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MARKETPLACE Mosquito Netting Ecommerce Store for Sale - $29k profit/year (2.3x valuation including inventory)

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Trevor Kuntz

Professional Dog Owner
Feb 5, 2012
367
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Arizona
I am selling my ecommerce Shopify business for $77,950.

This is a 2.3x valuation ($66,900) of the company plus ~$19000 of inventory valued at a discounted amount of $11,050.

I am going to be very transparent about this business, so ask any questions you want. If it doesn't sell by January 31, I am taking it off the market. This is because I believe a buyer needs to be in place by February 1 for the buyer to be able to take full advantage of the Spring season upswing, which really starts to take off in February (see revenue chart at bottom).


Business Overview: This is a 7-year-old established Ecommerce business with a niche in American-made cut-to-order mosquito netting that is bigger than anything on Amazon and MUCH better quality than anything on Amazon. These nets are as big as 12 ft x 200 ft.

For the past 3 years, I have been working full-time for biophase and then running this business in the mornings before work and sometimes in the evening after work. I occasionally work on it on the weekends. This is a business that most people could run while still working full-time or part-time if they want to.

98% of orders are through the Shopify website and most traffic is organic. Paid traffic for 2018 and 2019 combined was $4213.35 and SEO expenditure for 2018 and 2019 was $0.00. Average order is over $100 and average profit margin after credit card fees, shipping costs and COGS is 49.40%. Add website expenses, storage costs, and advertising and the profit margin is still a healthy 42.29% profit margin.

By the Numbers

Sales


Average Order Value: $112.40

2018 Revenue: $64,451.24
2018 Profit: $24,422.06
2018 Profit Margin: 37.89%

2019 Total Revenue: $68,631.33
2019 Expenses Breakdown:
Credit Card Fees: $1,929.81
Cost of Goods (including delivery to warehouse): $20,568.08
Packaging: $640.46
Order fulfillment/total shipping costs: $8,086.18
Advertising: $3,035.32
Warehouse: $4,339.79
Website Hosting and apps: $1,010.64
2019 Profit after All Expenses: $29.020.72
Profit Margin: 42.29%

Profit margin increased in 2019 because I increased prices, I optimized shipping services to reduce shipping costs, and I reduced warehouse expenses as much as possible. For someone with a warehouse or 2-car garage, removing that expense alone would increase profits about $4k/year.

Website Traffic

2019 Online store sessions: 43,089
2019 Online store visitors: 39,320

Online store sessions by traffic source
Search: 25,540
Direct: 16,073
Unknown: 780
Social 631
Email 65

Organic Google search makes up most of my traffic. The site ranks on page 1 for all relevant keywords, primarily due to the age of the product pages.

Miscellaneous Info

This business is primarily a summer business, with about 66% of sales between April 1 and July 30.

Employees required: no
Daily hours required: 2 to 3 in summer, 0 to 1 in off-season (October to mid-February)
Space required: I store everything in a 170 sq ft space. A 2 car garage and driveway is ideal. Warehouse space would be a bonus, but not required.
Physical ability: able to lift up to 70 lbs (most of the time, less than 40 lbs), ability to bend, kneel, etc.

95% of the products sold are made in the USA. There is one primary competitor (MosquitoCurtains.com) that sells the exact same products at a much higher price point because they have much higher overhead costs with a big building and many employees.

Cool facts:
In 2017, my business cell rang while I was taking a shit in my bathroom. I answered anyway. That call ended with a $26,500 dropship order profiting over $10,000 and I never touched any product from that order. That netting ended up going to Puerto Rico for use in the aftermath of Hurricane Maria.

Highest-revenue/profit account is SOCOM. They were my very first real customer in 2012, ordering 28 tents from me. Since then, I have supplied all 8 SEAL teams with large mosquito netting panels. I don't ask what they use them for. Lol.

Revenue and Profit Chart

Below is a monthly chart of revenue and profit. Profit margins are higher this year because I increased prices 10% and optimized shipping services to reduce shipping costs.

29291
 

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MJ DeMarco

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Approved, good luck.
 
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Trevor Kuntz

Trevor Kuntz

Professional Dog Owner
Feb 5, 2012
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Arizona
Approved, good luck.
Thanks, MJ, I appreciate it. If not for your book and this forum, I would have never had the inspiration to start this business in the first place. You have probably helped indirectly create more businesses than most university MBA programs (including this one) and I look forward to again applying your principles towards my next successful business!
 

AgainstAllOdds

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Hi Trevor.

Congrats on all that you've done so far.

I have a couple questions that might be useful for a potential buyer:

1. What growth opportunities do you see for a potential buyer? And in your 7 years of operating the business, what limited you from taking advantage of those growth opportunities?
2. What kind of barrier to entry/protection is there on your business? What are some indicators that the year over year cashflow will remain consistent?
 
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Trevor Kuntz

Trevor Kuntz

Professional Dog Owner
Feb 5, 2012
367
184
116
Arizona
Hi Trevor.

Congrats on all that you've done so far.

I have a couple questions that might be useful for a potential buyer:

1. What growth opportunities do you see for a potential buyer? And in your 7 years of operating the business, what limited you from taking advantage of those growth opportunities?
2. What kind of barrier to entry/protection is there on your business? What are some indicators that the year over year cashflow will remain consistent?
Thanks for the questions, AgainstAllOdds.

"What growth opportunities do you see for a potential buyer?"

FBA Amazon is the biggest available growth opportunity. Obviously, Amazon is not necessary for the success and stability of the business, but if you really wanted to grow it by 2x or more, that would be the largest potential starting point.

"In your 7 years of operating the business, what limited you from taking advantage of those growth opportunities?"

What limited growth was easily my ego. When I started this business in 2012 at 19 years old, I lived with my mom and had very little personal expenses. In 2014, at 21 years old, I was working full time at home on a $30k salary and the business had revenue of $15k and profit of about $7k. Because I had no expenses and no life experience, I thought it would be a great time to quit my job and “run the business full-time”. I took my $10k in savings and my $2k in inventory and went off on my own. Obviously, anyone looking at this objectively would say that would be a bad idea.

I moved out in 2015, living expenses went way, way up and instead of investing money into the business, I had to constantly take money out to pay for living expenses, effectively strangling the growth and slowly going into personal debt. The business grew very slowly. 2014 revenue was $15k, 2015 revenue was $22k, 2016 revenue was $28k, 2017 revenue was $45k and 2017 was also the year I got my current full-time job. Due to low initial income and high expenses, the business grew a lot slower than if I had stayed working.

"What kind of barrier to entry/protection is there on your business? What are some indicators that the year over year cashflow will remain consistent?"

The barrier to entry is three-fold.

First, initial inventory costs are quite high. To be able to offer the products I offer, someone coming into the market would need to make an initial product investment of at least $15k.

Second, sourcing from China is a very difficult proposition in this industry. The tiniest defect in your netting will make it unsellable. US manufacturers are MUCH more attention to detail and reliable. Another barrier against overseas manufacturers is obviously tariffs, which I am more immune to with a US manufacturer. However, US manufacturers have a high MOQ, especially for first-time buyers. It took me three years to get the manufacturer's pricing down to match the prices paid by my competitor, so any newbie would likely face the same headwinds.

Third, the age of the company is a big factor in its stability. The company has a very good reputation and a decent number of high-revenue returning customers. If I were to keep this business on auto-pilot, which is effectively what it has been on since January 2019, I have no doubt it would gross the same revenue next year.

I’ve often felt that this space actually doesn’t have THAT much competition. One guy came into my space for three years and tried to compete, but he was never able to outrank me in the SERPs and that made all the difference.

I’m also going to publicly answer this question, which came through PM.

"Good luck on the sale Trevor. What is the reason of selling?"


Before I answer why I am selling, I must first answer why I started the business in the first place. In 2012, my parents complained about mosquitoes on their patio. I researched netting options and found that the only company online (MosquitoCurtains.com) quoted $1200 for custom netting to screen my parents’ patio, a price my $60k/year combined parents would never be able to justify. Local contractors charged even more. I decided then that my mission was to provide high-quality netting to people like my parents at a reasonable, affordable price point. I’ve always considered it a very valid mission and a need-driven mission.

As a mission-driven person, I will normally invest my time and energy in the mission I believe in most. In 2017, I returned to working full-time for biophase, who if you know him from around The Fastlane Forum, has a mission of helping rescue dogs through his one-for-one business model. As someone who loves dogs (evident from my profile pic), I have come to the realization this year that his mission of helping literally hundreds of thousands of dogs around the world is way more important to me than providing affordable netting to people and that I want to be able to invest all of my time and effort towards his mission over my mission.

The netting company is still growing and still providing a huge need in the market. I am really glad that it exists to help people who hate mosquitoes and just want to enjoy their patio in peace. However, I know that as my energy and focus shifts, the netting business will become more and more secondary to me personally and I don’t want that for my customers, so this is why I want to find a new owner who wants to continue the mission and can continue filling these customers’ needs while making a decent profit for themselves.
 
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Trevor Kuntz

Trevor Kuntz

Professional Dog Owner
Feb 5, 2012
367
184
116
Arizona
I got another PM of general questions, so I will go ahead and answer them here:

1. Does the purchase price include inventory?

Yes, the purchase price includes enough inventory to last through summer or about 8 months from January 1. Of the 5 primary-selling products, 4 are well-stocked. One product would have to be restocked before summer. Estimated cost to restock that one product for one year would be $2900 minimum.

2. What are the units sold 2018 vs 2019? If you raised prices in 2019, it might be lower units sold compared to 2018?

Since COGs per unit didn't change from 2018 to 2019, I use COGs as my primary measurement instead of units sold.
2018 Revenue: $64,451.24
2018 Cost of Goods: $21,008.71
2018 Profit: $24,422.06

2019 Revenue: $68,631.33
2019 Cost of Goods: $20,568.08
2019 Profit: $29,020.72

3. How much of the sales came from paid ads?

Adwords is a low priority for me and I don't track ad conversions, which is a stupid plan for someone wanting to sell a business. Lol. In fact, Adspend in 2018 was just over $1,000 and I didn't even know until I did my taxes at the end of the year. I spend about 4 hours per year optimizing text ads (aiming for 8/10 or better rating from Adwords) and adjusting CPCs. I aim for an average CPC of less than $0.40, which usually ranks me around 4th to 5th depending on keywords. However, my primary focus for sales is just super good customer service and super good products.

Ads are part of direct traffic in Shopify, and these are the revenue number by traffic type:

Direct $46,024.48 (including phone orders)
Search $22,109.28
Unknown $700.04

4. Do you have sales figure prior to 2018?

I do. Here are the yearly revenues for 2014 to 2018.

2014: $15k
2015: $22k
2016: $28k
2017: $45k

Full disclosure: This thread originally listed revenues of ~$64k and profit of ~$26k. I realized today that these figures did not include a large order that took place outside of Shopify on March 13, 2019. Payment was made by check for this order. These are the details for that order. I have updated the thread title and revenue/profit figures to include this order and I have imported the order into Shopify on December 20, 2019. Screenshots of the order including customer emails, check images, freight BOLs, etc will be available to buyer for proof during due diligence period.

OrderOrder SubtotalShippingOrder TotalAfter CC FeesOrder COGSPackagingShipping CostProfitMargin
19923838$3,888.00$416.18$4,304.18$4,304.18$1,448.00$1.00$456.70$2,398.4855.72%
 
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quicksort

New Contributor
Oct 9, 2015
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How bad can someone mess this up if they don't know what they're doing? What would be obvious mistakes that a clueless person might make?

You mentioned that FBA would be the biggest opportunity you see- what kind of time investment do you think it would take you personally to pull it off?
 
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Trevor Kuntz

Trevor Kuntz

Professional Dog Owner
Feb 5, 2012
367
184
116
Arizona
How bad can someone mess this up if they don't know what they're doing? What would be obvious mistakes that a clueless person might make?

You mentioned that FBA would be the biggest opportunity you see- what kind of time investment do you think it would take you personally to pull it off?
It would be really hard to mess up. The only way you could mess up is either deleting the site on accident or not ordering inventory. Not responding to emails or phone calls at all would probably knock out 25% of sales.

I actually already have inventory ready to send into Amazon and listings created. Because the product doesn't really sell at all during the winter, it is currently fulfilled by seller. Sending it into FBA this early would just incur a lot of unnecessary storage fees. There isn't a ton of downside to FBA apart from higher fulfillment fees. I think Amazon customers also generally tend to be more finicky and have a higher return rate than Shopify customers.

My current Shopify order return rate is less than 1%. I expect FBA could get to 5% simply because people don't really read product descriptions when they buy from Amazon, but this is something all Amazon sellers tell me I will just have to accept.

I should also mention that my primary competitor (MosquitoCurtains.com) is not on Amazon either. They do all their sales through their website. There is one other decent company that does sell on Amazon (Skeeto) and they do fairly well. I do not consider Skeeto to be a direct competitor because the majority of the netting they sell is only 54 or 72 inches wide while my netting is mostly 108" and 144" and is targeted toward a different customer.
 

syp5

PARKED
Dec 23, 2019
1
0
1
Hi Trevor,

Would the buyer need to have significant DIY skills to run the business?
 
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Trevor Kuntz

Trevor Kuntz

Professional Dog Owner
Feb 5, 2012
367
184
116
Arizona
Hi Trevor,

Would the buyer need to have significant DIY skills to run the business?
No. I had zero DIY knowledge when I started the business and the base day-to-day work requires zero DIY work. It does require order fulfillment work (cutting the netting to order) but this work could be done by someone with zero prior experience.

The ability/capability to sew would be a bonus. I have a basic sewing machine and charge customers $2/ft to sew a straight line in their netting to make a curtain sleeve. This works out to about $60/hour, but this is the ONLY DIY work that I will do for customers. If they want more custom stuff, they have to go to my competitor (and pay 3x more) or DIY it themselves (which is what most do).

My customers are generally very smart and very DIY oriented to begin with, so everything I have learned over the years, I have learned from my customers. There are some frequently asked questions from prospective customers which have simple answers and can be visually answered through customer testimonial photos. I will provide a full customer service guide to the buyer.
 

AlexFS

Contributor
Dec 20, 2018
19
24
16
PM sent. Hopefully this is still active?
 

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broswoodwork

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It would be really hard to mess up. The only way you could mess up is either deleting the site on accident or not ordering inventory. Not responding to emails or phone calls at all would probably knock out 25% of sales.

I actually already have inventory ready to send into Amazon and listings created. Because the product doesn't really sell at all during the winter, it is currently fulfilled by seller. Sending it into FBA this early would just incur a lot of unnecessary storage fees. There isn't a ton of downside to FBA apart from higher fulfillment fees. I think Amazon customers also generally tend to be more finicky and have a higher return rate than Shopify customers.

My current Shopify order return rate is less than 1%. I expect FBA could get to 5% simply because people don't really read product descriptions when they buy from Amazon, but this is something all Amazon sellers tell me I will just have to accept.

I should also mention that my primary competitor (MosquitoCurtains.com) is not on Amazon either. They do all their sales through their website. There is one other decent company that does sell on Amazon (Skeeto) and they do fairly well. I do not consider Skeeto to be a direct competitor because the majority of the netting they sell is only 54 or 72 inches wide while my netting is mostly 108" and 144" and is targeted toward a different customer.
This is probably a dumb question, but have you approached the competitors about buying you out?
 

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