Are you thinking about buying an online business, or maybe selling your existing one?
Before taking action, make sure to have a look at the first annual report released by Empire Flippers, one of the major marketplaces for buying and selling online businesses.
The company analyzed $50.8 million worth of business deals, sharing the hot trends that emerged in the past year.
The report is huge, but we’ll try to bring you the most relevant insights. Let’s have a look:
What makes a business more valuable? According to the data analyzed by Empire Flippers, three factors result in a higher business valuation:
- Strong brand.
- Multiple sources of traffic.
- Multiple sources of revenue.
What kind of business had the most value?
- In 2017, content websites produced the most revenue (54.18 percent of sales revenue): Amazon Associates websites are the frontrunners in this category.
- 2018 saw a shift, with e-commerce business sales becoming more valuable than the rest. They represented 56.13 percent of sales revenues, with the majority of e-commerce businesses being Amazon FBA.
The trend is still growing into 2019 too. E-commerce businesses are representing more and more of the total sales revenues.
However, content sites are still an asset that buyers crave in 2019: They’re fairly hands-off businesses and they can be a launchpad to almost every other type of monetization out there.
In 2017, 125 content sites were sold, whereas in 2018, there were 157. The total combined sales prices grew by 26 percent too, from $9.7M to $12.2M.
What’s the biggest risk for content sites? Most of these businesses rely heavily on SEO traffic, and we all know one thing: You can’t control Google!
It’s the same story for monetization too: Affiliates programmes change, offers come and go, and accounts get banned.
What about e-commerce businesses transactions? The first trend you can notice is that a ecomm business takes longer to be sold, especially for Amazon FBA businesses.
This is due to a diligence factor: There is just a lot more for a buyer to look into with an e-commerce business compared to a content site. You need to take into account the Income statement, how the supply chain is mapped out, supplier relationships, inventory, sellability etc.
What are the biggest risks for e-commerce? Getting traffic from a single source can be a critical point of failure.
Also, you should always be “recruiting” new factories to build your products and save yourself from being at the mercy of a single manufacturer.
This is just a tidbit from the report. It goes on, analyzing Ad sense content site businesses, Amazon FBA business, Saas businesses and much more.
Even though you’re not looking to buy or sell a business, we really suggest you take a look at the whole report and catch the most relevant info for your business.