If you are reading this, you are probably an e-commerce business owner who has worked hard and built an e-commerce brand in the last few years, and now you are wondering what you should do with your brand. Should you continue working on it? Or should you reap the rewards of your hard work and let professional companies take your brand forward? In this article, we will discuss why you could consider selling your e-commerce business.
Building a business from scratch is hard, but scaling it is even more challenging. Scaling a business requires reinvesting profits back into it each year in the hope of growth. Business owners are always in a dilemma of compensating themselves or reinvesting the profits back in the business. But, of course, this is not a risk-free investment. There is always a chance of things going south. While there is fierce competition in the e-commerce space, there is also a threat from e-commerce sites on which the sellers depend. Sites like Amazon change their algorithms once in a while, drastically affecting certain products’ visibility. They have the data on which products sell well, and they can start their in-house brands and list the products which sell well, thereby directly competing with the sellers. They have deep pockets and can undercut sellers on any day. Eventually, this decreases the sales of the original sellers of the product.
There are other issues like seller accounts getting suspended or removed altogether from the websites. In the e-commerce business, there is very little buyer loyalty. Most of your customers disappear the moment your account is removed from Amazon. It becomes difficult for a small or a medium business owner to legally fight against large e-commerce websites in such a scenario. The seller is then left with large stocks of unsold inventory and also in debt in some instances.
If your business is into the FBA model, there is also a chance of Amazon increasing the rates overnight. For example, a change in the commission rate from 8% to 15% can completely eat up your margins. In short, sellers are at the mercy of e-commerce websites and often have very little negotiating power with them.
There are also cycles in the e-commerce business. For example, certain products sell well during certain months/years, and they have meager sales during the bad phase of the business cycle for the product. Therefore, it is a good idea to exit an e-commerce business when the sales of your products are good rather than holding on to them until the sales cycle turns against you.
As you may have also experienced personally, e-commerce is a highly uncertain space to be in, and it is a good idea to book your profits when the time is right. But, of course, every entrepreneur loves the brand that they have built, and parting with it is not easy. So, choose the right partner to sell your e-commerce business. Find a trustworthy partner who is transparent about the whole process and is someone who can give you a fair value for your business. Ideally, it should be someone with enough expertise to continue growing your brand.
eCommerce roll-up businesses like Powerhouse91 have lots of experience in running brands, and they have an excellent record of acquiring e-commerce brands and increasing their efficiency. Powerhouse91 acquires eCommerce brands from merchants in exchange for a lump sum cash payment and, in some cases, future profit-based incentives. Because Powerhouse91 handles several brands rather than a single brand, they make use of mutual learnings, economies of scale, and considerable efficiencies in marketing, listings, and supply chain to enable the brand to grow at a rapid pace. Finally, this allows business owners to earn financially from selling their brands, allowing them to pursue other projects as their brand grows immensely.
If you feel that the time is right, reach out to them and see if selling your business may be the right thing for you to do right now. To know more about Powerhouse91 you can visit their website or contact them at contact@powerhouse91.com
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