Website Closers® presents a thriving Consumer Products Goods company that has developed 5 strong brands and a healthy mix of sales channels between Amazon (55%), Wayfair, Target, Costco, Sam’s Club and Walmart. The company has a wide variety of product offering with products for the home, office, garage, outdoors and vehicles.
The company’s products are in high demand, attract repeat buys, and are being sold exclusively by this company at competitive prices. It’s been a winning combination for nearly two decades, enabling the business to market products sold under its brand names, maintain multiple top sellers, and expand to additional sales channels to ensure continued growth.
Asian Sourcing and R&D
One of the unique opportunities that this business brings to a potential buyer is sourcing office it built in China where its own employees source products, safeguard against quality issues, and handle overseas logistics to the United States. They also have sourcing agents in place in India and the Philippines. These sourcing agents work closely with their staff in the U.S. to continue to build new products for the company – another massive value driver for any buyer of this company.
Now that they have 5 brands under management and full R&D system in place, there is no end to what these teams can deliver. With so much experience behind them, they have become adept at learning what customers are looking for, and even as important, what customers don’t like about other brands’ products that are out there, but not meeting quality or functionality standards.
Amazon.com
Amazon remains the company’s top-performing platform, representing 55% of the company’s revenue. The company has been awarded the coveted Seller Fulfilled Prime opportunity by Amazon, which allows them to ship products from their 3 managed warehouses while still selling products on the Amazon platform under the Prime Badge. This is a huge cost savings to the company since it no longer has to concern itself with Amazon’s ever-increases FBA cost increases. Currently they only offer 10% of the large product array via FBA.
Customers like what they’re getting on Amazon, having given this brand a solid 4.5 – 5-star seller rating on the platform, where they have tens of thousands of solid reviews and an amazing amount of real estate. Gaining the organic search results that they have with their products would be very difficult to surmount given the volume that they ship each day. This sales velocity and smart pricing has allowed them to win the #1 Best Seller Badge for multiple products.
Selling popular everyday items can be fiercely competitive on a site such as Amazon, but this company has its products manufactured to their specifications, and these items are trademarked. The company has agreements with its suppliers not to sell these specialized items to other businesses, giving them a significant advantage over competitors. The company has grown to a whopping 650+ SKUs, enabling customers to search their store for a wide variety of products that sell at a healthy pace year-round, with many enjoying big spikes in sales because they’re seasonal. For example, the company has a line of snow removal products that are top sellers for them during the winter months.
This business represents a clear opportunity for a U.S. Buyer to acquire this company and then scale it quickly by launching an international expansion on Amazon’s foreign platforms, and by continuing to do what it does best: developing new, innovative products that are ideal for attracting new customers and for promoting upsells.
Business Broker Takeaway
There are many value propositions for this business, but the 3 we think are the most important for buyers to consider include:
- Diverse Product Catalog. The company has succeeded by carefully studying trends in the market and finding products that customers want or need. This is how the company has grown to offer more than 600+ SKUs, including a wide variety of items for the home, office, garden, and garage. The company also markets a line of automotive ice scrapers and snow brushes for winter, stadium chairs, and lap desks across six websites that direct customers back to their Amazon platform for purchase. They have several top sellers, including box cutters, pet gates, and snow brushes, and the top 20% of their best-performing items make up 80% of their sales.
- Multiple Sales Channels. Amazon is the company’s leading sales platform, but the company has diversified and started to market products on additional channels. Today Amazon represents slightly more than half (55%) of their sales, while 23% come from Costco, 7% from Sam’s Club, 6% from Costco Canada, and the remaining 4% from Target, Wayfair, and Walmart. With their products available on so many sales channels, the company is shipping up to 10,000+ products a day during the peak season.
- Experienced Team in Place: The company maintains offices in Texas and China, and warehouses in Kentucky, Nevada, and Pennsylvania. The owners employ 45 seasoned workers including 8 full-time employees in their Austin office, seven in the China office, and 8 employees in each warehouse. Four customer service representatives are employed in the Philippines and stay busy since the company gets up to 100+ customer inquiries a day. A major focus of their work today is on product development. The company now has several new products in development, to be launched soon.
The Company
This 16-year-old company has put the focus on providing customers with items that are practical, handy, attractive in the home, or useful at the right time of year. Having completed careful research on trends among leading retailers and tradeshows, the company has developed a knack for developing items that customers are attracted to.
With an Average Order Value of $53, products are competitively priced, and many of the shipments are conveniently handled by Amazon FBA. The products that are not get quickly shipped from the company’s three regional warehouses.
Their sales hum vibrantly throughout the year, with a peak during the holidays. Seasonal items, such as their snow removal products, do well in colder months. In addition to its trademarks, the company also has design patterns on its snow brushes, shovels, and lap desks.
Operations & Marketing
With so many products and high demand for many of them, the company takes full advantage of Amazon shipping and its regional warehouses to provide quick deliveries, while their staff understands the art of providing strong customer service. Adequate inventory levels are always maintained to ensure no orders are delayed and the company can keep up with demand.
All products are packaged for Dropshipping by their manufacturer. Once orders are received, the company’s warehouse teams simply apply a shipping label on it for delivery.
In addition to the company’s 45 employees, two remote workers are used, and the company outsources its graphic design and video editing. All other daily and administrative tasks are done directly by the company’s workers.
Sales are driven in part by PPC ads on Amazon, and one of the company’s employees oversees applying SEO keywords to their websites and product descriptions. As a result, the company now attracts 1 million unique monthly visitors to its websites around peak sales times.
Amazon has proven to be an enormously beneficial tool for eCommerce shops, giving their products and services exposure to an audience of more than 200 million Amazon Prime users across the globe. Since millions of consumers shop on Amazon daily and trust the platform for quality products, this company is a reminder of how much Amazon has changed the economic landscape, to the benefit of both shoppers and sellers.
Balance Sheet Notes
This company continues to operate beautifully coming out of COVID; however, some of the supply chain issues from COVID continue to weigh on this business, which is why ownership is seeking a partner with access to capital to help it right size and have sufficient capital to continue to grow to $100M+.
One issue the company has is that it invested heavily in inventory during COVID since the demand was high and supply was short. The company requires about $6-$7M in inventory at its current sales levels but has over $20M currently on its books. This poses balance sheet and income statement issues on multiple levels:
- Additional Warehouses. The company only needs 1 warehouse at its current level of sales but has 3. One of the leases is priced well below market so can easily be subleased. Another lease is closer to market prices but still has the opportunity to be subleased, even if the sublease was slightly subsidized by the company. These savings can immediately be realized when a new owner takes over.
- Cost of Capital. The company took out loans at COVID-era rates, which have since skyrocketed with the federal reserve raising rates – this higher level of interest is hurting the company’s ability to grow. A buyer with appropriate levels of capital will not need lending, which will immediately save the company hundreds of thousands in interest.
- Employee Count. The headcount was raised during COVID and hasn’t been downsized. A new owner can achieve immediate increase in margin by right sizing the workforce to current needs.
- COGS. The COGS in the income statement still reflect COVID-era container shipments, which were 5-10X where they are now. Because the company has 3X more inventory than it needs, it will take time for this to run off and normalize.
Summary
This company has an enviable future: it offers unique products that people want, continues to launch new SKUs, has a high 4.5 rating on Amazon, and has the right team in place to continue keeping customers happy. For a buyer, it’s a golden opportunity to take advantage of this company to scale it rapidly.
