How to grow your e-commerce Business by Buying a Business

On this podcast, Walker Deibel of Quiet Light Brokerage will be teaching about how to grow your e-commerce startup through acquisition.

Can a 7-figure Amazon seller grow an e-commerce startup through acquisition?

Yes absolutely.

It’s a lot easier in the USA than the UK where 90% of deals in Quiet Light Brokerage in 2019 were in the USA.

Cash is so available right now while interest rates are low.

Rule of thumb for buying an e-commerce business

He’d want at least $100K to allocate towards acquiring an e-commerce startup.

If you have more, it’s easier.

Say you have $50K on your e-commerce startup, you could probably buy a business with an SBA loan.

A lot of it comes to your comfort with debt as a vehicle.

If you’re comfortable with maximizing debt

Make note you have the right skillset.

You could buy a business doing 500K

166K

83K will be principal and interest payments on the acquisition so you get about 183K in free cash flow.

Equity buildup takes the real estate model to e-commerce startup Acquisition entrepreneurship

With a physical asset like a house, you have the physical asset.

There is more of a margin of safety if you wait long enough, the real estate market will always turn around.

Walker bought the printing company first because the bank was willing to use the equipment as collateral.

Porter’s 5 forces of Strategy

* Harvard strategy

* Customer power

* Supplier power

* New entrants

* Competition

Threat of substitution

Channel concentration is also needed.

In online you need to add “marketplace power”.

If you have an e-commerce startup that is 100% on Amazon, Risks might be

* Algorithm changes

* Organic ranking changes

* Start charging $20 for no reason on every ad

You could look at something driven by Google or Amazon but this is a virtual version of selling all your products via Walmart.

How to Lower Risk of an Amazon business

The trend - Amazon has become acceptable.

You could say that all Amazon businesses have a type of risk.

At QLB, they sell all types of online businesses.

24 months ago, buyers were saying “Why would I buy an FBA business?”

⁃ “Amazon has too much power”.

Today 2020 Amazon has become a completely accepted distribution channel. Just like Google.

Coffee maker example

“This is really crowded”

* Great organic rankings

* 100s of reviews

* Historical performance of

* Email list off Amazon

You can use this as an infrastructure to build a new e-commerce startup business.

Wide-open markets

Let’s say you launch in this, then a 2nd one does.

The mindset of e-commerce entrepreneurs vs. Investors - is there a different mentality?