RMRB 24: Selling Gag Gifts

Jake Davis

December 31, 2018

This week, Jake spoke with Nick about his Amazon FBA and ecommerce business created in June 2017 in the occasions & gifts niche. He’s selling gag gifts and is making about $2.3k/month. The business is part of Amazon’s Brand Registry program and has an Instagram following of almost 20K. Nick spends minimal time running the business on a weekly basis. 

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Jake:                      What if you could cut through the noise in the online business world and learn from someone who has built a real business? We verified the numbers and combed through the P&L. This is not only a real business, but a real asset that people want to buy. We’re going to pull the curtain back and give you the insights this entrepreneur has discovered that you can use to level up your knowledge, whether you’re looking to buy a business or looking for inspiration to take your current business to the next level.

                                Hey, listeners. Welcome back to the Real Money, Real Business podcast. This week, I got a chance to speak with Nick about his Amazon FBA and e-commerce business that is making over $2000 every single month in net profit selling gag gifts. Nick, thank you for taking the time to be on here with me today. How are you doing?

Nick:                      Good, doing great, Jake. Thanks.

Jake:                      Yeah, it is my pleasure to have you here. Before we dive into the questions that I have for you, I want to go ahead and run through a little quick summary of the business. Again, the business was built in June of 2017, has a monthly revenue of $4169, expenses of $1851, to make for a net profit of $2318, which is generated on a 12-month average. Included in the sale of this business are 3 SKUs, the Amazon seller central account, Shopify account, all social media accounts, supplier relationships, and associated domains. Please note that inventory is not normally included in the list price. Further details can be provided to active depositors.

                                So, Nick, can you tell us a little bit about your background in building and running online businesses?

Nick:                      Sure. So about 4 years ago, I started with learning how to develop websites, because I thought that was a tool that every online entrepreneur should know. I failed a majority of my businesses, and this is pretty much my success. And, yeah, I just pretty much learned how to market it with influencers and social media, and that just caught on.

Jake:                      And now we’re here today, and you want to sell it. So why have you decided to sell it today?

Nick:                      Sure, so running this business, I saw a lot of opportunities in the software space, and I’m developing a software to tackle those problems, and it takes a lot of money to develop software. So I’m going to take that money and just pretty much invest it into this next venture I have.

Jake:                      Which absolutely makes sense, then. So looking back at this particular business, how did you … You told me the story, and it’s honestly kind of funny, and without giving away the products or exactly what you’re selling, unfortunately, the story’s going to be a little less funny. But, why don’t you tell us a little bit about how you came up with the idea for the business.

Nick:                      Sure, so I was at an event where they exchange gifts, and I just thought of a gag gift that could be exchanged instead.

Jake:                      And, yeah, and it’s actually pretty funny. So then when you look at these gifts that are being exchanged, then, why did you decide to set up on both Amazon FBA and your own e-commerce platform?

Nick:                      Okay, so going back to my knowledge, I knew how to build a Shopify store and WordPress stores, so I actually started on Shopify, and while I was running that, my friend recently got into Amazon FBA, and his own private labels, and I saw the money that was being generated there. So he helped me actually set up Amazon FBA, which got me in contact with a business development rep at Amazon, I think. I think that’s what they call it, but yeah, he reached out to me because he saw my listing, and he pretty much helped me with key word optimization and just how to market on Amazon, so that’s pretty much how I got into Amazon, so it was a little bit later after Shopify.

Jake:                      And, given the nature of the items that you’re selling, when the representative from Amazon reached out to you, what did he have to say about the products? Is there any risk about it violating Amazon’s terms of service or anything like that?

Nick:                      Yeah, he loved it. There was no violation in terms of Amazon’s rules, but one thing he wanted to do that I couldn’t do was he wanted to include me in a Prime deal, where it’s like in their newsletter for like all of Amazon customers. But that could not have been done because of the nature of the product, so-

Jake:                      Can you expand upon that, Nick? So you mentioned that you couldn’t get that done because of the nature of the product, but if the Amazon representative wanted it … So I don’t know what the issue is?

Nick:                      So the issue was profanity.

Jake:                      Mm-hmm (affirmative)-

Nick:                      So is that-

Jake:                      Yeah, no, that’s fine. No, I understand the products. I guess my question is-

Nick:                      Mm-hmm (affirmative)-

Jake:                      You said that you couldn’t get it done.

Nick:                      Yeah.

Jake:                      But the Amazon representative said it was okay and he was pushing for it. So did someone else at Amazon step in and say, “No, hey, sorry, we can’t do this”?

Nick:                      Yeah, that’s pretty much what happened.

Jake:                      Oh, okay. I get that.[crosstalk 00:05:00]

Nick:                      So basically, he pushed it up the ladder, but what happened was, what ended up being was, I guess, one of his managers pretty much said because of the nature, it can’t be done, but you know, if there are softer words, I’m pretty sure it could have been pushed out very easily.

Jake:                      Mm-hmm (affirmative)- and that makes sense. So when you look back over the last year at the numbers, like I said, the business has made $2318 per month on average over the last year. One thing you notice is that September of last year was really high compared to the rest of the year. And then, you know, you’re definitely still profitable, but it’s not nearly as high as September of last year.

Nick:                      Right.

Jake:                      So what happened?

Nick:                      Okay, so there’s a lot of things that happened that month. I just kind of went viral on Instagram, and a lot of accounts started reaching out to me for marketing opportunities, and at the time, I was focused on growth, so I pretty much just put a lot of money on Instagram influencers, and that was around the time where I was just all over Instagram. Pretty much any influencer pretty much knew about me, and it kind of get spread through their networks, and they just wanted to do business with me, so I pretty much just leveraged that opportunity and just went with it. But now what people are probably curious about is kind of like the dip.

                                So after that month, I realized I don’t want to be in e-commerce anymore. That’s when I found my new venture idea with my friend, the Amazon guy, and that’s when I was building the business plan, searching for developers and I kind of stopped marketing right after that on October, which resulted in … I don’t think I marketed in October. So it pretty much got cut in half, if I recall correctly. And yeah, so from then on, I just kind of let it run on autopilot. So there is, I mean, a huge opportunity for someone who understands like influencer marketing or social media marketing.

                                I didn’t run any Facebook ads, Google ads, none of that, so I mean there is a lot of opportunity to grow. Email marketing, I didn’t really capitalize on, so I’m a little bit upset at myself for not really going with it, but I realize I have to shift my focus to my next software venture.

Jake:                      And if you’re not passionate about it, you’re not passionate about it, but it leads me to ask, then, what opportunities are there for someone to get the business back? Is it a long-haul to get it back to that peak in September?

Nick:                      I don’t think so. I don’t think so at all, because with influencer marketing, you pay an influencer to put up a post, link it back to your Instagram profile, and they click on the bio link, which goes into your Shopify store, and that can be easily replicated. For me, the reason why I didn’t go more into it was because I wanted to keep all the money instead of investing it back into the business. The only investments that I made back into the business were pretty much inventory, and yeah, I mean, if someone just really understands influencer marketing or yet alone any type of marketing platform, Facebook, Google, it can really get to that level that I once was.

                                I think it could go further if you include more products in the niche. I missed out on a lot of opportunity, so when I first launched, it was just one product, and during the heyday, September, was when I started adding … I added two more products, and pretty much, there’s a lot of opportunity to be made if you just keep adding on to this niche.

                                Oh, one thing I do want to note is I think, when I first launch, it caught the eyes of the number one, like, online retailer in this niche, and we have a very close relationship now, and that relationship can be transferred over, and he’s basically doing wholesale business for us, and yeah, it’s pretty good.

Jake:                      So then, looking at the business as it is, since it has been running on autopilot, what have you been doing at all for the business? You know, how much time do you invest in it on a weekly basis?

Nick:                      I would say roughly around like 4 hours or less. It’s very hard to like pinpoint, but I do keep up with customers’ emails. I still package, you know, the few orders I get from Shopify. I send it in to Amazon when I need to. I have a social media account with about 20K followers, like 19.5 I think, right now. And I just post memes daily. I just post, you know, stuff like that. And that’s about it.

Jake:                      Hey, listeners. Do you want to find a business that is just right for you? Head on over to Empire Flippers and have a look at our marketplace, where you can see real businesses making real money, just like the one we’re looking at today. In fact, don’t miss out. Head over now. Share your email address, and we’ll send you hot, fresh new listings of successful businesses every week to your inbox. Now, back to the interview.

                                Looking towards the future, we’ve kind of already touched on some of the other opportunities, but what do you think are some other ways that the new owner can try to grow the business anymore? Is there opportunity to expand the marketplaces you’re selling on or expand the product line? What do you think?

Nick:                      Oh, yeah. So definitely expanding the product line. Just having more products to upsell would increase revenue. They could capitalize on email marketing, for sure. And pretty much just more, you know, social media marketing with influencers and platforms with all types of social media. Again, I haven’t run like any social media ads since September, pretty much.

Jake:                      On the flip side of opportunities, do you feel like there are any potential risks associated with this business that you want a new owner to be aware of?

Nick:                      The risks … Yeah, I mean, there’s risks with all business, I guess. It’s hard to predict … Like, I’m trying to think of any risk that-

Jake:                      Well, there is, as we kind of spoke on earlier, a tiny bit of a risk just in the nature of the products. You know, they’re slightly fan-nic … Is that a word? So there’s a slight level of profanity associated with the products, but I mean, that’s really the only thing I can think of.

Nick:                      Yeah, I mean, I guess … But like that’s what I’m saying. So like if you expand the line and not have like, you know, the profane products, then that can be maybe pushed up to Amazon. I haven’t really asked them, but yeah, I mean, I guess just maybe the nature of the business might be the only risk. It’s not something that I guess everyone would buy. But it is, again, there’s a huge niche just catered around this business and multiple others.

Jake:                      Absolutely. I mean, knowing the products myself, there is clearly a market. So would you say there’s any special skills required for someone who is unfamiliar with the niche or the business model? Something that can’t be taught? You know, you need to have this skillset going in?

Nick:                      No. Not at all. There’s nothing unique, like unique skill you need to know.

Jake:                      Mm-hmm (affirmative)-

Nick:                      Yeah, it’s all-

Jake:                      What advice would you have to someone who wanted to get set up on their own e-commerce platform or selling on Amazon FBA? What’s something you wish you had known when you got started, beyond the don’t give up on the influencer marketing, back in September? Beyond that, like what’s something you wished you had known?

Nick:                      I wish I had known that it’s a huge time commitment, even if it is one product or two products or three products. Again, this was my first successful business, so I wish I had known, like what I was getting myself into. Like almost like a beast of its own, you know? It had its own mouth to feed, and I didn’t really understand the grasp of inventory management, of like, you know, keep reinvesting into the business, and I guess that kind of like deterred me from investing more into the business because I wanted the money in my own pockets instead of the company’s pocket.

                                But I guess that’s just my personality. I just really want to just, you know, keep a lot of it. I don’t know if that like answered your question.

Jake:                      No, I mean, your advice is your advice.

Nick:                      Yeah.

Jake:                      Would you commit to a non-compete?

Nick:                      Yes.

Jake:                      And how much support are you willing to offer a new owner during the transition period?

Nick:                      I could provide the 30-day support, yeah.

Jake:                      And would that include Skype calls, emails, whatever’s needed?

Nick:                      Sure. Yeah, whatever is needed.

Jake:                      Nick, would you be open to negotiating on something like an earn-out?

Nick:                      No, I wouldn’t be. The reason why is because I would just need the lump-sum to really just fuel my next venture, but I am open to, like, what is it? Competitive offers. But I am open to like, you know, negotiating on the final sale price if it’s a serious offer.

Jake:                      Nick, thank you. I do have another question for you. Before we get to that, I want to go ahead and run through that quick summary of the business again.

                                The business was built in June of 2017, has a monthly revenue of $4169, expenses of $1851, to make for a net profit of $2318, which is generated on a 12-month average. Included in the sale of this business are three SKUs, the Amazon seller central account, Shopify account, all social media accounts, supplier relationships, and associated domains. Please note that inventory is not normally included in the list price. Further details can be provided to active depositors.

                                Nick, can you tell me why you feel that this is a business worth buying?

Nick:                      Yeah, sure. Because of the opportunity. I don’t think I reached my full potential. Like September I think was only a taste of what could be done. I could explain more to potential buyers, like what my vision was, but my vision was to have a lot more SKUs. It was to have like, to be the biggest in my niche, and there are a lot of like opportunities for that. I just really … Like going back to my advice, like I just didn’t understand what I was building, like the monster that I was building, and yeah, someone who has the capital to really like bring the SKUs and do the marketing, there’s a huge opportunity to really blow up.

Jake:                      Absolutely, and you can clearly see the demand for these kinds of products.

Nick:                      Yes.

Jake:                      Nick, thank you so much for taking the time today. I really appreciate it.

Nick:                      Yeah, thank you, Jake.

Jake:                      You just learned how this business works, and I want to give you the opportunity to learn more about what you can do to buy real online businesses just like this one. If you want to find out more about businesses making real money, head over to EmpireFlippers.com and sign up for our mailing list. There is an entire world of people quietly investing their money into online businesses and seeing great returns. Now, we want to help you do the same thing.


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