RMRB 39: Selling Private Labeled Products

RMRB 39: Selling Private Labeled Products

Jake Davis Jake Davis May 8, 2019

This week, Jake spoke with Alex about his ecommerce business that was created in January 2017. The Shopify site sells a products in the apparel & accessories niche and has 24 products that are all private labeled. The business has a strong social presence and requires minimal from Alex to maintain.

Find more businesses like this one on our marketplace and check out this listing!

Check Out This Week’s Episode:

Speaker 1:
What if you could cut through the noise in the online business world, and learn from someone who has built a real business? We’ve 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.

Speaker 1:
Hey listeners. Welcome back to the Real Money Real Business Podcast. This week, I’m going to be taking a look at an e-commerce business that was created in January 2017, and is already making over $15,000 every single month in net profit. I had the chance to sit down with Alex, the owner, to run through what really makes this business tick.

Speaker 1:
Alex, thank you for taking the time with me today. How are you doing?

Alex:
I’m really good, thank you.

Speaker 1:
Well, it’s my pleasure. Very glad we could connect today for this interview. And I’m excited to discuss your e-commerce business with you. But 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.

Speaker 1:
Again, it was built in January of 2017. Has a monthly revenue of $34,736. Expenses of $18,908, to make for a net profit of $15,828, which is generated on a 12-month average. Included in the sale of this business are the domain and all site content and files, social media accounts. And please note the inventory is not normally included in the list price. Further details can be provided to active depositors.

Speaker 1:
Alex, can you tell us a little bit about your background in building and running online businesses?

Alex:
Yeah, sure. Basically, I’m in e-commerce since like about six years. Actually, I started when I was studying with some friends, some other projects. I’ve been creating this project that I’m selling now two years and a half ago, more or less. I was just trying to exploit on the maximum the knowledge I’ve acquired in all these years to create something on my own that I will personally own 100%.

Speaker 1:
Why did you settle upon selling on your own Shopify site rather than something like Amazon FBA?

Alex:
Well my first e-commerce experience was something based on classic e-commerce websites. We had experiences with Amazon, but I was really much more confident in launching something that I know at 100%, so I went to Shopify because I knew that I would know how to manage it 100%.

Speaker 1:
Why have you decided to sell the business today?

Alex:
I think there is two main reasons. The first one is that in my life, and it has always been like this, I have cycles and I think this cycle for this project has ended for me. I am really looking for other projects and other things to do. I’m actually having a new project now. I really prefer to give this project to someone who is going to be 100% motivated to maintain it and make it grow, and I am also going to use the profits of the sale for another project, so this is the two main reasons.

Speaker 1:
What is your main traffic source for your website?

Alex:
I have I would say two main traffic sources. The first one is definitely through Facebook ads. So in Facebook ads I also include Instagram ads, because most of my communication is done on Instagram because it’s a fashion brand so the platform is better to do so. I also have a great community on Instagram and Facebook, so there is natural traffic coming as we are posting some posts on Instagram or Facebook.

Speaker 1:
So you’re definitely utilizing social media, you mentioned Facebook, are you doing anything other than Facebook?

Alex:
Well, naturally this is where I think this is where there is huge room to grow. We don’t do emailing, we don’t do Google Ads, we don’t know Snapchat ads or whatever. So there is really to me a big opportunity.

Speaker 1:
What does it take from you, the other, to maintain this business at its current level?

Alex:
Since I have a VA doing all the customer service I don’t really take care of this part. More or less it’s like two or three hours a week, managing stocks, being sure that everything is in stock and ready to ship, adjusting ads on Facebook even though I didn’t touch ads since a month and a half and it’s really going these days. Posting photos on Instagram, Facebook, trying to connect with … To make the community leave with sharing the photos or tagging us on. Things like this.

Speaker 1:
You have a VA helping you run the business, correct?

Alex:
Yeah.

Speaker 1:
Mm-hmm (affirmative). So what does this VA do for you?

Alex:
So the VA do basically, we are working on Zen Desk which is a software really useful to manage all the customer service email. He basically answer all the email he has the ability to do. This means delivery problem, questions about products, things like this. I sometimes need to help, like really not so often, for really complicated case or whatever. But, his job is to take care of the entire customer service part.

Speaker 1:
Will he be continuing with the business?

Alex:
Since he’s a relative probably he won’t, but I’m willing to find a new VA for the buyer and make the entire transition.

Speaker 1:
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.

Speaker 1:
So, if you were to keep this business and try to grow it, what are the big opportunities that you would focus on? Where are the opportunities for growth here?

Alex:
So basically on Instagram, we receive like five to 10 demands every day about influencers. Some have 500K followers, 200K followers, even sometimes 1,000,000. And they ask for a pair of eyeglasses and in exchange they will do some posts. This actually I’ve never went to it because I did not like … I don’t know, I just didn’t feel like I would do it well, so I didn’t, but there is definitely a big opportunity here.

Alex:
There is also the Google Ads that we never touched. The emailing, we had about 50,000 email lists we never used, and also probably communicating more with previous buyers and the whole community we have on Instagram and Facebook.

Speaker 1:
Do you feel like there are any potential risks associated with this business that a new owner should be aware of?

Alex:
I would say that the competition is a big risk. The fact that also the most traffic nowadays is coming from Facebook ads. However, we also have a substantial part coming from the community we’ve acquired on Instagram and Facebook, so that will be okay. We really advise the new buyer to try … So to me competition is a risk. The fact that most of the traffic comes from Facebook ads is something that the new buyer should maybe work on. But there is also a really substantial part coming from the community we acquired on Instagram and Facebook so that balance a little the risk.

Speaker 1:
If someone were to come to you and say, “Hey Alex, you’ve been very successful with e-commerce and I want to get started with my own e-commerce store,” what advice would you have for them?

Alex:
In my experience, I’ve had friends and relatives asking me, “Oh yeah, how did you do it [inaudible 00:07:42]?” Every single time I see them prepare [inaudible 00:07:45] for month and month and sometimes not bring anything. So my biggest advice would be to go to the things directly to get hands dirty. Once they really start something, it’s like to work on every day, like photos, descriptions, information, to make it perfect. Even if it doesn’t mean anything at the beginning, that one person plus one person plus one person makes the whole thing and that’s to me one of the most important thing.

Speaker 1:
Would you commit to a non-compete?

Alex:
Yes.

Speaker 1:
And how much support are you willing to offer a new owner during the transition period?

Alex:
I can do email support for 30 days and a couple of Skype calls. That’s totally fine.

Speaker 1:
Are you open to negotiating on something like an earnout?

Alex:
Yes. Yes. I am.

Speaker 1:
Awesome, Alex. Thank you so much for taking the time with me today. My final question for you. If you were looking at this business from the perspective of a potential buyer, why would you feel like it is an asset worth buying?

Alex:
As the depositors would see, the last month has been really great, really successful. I’ve been someone always really cautious and I know there is big room to grow. There is so many opportunities, like as influencers, Google Ads, emailing that I never touched. So I definitely think that yes, this asset has a big chance to grow more than now.

Speaker 1:
Awesome. Thank you, again, very much for taking the time with me today. I really appreciate it.

Alex:
Thank you.

Speaker 1:
You’ve 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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