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Home > Amazing FBA > How to Grow Your E-commerce Startup through Acquisition with Walker Deibel
Podcast: Amazing FBA
Episode:

How to Grow Your E-commerce Startup through Acquisition with Walker Deibel
Category: Business
Duration: 00:41:41
Publish Date: 2020-04-08 00:00:03
Description: How to grow your e-commerce Business by Buying a Business On this podcast, Walker Deibel of Quiet Light Brokerage will be teaching about how to grow your e-commerce startup through acquisition. Can a 7-figure Amazon seller grow an e-commerce startup through acquisition? Yes absolutely. It’s a lot easier in the USA than the UK where 90% of deals in Quiet Light Brokerage in 2019 were in the USA. Cash is so available right now while interest rates are low. Rule of thumb for buying an e-commerce business He’d want at least $100K to allocate towards acquiring an e-commerce startup. If you have more, it’s easier. Say you have $50K on your e-commerce startup, you could probably buy a business with an SBA loan. A lot of it comes to your comfort with debt as a vehicle. If you’re comfortable with maximizing debt Make note you have the right skillset. You could buy a business doing 500K 166K 83K will be principal and interest payments on the acquisition so you get about 183K in free cash flow. Equity buildup takes the real estate model to e-commerce startup Acquisition entrepreneurship With a physical asset like a house, you have the physical asset. There is more of a margin of safety if you wait long enough, the real estate market will always turn around. Walker bought the printing company first because the bank was willing to use the equipment as collateral. Porter’s 5 forces of Strategy Harvard strategy Customer power Supplier power New entrants Competition Threat of substitution Channel concentration is also needed. In online you need to add “marketplace power”. If you have an e-commerce startup that is 100% on Amazon, Risks might be  Algorithm changes  Organic ranking changes  Start charging $20 for no reason on every ad You could look at something driven by Google or Amazon but this is a virtual version of selling all your products via Walmart. How to Lower Risk of an Amazon business The trend - Amazon has become acceptable. You could say that all Amazon businesses have a type of risk. At QLB, they sell all types of online businesses. 24 months ago, buyers were saying “Why would I buy an FBA business?” ⁃ “Amazon has too much power”. Today 2020 Amazon has become a completely accepted distribution channel. Just like Google. Coffee maker example “This is really crowded”  Great organic rankings  100s of reviews  Historical performance of  Email list off Amazon You can use this as an infrastructure to build a new e-commerce startup business. Wide-open markets Let’s say you launch in this, then a 2nd one does. The mindset of e-commerce entrepreneurs vs. Investors - is there a different mentality? Not so much a difference but some people just don’t know about the model. 90% of self-funded buyers never actually end up buying something. They don’t know what they are looking for. They look at it like items on a menu. If you order a ham and cheese sandwich, you don’t need to know anything. Before you start to shop and understand what it is you bring to the table. What does the empirical evidence suggest makes a successful entrepreneur? An intelligent, driven individual committed to a good opportunity. Intelligent - It is correlated to success Driven and committed. - You put in the success equity and get it done The aptitude of the business buyer What skill sets do they bring to the table? Spectrum between: ⁃ Revenue generator ⁃ Profit maximizer (reduces costs) People have a natural tendency to live in one place or another on the spectrum knowing how you want to spend your time. Racing bikes tell you what you kind of business buyer you are Men buy based bikes on what they want to be. Women buy based on where they are today! For example, Walker has a $20K bike he doesn’t ride. Two types of people who want to be in Amazon
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