Website Closers® presents an SBA Pre-Qualified CPG Brand operating in the Marine & Boating Parts Vertical, using eCommerce as its primary sales channel.
SBA Prequalification
The SBA Pre-Qualification certification is not an easy one to achieve. It requires a rigorous review of the target company’s financials (historical and current) and operation to ensure that the business can properly service debt after closing. This company achieved its pre-qualification based on a solid history and likelihood of continuation of success. For a Qualified Buyer looking to use this financial tool to buy an eCommerce business, there are many benefits.
They can put as little as 10% down and amortize the business over 10 full years. They can rest easy knowing that they aren’t the only ones performing due diligence on the company since both the bank and a 3rd party evaluation is needed as well. And they can achieve a return on their initial 10% investment much quicker than with non-SBA deals due to the longer senior debt payback period. And combined with the low multiple being offered for this deal, this is a no brainer for one looking to get into the eCommerce space, or for one already in the space looking to pick up a cash cow.
Operations
The Company’s large array of product offerings are sourced from several suppliers in the US and overseas and selected based on competition, demand, shipping costs, and profitability. Astutely, the company stocks a large amount of inventory of aftermarket parts that are newer to the market and deliver excellent margins. Favorable payment terms have been negotiated with many of the suppliers, resulting in comfortable cash flow. Hundreds of thousands of dollars in inventory is included in the sale, reducing working capital requirements for a new owner and allowing them an even faster ROI.
Depending on the parts, they can be shipped from Asia by sea with final delivery by truck, UPS, or FedEx or imported by air. Orders from suppliers in the US are placed as regularly as every week, reducing the need to carry surplus stock.
Currently, sales are focused on the US market. Two-thirds of revenue is derived from Amazon, and the eCommerce giant has approached the business repeatedly to sell in every country they operate. This invite-only process presents an enormous opportunity for a buyer to expand by hiring additional staff or using existing infrastructure. The other one-third of sales generate from eBay, which also has international prospects that are ripe for the picking, particularly because marine parts outside the US can be challenging to locate.
Products are sold Prime on Amazon wherever possible and, in other cases, dispatched from the company’s warehouse along with eBay orders. Typically, between 5,000 and 12,000 units are stocked at Amazon facilities at any given time, and during peak season, up to 400 shipments are made daily. In 2022, 43,000 Prime, 7,000 non-Prime, and 13,000 eBay deliveries were made. Many of the 20,000 orders remitted from the company’s facility comprised multiple packages.
Although it is presently only used when an item is out of stock, DropShipping is an option for a buyer so inclined.
The broad customer base comprises any boat owner who may not have access to a local marine shop or is seeking better pricing.
Human Resources
The founder manages all day-to-day activities, including ordering, customer service, receiving stock, packing, shipping, handling returns and exchanges, and researching new products and pricing. He is willing to stay on board for a period necessary to teach these aspects to a buyer and ensure a seamless transition and continued prosperity.
One part-time helper assists with UPS and USPS shipments.
Due to human resources constraints, marketing efforts have intentionally not been pursued, aside from sponsoring certain listings. Subsequently, scale opportunities are abundant.
Scale Opportunities
Paid advertising offers immediate growth potential for the company. Diversifying sales platforms, such as integrating with Shopify and Walmart, can significantly boost revenue, especially since the company has approval for the latter. International Amazon Prime stocking is another bright prospect, while locally, transforming part of the warehouse into a showroom could cater to walk-in customers.
Additionally, launching a wholesale division targeted at repair shops through a specialized portal could provide commercial discounts, fostering repeat business and reducing acquisition costs. Effective social media and email marketing campaigns, integral to many eCommerce ventures, can be rapidly incorporated by new management. Lastly, the marine parts industry has ample room for growth, and by adding new SKUs and sourcing in-demand parts from existing suppliers, the company can cater to a wider customer base.
This enterprise could be operated anywhere in the 48 states and at any time of the day. The only obligations regarding time are receiving deliveries and pickups from couriers.
The Industry
The marine industry has witnessed a growing trend of consumers purchasing parts through online platforms, and the surge in boat sales in the US during the pandemic played a pivotal role in this shift. As more individuals acquired boats and watercraft, they turned to marketplaces for convenience and accessibility.
The habit of online shopping has endured due to several factors. Convenience remains paramount, enabling individuals to easily find and order specific parts without the need to visit physical stores. Moreover, online channels offer an extensive range of products, allowing consumers to compare options and prices and access reviews before making informed decisions.
The owner of this company already had well-established storefronts and was able to capitalize on those market conditions. The business’s robust online presence, broad catalog, and competitive prices ensured that it catered to the evolving needs of consumers, as it continues to do to this day, corroborated by the stable and healthy top and bottom lines.
The trend of purchasing marine parts online continues to thrive, reshaping the way boat enthusiasts and owners access essential components. Therefore, this business is primed for continued success under capable new stewardship.
