually pays for the trips in the form of discounted prices.
Anually earned travel miles valued at approximately $40k.
Questions for the Seller:
Would you consider offering a larger discount for the inventory?
Where are your email servers located, and what ongoing management is required for them?
🔗 Helpful links
If you haven’t read Warren Buffett’s annual shareholder letters, check them out; they are legendary among investors.
Enduring Ventures' annual shareholder letter does a nice job of providing macro insight into the long-term private equity cycle.
Permanent Equity’s annual shareholder letter offers an interesting view of the small business niche and explains why we can still find great opportunities in this inefficient market.
Give it to me straight (I can handle it)
Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.
Do you know someone who would like to learn more about online businesses directly from the best listings on the internet?
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