We Bought a Shoelace Amazon Business

In blog, business, e-commerce by Michael MicheliniLeave a Comment

We Just Bought a Shoelace Business (example of what I’m doing lately)

To give people on the personal blog a bit of an example, at Alpha Rock Capital we just purchased a business selling elastic shoelaces on Amazon. They previous owner had been building it up for a couple years and it is a top ranking product in the re-usable / elastic shoelace category.

When it was listed for sale it was making five thousand a month in SDE (seller discretionary earnings) profit (a couple months ago) but during the time it was listed it has done twenty thousand a month for the past 2 months.

Insane, right?

So we buy thing business and “roll it up” into the other 9 brands we have purchased over the past couple months.

Then we merge this into our holding company operations, and have the same team that is managing the other brands take care of this one.

Why?

The idea is, we believe in the roll-up strategy. The idea of consolidating a lot of smaller businesses / brands selling on Amazon and putting them all together into a bigger operation. This way we can scale, we can put together shipments and send by a full container, we can use the same marketing and operations teams, we can get better inventory financing terms.

One of the crazier things we have noticed is that already – many of those selling their businesses have a lot of basic things to fix. One issue, one that many e-commerce sellers, myself included, can see is running out of stock.

It takes money to grow an e-commerce business. You need to buy more inventory to get to the new level of your business. As your rank and sales velocity grow, you need to finance more inventory – either from your own funds or raise investment or borrow / take debt.

Marc has said he loves it when a business is always running out of stock, as Alpha Rock Capital can then use its finances to ensure it no longer runs out of stock. We’ve also found businesses we bought that don’t have stock on various products and are “sitting on the shelf” – adding inventory on those has brought sales back.

So while in Hong Kong with Marc, the acquisitions firm has purchased a shoelace business.

Now we sell shoelaces!

But here’s the thing – Amazon FBA makes most products basically “vanilla”. And by buying the company instead of starting from scratch, you get the suppler information, the listing, and can scale it up.

Many of those we have bought the businesses from love to “start it up” and plan to launch a new product.

If you’re interested in having us take a look at your Amazon business to sell and start new, or buy a house, or whatever, reach out.

Related Posts

Leave a Reply

avatar
  Subscribe  
Notify of