PodcastSelling on Amazon

Buying an Ecommerce Business – Branded by Amazing EP#15

By October 13, 2021 No Comments
 

Welcome to Branded By Amazing Ep 15!

Matt Clark (00:05):
Hey there and welcome to Branded by Amazing. This is episode number 15, and today we have a special interview with a friend of mine right here in Austin, Texas named Shakil Prasla. So I’ve known Shakil for quite a few years now. And, uh, he’s got a lot of cool experience in e-commerce quite different than my experience actually. And the main topic that I want to dig into with him is on different ways to fund purchasing and growing e-commerce businesses.

Cause he’s done it a bunch of different ways through loans, through equity, other sources. And this is something that I’m interested in for my e-commerce business myself right now. And I’m sure a lot of people want to know about this too. So super excited to get into this topic. Uh, I’m Matt Clark, the CEO of amazing.com and let’s get into this interview. All right. Thanks for coming down for this Shakil.

Shakil Prasla (00:48):
Thanks for having me, Matt.

Matt Clark (00:49):
I’d like to get into first is kind of your background, which I actually don’t even know, like we’ve known each other for a few years, but how did you get started in e-commerce?

Shakil Prasla (00:57):
Yeah, so, and, um, I, uh, graduated from UT in 2008, did some financial consulting, uh, but it wasn’t really for me and I didn’t know what to do next. So then I went to go get my MBA and then, uh, after getting my MBA, I still felt like I didn’t know what to do. So I went on Google and I started looking at jobs to have with an MBA. I kind of went down this rabbit hole of, um, selling things online, working from home, being in your pajamas that really intrigued me. And so I didn’t know what to do first. So I packed my bags. I went to China, I went to the Canton fair, which is the world’s largest trade show. I think at that time I just walked the boots and found something. I really like it was these, um, men’s accessories, watches, cuff links, uh, bracelets, tie clips, and that stuff started a website went to, uh, Upwork at that.

Shakil Prasla (01:52):
I think it was called oDesk at that time and, uh, hired a bunch of people and, uh, started generating some revenue, learned about SEO, learned about content, just really self taught myself, look that competitors one on, uh, Google just kept trying to learn. And then finally, after a year I made her profitable, but it was, uh, the year was a very long grind. After that year, I felt little still unsatisfied. I wanted to go do something else.

So I was at a crossroads of what to do next. Should I consult people on how to start websites or should I just go buy something? And I decided to go buy something because that’s what my dad was doing. He was buying businesses. So I had that kind of exposure. So, um, I think in 2013 or 14, I bought my first business. And at that time, um, multiples were less than two. I wish it was still like that today. Um, and I, the first website I bought was just selling a website alone, uh, barely running any ads, no Amazon or eBay, no other marketplace. So I bought that website. What kind of business

Matt Clark (02:57):
Was it?

Shakil Prasla (02:58):
Uh, it was beverage coolers. Oh, okay. It’s like, you’re a koozie, but with like a little freezable gel around it, it keeps your soda or beer cold for a few hours. Yeah. And, uh, bought the website, turned on ads. I think I was only spending $500 a month and then started selling on Amazon and where I bought it at about a two X, multiple, but I was able to make my money back in six months just by doing these few things. I was like, oh man, I’m onto something. Let me keep doing

Matt Clark (03:26):
This. And so that started me on a journey of trying to find businesses where I could provide value. Um, and I think now I’ve bought 15 online businesses. Um, just each time was larger and larger. Uh, the first one I bought in, um, it mentioned this, but it was $52,000. Um, so, and then since then we’ve been just buying larger and larger businesses. And here I am today, it seems like everybody wants to be buying a business right now.

Yeah. I mean, that’s kind of, one of the things I want to get into is like, I mean, part of it’s because I find it super interesting what you’ve done. And part of it’s kind of like we were talking about like out of self-interest it’s like, cause we’re at the point with our, uh, e-commerce coffee business that I’m like, we’ve generated a lot of good cash and we’re profitable and we keep generating more cash, but I’m like, you know, we don’t want to kind of just deplete half of our cash, you know, trying to save some money on inventory.

Matt Clark (04:16):
But I also think that things are consistent enough that it’s kind of crazy not to look at that as an option, like raising some sort of debt, you know, just to kind of fund inventory so we can keep the cash in the bank account, but then also kind of, uh, lower our costs. And so I know you’ve got a ton of experience and so, um, would like to talk about like some of the different options you’ve done, like buying these businesses, like where have you gotten the capital and like what’s kind of been your experience.

How to Use Leverage to Buy Businesses

Shakil Prasla (04:36):
Yeah. And so I think anyone that’s looking to be buying a business, it’s really hard if you’re trying to buy a seven figure business, it’s really hard to even have seven figures in the bank account. Uh, not a lot of people even have that. So you have to do what’s called leverage. Um, and leverage basically means just taking a loan from somewhere, whether it’s a bank, whether it’s individual, whether it’s private equity or VC group, uh, the most popular way to be buying a online business right now, it’s called it through an SBA loan. Um, my, my last time I bought an SBA loan, uh, through, uh, used SB alone was in 2018 when you only had to put down 10%. So if you’re buying a million dollar business, uh, you only have to put down a hundred thousand dollars. And the way I saw the math was, if you’re buying, you know, let’s just say other three X, multiple, the business should be making $333,000 a year.

Shakil Prasla (05:33):
And that’s why you’re buying it for a million dollars. Um, but your loan payments for that $900,000 over the course of 10 years is supposed to be around $125,000. I have these numbers memorized because I’ve used this example before so many times. So the business is making 330, $3,000 and your loan payments are $125,000.

So you’re left with about $208,000 a year on an investment of a hundred thousand dollars. So your, your sort of cash on cash is 200% per year. Um, versus you having a million dollars and you buy the business and you’re making 330, $3,000 a year, your cash on cash. There is only 33%. So the math for me worked out because it allowed me to keep more money in the bank. Um, in that example, I could have bought 10 of those businesses, you know, a hundred thousand dollars each just using leverage and just increasing my income.

Matt Clark (06:30):
Um, and for, for those SBA loans, which by the way, in case anybody doesn’t know small business administration, but for those loans is 10 years like the typical term.
Shakil Prasla (06:37):
Yeah. It’s, it’s 10 years on, uh, online businesses and, uh, Iran I 25 years for real estate or an actual physical store. Yeah.
Matt Clark (06:47):
And is that usually required a personal

Shakil Prasla (06:49):
Guarantee? The, uh, yeah. So you do, um, have to give your personal guarantee. So if you’re not unable to pay loans, uh, through the, the business, you’re going to have to make it up personally. Uh, and if you still can’t do that, then, you know, unfortunately you’re gonna have to, uh, go through the banks that bankruptcy route. Yeah. Um, so yes, it is risky in the sense that you are liable for that amount. And, um, yes, the interest rate is prime plus two points on 5%. So today it would be six and a half percent. Um, and it does take a very long time. It takes three to four months to even close these types of loans. And if you’re trying to sell it that the seller may get a jittery and stuff, but I still think it’s one of the best vehicles out there, uh, for USA based companies is to be using an SBA loan. Um, because if you only have a hundred thousand dollars saved up, that’s how you could buy this large cashflow. Otherwise you’re kinda stuck buying smaller businesses,
Matt Clark (07:48):
Uh, for that kind of loan. Is it, is them approving you or not? Is it more based on like you personally or the quality of the business you’re buying?

Shakil Prasla (07:56):
Yeah, it’s both. So they do look for two years of tax returns on the business itself to make sure that, you know, legislate it, you’re buying it at $333,000 a year. They want to make sure that it’s kind of been near there at least trending up towards that. Um, and then two, they do look at you, they do look at your balance sheet. They do look at your credit score and they do look at your experience. They don’t want anyone to just come in that doesn’t have e-commerce experience. Um, so they do want that kind of protection as well. Uh, they will require to buy life insurance too. So if something happens to you, uh, they’re the beneficiary. So they get the money from that as well. So I, they are some nuances, but I still think it’s, it’s one of the best vehicles out there to be buying businesses.

Matt Clark (08:41):
And what, um, um, what was I gonna say? Um, have you ever not been approved for one of these SBA loans?

Shakil Prasla (08:47):
I know I have it, but they do have a cap of $5 million, which I am capped off at,

Matt Clark (08:55):
Across multiple businesses or for one yeah. You as an individual can only have that much.

Shakil Prasla (08:59):
Exactly. So, so let’s say you and I, um, buy business for $3 million and Andy and I buy a business for, uh, $2 million, even though we’re partnering, I’m still liable for $3 million on our end and $2 million from his end as well. So I’m already capped off there. So they do have those limits. They will, uh, you will get, you may get rejected. If again, you may not have the experience or you may not have the credit score. You may not have the kind of the credit wording that’s just with any other bank. Uh, the thing you could do next is find another bank to help you.

Interest Rates Now

Matt Clark (09:35):
Yeah. Cause I was wondering about that. We can jump into that, um, because you know, with interest rates being so low right now, uh, I mean six point, whatever percent you said for SBA loan is not very high, like historically, but right now it’s kind of like, could I get cheaper? Could I get like half of that from some other source? So I’m some other banks who is basically borrowing money and nothing at like a quarter of a percent or something. Yeah. Um, so I don’t know if you’ve had experience with that also.

Shakil Prasla (09:57):
Yeah. Yeah. So your typically your interest rate is going to be lower. If the bank can have collateral that they deem safe, right? So that’s my real estate, or whenever you buy houses and stuff, your, uh, interest rates are, you know, under 3% right now. Uh it’s because you’re living in there, they’re typically safe. They do an appraisal to make sure, Hey, you’re going to have a million dollar loan. That’s what the market rate is too. So the bank is really covered there in case you don’t pay, they just take over the house and just resell it for at least what they gave the law enforcement, Surrey failure, able to show a safe collateral. Um, then the bank will give you better rates. So let’s say you own a business. The business is worth $5 million and you need inventory. You could tell the bank that, Hey, my business is worth $5 million. You could do an appraisal on it. You could see tax returns. I need a $250,000 loan to buy more inventory. Um, can I hold this business as collateral suppose the bank will see? Okay, well, wow. This business is valued at $5 million, according to our appraisal, I’m sure we’ll give you the $250,000, but if you don’t pay that, uh, we will take over this corporate guarantee of the business. Um, so, you know, typically in those, you, you would get anywhere from three to 4% interest rates.

Matt Clark (11:18):
And have you, have you been able to use a non SBA kind of bank financing to purchase businesses by themselves? Like I’m just using that business, you’re buying as the collateral, um,

Shakil Prasla (11:30):
That it gets a little harder because you have to have some type of equity in the business. Um, but in that instance it it’s called seller financing or yes. Uh, I have been able to buy a business where majority of the purchase price was financed through the seller, right? So the seller is acting like a bank. Um, and so our, our terms were over five years, uh, we were paying, I forget it was like four or 5% a year, um, on a fixed monthly rate. And at the end of the five years, they get a balloon payment. And the reason the seller decided to do this, uh, we had a good relationship. Um, that’s, that’s another key thing is whenever you’re buying a business, you want to make sure that there’s trust, uh, between the, a, the, the buyer and the seller. So that was there.

Shakil Prasla (12:20):
And he saw that I was really passionate about the business that I wanted to grow it. And so he felt pretty safe on that too. And then again, I told them when we signed a promissory note that, Hey, if I’m unable to pay this more than twice you take over the business. Right. So if I bought the business for half a million dollars and I’ve already paid it for two years, he’s already gotten, you know, 40% of the money. Yeah. Uh, and so to him, he feels good about that as well. Um, but what that also kind of makes the seller do is they keep an eye on the business. They want to make sure that the business is going well, so they continue to get paid. Um, but yeah, you could definitely pitch the seller financing. Uh, but on the flip side, why would someone want to do seller financing? One there’s cash offers on the table to which the market is crazy right now.

Matt Clark (13:09):
Yeah. Yeah. I definitely like to get in that for a second, but, um, you know, cause isn’t like a typical like private equity model as they maybe they’d buy a more established company. And so maybe there’s more history and that business can better be leveraged, but they buy an established company. And then, you know, typically they add like a ton of debt on there to like fuel growth. But then from my understanding, it’s not like the person who owns a private equity fund is saying like, I’m John, I own this private equity fund. Now we bought this business and I’ll personally guarantee this new debt on this business. Like they’re not going to do that. But typically from my understanding, they’re putting the debt on the business itself. And so it’s kind of like, you know, like your house more or less, um, like, is, is that correct?

Shakil Prasla (13:43):
Yeah. It depends on where you get the debt from. Um, the, the ways we’ve talked about is usually personally guarantee or, or, but the way you’re talking about as a corporate guarantee. Yeah. Um, and so it depends where the funding source is if it’s private equity group, they got the money from investors, uh, and they’re taking their own risks. Right. So, so if the investor loses, uh, money, it, it, it, the, the, the private equity is it’s not on them, uh, to return the money. It was just their understanding. Right. So if I invest in, you know, your companies and stuff, I have no guarantee I’m going to make my money back, but I’m just betting on you that you’re going to make the right. Right decision. So that’s kind of the private equity model. Um, again, it’s, it’s just a hot space right now, especially in the Amazon. Uh,

Profit

Matt Clark (14:29):
Yeah. Yeah. So, I mean, you said, you know, when you bought your first business, I think you bought it for like two X profit, which was kind of the market back then, but now, you know, we’ve seen it go and you may see different stuff, but I’ve seen it just in my time doing Amazon related stuff. And like, cause early on, it was like people were all just in the Amazon space to kind of make profit. Like, they’d be great. And you’d be the biggest hero if you’re making 50 grand a month in profit or something, but still good amount of money for somebody to just owns a business by themselves. But now it’s kind of like, we’ve seen the higher end of the market go to, you know, tens of millions of dollars, hundreds of millions of dollars for people like selling these businesses.

Matt Clark (15:00):
So it’s the high end is completely different. Now. We’ve also seen the kind of multiples increase over time from like, when I first heard of people selling these kinds of businesses, maybe it was like three X, but now we hear like five to seven X, that kind of thing on, on profit. And in some cases, if you have the right kind of business, like a multiple of revenue, um, for you being somebody who’s bought these kinds of businesses and stuff, like what do you think of the general opportunity for that kind of stuff right now? Uh, on the buying side, um,

Shakil Prasla (15:25):
They are getting a little expensive. Um, but I think it’s actually good for the market though. Uh, because it’s getting more mature, more established. So you’re right. You know, I think around 2017, 2018, uh, even Amazon sellers, they were okay with, uh, you know, they were just wanting to make some money. There was no marketplace to buy and sell Amazon businesses. Um, but ever since then, and I think, I remember when in 2017, when I was buying my first Amazon business, I was super scared because Amazon sent the notice saying something about you cannot exchange accounts for sale or something like that. So I was super scared about even buying a business, but now all of that is, is kind of gone and stuff. Now it’s more safe to be buying businesses.

Matt Clark (16:09):
How long ago when, like, I mean, you could just wake up one day and Amazon and be like, you’re selling privileges have been revoked and like, you know, five years ago, something like that, like that was common. And like, fortunately, eventually they kind of sorted that out where it’s like, if you get a surprise like that, it’s like, you’ve probably done something wrong. Yeah,

Shakil Prasla (16:22):
Yeah, exactly. Um, and so I think like those scares are getting lesser and lesser, which means there’s less risk and that’s why the multiples are going up. That’s why private equity groups getting it. That’s why banks are willing to finance these deals. So I think it was that multiple keep going up to being on par with the other kind of brick and mortar, um, multiples. So I think, um, I think it’s just catching up to what it should be. Um, but yeah, it’s, it, it just sucks that it’s, it’s getting a little more expensive from what I’m used to, but I’ll still buy, uh, a good business at that multiple

Matt Clark (16:55):
What’s kind of, what would you think would be that you find a good brand selling, say majority on Amazon? Like what do you think would be like kind of the upper limit of the multiple that would make sense for you before? It’s kind of like, eh, this is too risky,

Shakil Prasla (17:08):
Four, four and a half. Yeah. I would still do that. Um, yeah. As long as it makes sense, anything above that, you know, I’ll need a shot of whiskey or something to do it.

Matt Clark (17:20):
Yeah. Yeah. We talk with one of these aggregators and it’s interesting because like they have so much Amazon experience, but it seems like they’re kind of pushing into, you know, your typical like DTC, like on Shopify, uh, maybe even retail is kind of like where they see some of the growth for some of these businesses. Yeah. Yeah. So, um, uh, yeah, so I want to talk about one thing, you know, kind of like we talked about at the beginning.

In our case, for example, you’ve got this business, we’ve got a profitable e-commerce company we’ve kind of lived off. We never gotten any investors. We’ve never even really like my business partner, Charles, like he may have put a little bit of money in at the beginning, but like never put a substantial amount of money.

Matt Clark (17:54):
I’ve never put a dollar into the business, um, kind of earned my way into equity. And so, uh, with that business though, it’s like, you know, I’m, I’m pretty sure that if we negotiated with suppliers because we have kind of an interesting, like, you know, net relationship with the supplier. So we don’t literally buy any inventory upfront, but I’m like, you know, they’re kind of funding that cash. And so I’m like, okay, we could go out there and get money for inventory. Um, we don’t have to deplete the cash. It’d be pretty low interest rate, but I’m pretty sure we could reduce our costs. And so, uh, what’s been your experience on the kind of, um, you know, using debt to kind of grow an existing operating business. Yeah.

Shakil Prasla (18:28):
I’ve got an inventory financing, uh, and it’s not a cheap either. They there’s typically, you know, and there’s a lot of companies that do inventory financing, they will ask your tax returns, they’ll ask for your balance sheets, your performers, you know, whatever the, if you’re, you know, for the last nine months of 2021, and then typically they will do, um, an appraisal on your collateral, whatever it is.

So we did our, our actual domain and, and kind of the assets of, of the revenue itself and were able to get inventory financing from that. Um, and I, our interest rate was like 13%. It was kind of right now, it was a little high we’re in a hurry. So that’s all we just pay that. But again, it, it, if you’re able to pay the 13%, uh, and I think in, in your case, uh, you’re trying to get that boat discount, right?

Shakil Prasla (19:27):
Yeah. Of whatever. If I buy, you know, 5,000 units today, or 500,000 units today, I got that dollar discount. That’s half a million dollars in possible profits that you’re getting. So you have to, um, compare that to that 13% interest rate that you’re getting. Does that even make sense if it does, um, that then you should go for it. Yeah. Uh, but you know, you have these different classes of like risk.

I was talking about houses kind of the cheapest in your online business and next your brick and mortar stores. But, you know, if you get into these, um, AR financing, your inventory financing, it does get a little more expensive. Uh, you know, I, I was in a hurry, so that’s why I just paid that, but it made sense for me. Uh, and ever since then, we’ve just kind of, uh, we don’t need that anymore, but we needed it to fuel growth at that time.

Matt Clark (20:16):
I think it wouldn’t be the best. Like where would you go if we tomorrow woke up and we’re like, let’s do this. Like, where would you go?

Where to Go for Inventory Financing

Shakil Prasla (20:22):
Um, I think the first thing you should do, you could Google inventory financing. That’s, that’s one thing you can do. You could go to, um, appraise just Google, uh, e-commerce appraisal companies. And they typically would be able to, um, uh, pushing the right direction. We used a, B Riley as the appraisal company, and they’re the ones that recommended the, uh, uh, inventory, finance and company to us.

I actually don’t even remember who they were. Uh, but yeah, th th these are a few ways to do it. You could do it through the bank. Banks do it as well, too. It’s just inventory financing is not your kind of traditional, um, loan vehicle. And so your big banks may take too long, or they may not want to do it, you know? So that’s why they’re, they’re specialized inventory financing companies. Like I think clear bank probably does it too, and stuff like that.

Matt Clark (21:17):
So why would you do something that instead of like a line of credit, which I’ve also never done,

Shakil Prasla (21:22):
You can do a line of credit as well, too. And that was actually a cheaper option. And that’s why we’re using a line of credit right now, too, and we’re not using the expensive, um,

Matt Clark (21:32):
Um, how does that compare to like get inventory financing? Um,

Shakil Prasla (21:36):
You will need to be banking with that bank for, like, I think it’d be established customer and still keep a sort of reserves. And you have to show that, Hey, I’ve kept half a million dollars of reserves in, in the, uh, account. And there are going to be, let’s say you get a line of credit. Let’s just say you get a 300,000 on a line of credit at 4%. You could keep tapping into sort of a revolving line of credit. You’re going to have to keep paying it down.

You cannot go above that $300,000, but they all want some type of collateral though. And so that typically could mean that, um, every month you have to do a reporting of your PNL. You have to keep a certain portion of money in the account, cannot get below a reserve amount. Um, so there are going to be some restrictions, but yeah, that that’s a cheaper option, a better option. Uh, but you have to be an established customer and you have to show proof of, you know, keeping funds in the account. Yeah.

Matt Clark (22:36):
Yeah. Because part of the thing that I’ve never, that I’ve always wondered. It’s like, I guess people do this on personal money stuff too, but it’s like, I’ve heard of these kinds of loans you can get, if you like, keep a chunk of money into their account brokerage account or bank account or whatever, then it’s like, you can basically get a loan as long as you keep that amount of money in there. Yeah.

But then I’m like, if the whole point is, so you don’t have to use that cash then like that cash isn’t really available to you anymore. Yeah. Unless maybe you haven’t invested in some, you know, index funds or stocks or whatever, and it’s kind of, okay, this is held there. I don’t ever plan to sell it, but at least I don’t have to sell it now. Yeah. But it’s always seemed kind of weird that relationship.

Shakil Prasla (23:08):
Yeah. I mean, you could do that against your 401k. You could do that against you. If you have some type of captive insurance policy, you could borrow against the actual funds. To me, it, it, it’s what you just said. It’s you have a hundred thousand dollars and you’re just borrowing against that. You might as well just use that money anyways, uh, to be, uh, you know, buying things. Yeah.

Shakil’s Latest Business

Matt Clark (23:30):
Cool. Um, so yeah, last thing I want to get into before we wrap up is I says you wore the shirt. Really. We got to talk about it. You’re a newer business gloves.com. Cause I know, you know, where shoot, I don’t even know almost two years into the pandemic, like over 18 months anyways. Um, and so, you know, PPE protective equipment like went crazy. I know you talked about this, we talked, I don’t know, maybe a year ago or something like that, that you were starting to get into this and looking at those opportunities. And so, um, what’s been going on with that.

Shakil Prasla (23:58):
It’s a big, he, uh, uh, you know, it’s been difficult. It hasn’t been easy. And, uh, what was

Matt Clark (24:05):
The, what was the original plan?

Shakil Prasla (24:08):
Uh, it to be greedy and make a lot of money, you know? And when we were doing that and, uh, you know, I’m not saying it to be proud of it, but it, it’s just, uh, there’s just an opportunity to use your cash, to be, um, buying kind of these overprice gloves and, or PPE in general and just selling it for a profit. And then, uh, unfortunately we just made a big bed and the markets just kind of normalized to what they were, but I wanted to, just from that learning experience, I wanted to create a long-term business. And so I went on and bought the domain gloves.com and it cost me seven figures to just buy the name itself, but it was worth it because it’s just, it’s these rare assets that, you know, no one else is gonna own the gloves.com, just like amazing.com.

Shakil Prasla (24:56):
No one else is going to own it either. And so we are working now to create this kind of B2C, um, you know, consumable, uh, uh, products, goods company, where we go directly from the manufacturer with our own branded products to the end user. And I’ve learned that man, so many people just use gloves in general. It’s not just the medical professional, it’s only 50% I think of, of users are medical professionals, but the other 50% are your tattoo artists or nail salons or mechanics, uh, cannabis, like there’s so many little industries. Uh, and that’s what we’re trying to get after is kind of the non-medical, uh, customers.

So it’s been, um, it’s been fun, but I’ve been so used to taking a business from like 1 million to like 5 million and never from zero to 1 million. And so it’s, it’s been challenging just learning this. Uh, it’s funny. A lot of my friends and peers are really good at going from zero to 1 million. Uh, but I was never good at that. And so just learning and going through that into hiring, uh, has been sort of hard just learning, but we’re, we’re, we’re, we’re going to manage and, uh, hopefully do well in the future.

Matt Clark (26:14):
So gloves.com the domain before you bought it, it wasn’t like an e-commerce store.

Shakil Prasla (26:18):
No, it wasn’t. It’s it’s imagine a one page word document and you take a screenshot of it and just post that on the website. That’s what it was. It was just, you know, you could use way back machine and, and look at the domain. It was just, there was nothing to it. And, um, and it was kind of parked just, just for the value itself. And now if you look at it, hopefully it looks way better. Yeah.

Matt Clark (26:40):
Yeah. So then you started building an e-commerce on that domain kind of from scratch, but your goal was to sell directly to consumer, whereas like the model that I’ve heard other people doing with that is they typically just like getting stuff from manufacturers in China, then they’re like offloading them to, I don’t know, whoever hospitals, I’m sure. Some sort of intermediaries and that kind of thing. That’s exactly.

Shakil Prasla (26:59):
Actually what spend them all up till now is the manufacturers will bring it in to the USA and they’ll sell it to other distributors or other wholesalers. They’ll give it to their salespeople who go out and go sell it to dental groups and hospitals and stuff. And, uh, you know, if there’s so many layers, you just have, markable remarkable remark up and we’re trying to do is just kind of cut all that out, create transparency, show them like this gloves, good.

It’s, it’s registered with the FDA and all has all these tests behind it. Um, and just be really good at pricing and just give a lot of variations of the different types of gloves. Um, you know, gloves come in, different colors, they come in different thickness. They even come in different flavors. So if you go to a dentist, you don’t want to feel that kind of, uh, you know, I did it’s vanilla flavored and different things like that. So that’s what we’re trying to do is just educate the market with good pricing globally.

Matt Clark (27:50):
I’ve all been able to push subscription at all with gloves cause any of these things you can use them once.

Shakil Prasla (27:53):
Yeah. Yeah. The typical, like your typical medical user goes through a box a day. Oh, wow. Uh, and so it’s, yeah, we are starting the subscription, but uh, for like the last six months going from zero to six figures as we’ve done it right now a month, uh, we’ve been focusing a lot of marketing and a lot of marketing when he initially do just doesn’t work out and just, uh, testing things out, bringing in new products, new content. So yeah, I mean, a lot of our traffic right now is SEO based, but we’re going to fuel that with a paid marketing and do a lot of Amazon as well.

Matt Clark (28:29):
Um, so yeah, last question is, um, you know, with all these changes happening, you know, there’s all these aggregators in the e-commerce space, very heavily on Amazon, but I think there’s just a lot of money being thrown around in the entire e-commerce space. Where do you see this ending up in the next few years?

What Amazon Sellers Should Do to Get Purchased

Shakil Prasla (28:45):
Yeah, no, it’s been, uh, that’s what I say. I think it’s just so crazy. Like we’re talking about real estate in Austin, too. How it’s been crazy. It’s been crazy in the e-commerce space where, uh, you know, I think the first aggregator came in 2018 with one-on-one and in 2019 was THRASS CEO and they’re at a billion dollar valuation. And I think purchase almost, I think there, there are two and now you have over 20 aggregators that have popped up this year.

Um, I think there’s two opportunities for people here. Um, and I actually to answer your question, sorry, I, I think there’s just going to go IPO. That’s just the next step for these people to, you know, they’ve raised a bunch of money. Uh, they may, you know, go IPO, um, create some value through that. And I know it was, uh, Jeff May try to buy them out or, you know, the threats he, or whoever will push Amazon around for changes.

Shakil Prasla (29:37):
I mean, there’s just going to have so much power one way or another, but I think, um, people that are seeing this today, um, there’s so many people that go to seller con there’s so many people that are in that amazing group. There’s so many people just in the Amazon space, they should get together. Like let’s say you’re doing $4 million in sales. I’m doing $3 million in sales. Andy is doing $3 million in sales.

We come together, we give each other. Um, so the, the, the stocks in each other’s companies come with evaluations, give each other each other a fair share of the whole pie. Now you’re at $10 million in revenue, and now you go buy a small Amazon business, a two, $3 million Amazon business. Uh, now you’re at $13 million. Okay. So you’ve proved that you can buy Amazon businesses. You’ve proved that you can run them because each of you come from silver toddler experience, you’re good at branding.

Shakil Prasla (30:29):
I’m good at content. He’s good at product sourcing. Um, now you take this $13 million and you go look up with all these big aggregators have been getting funding from there, and there’s a ton of them and go reach out to them and say, Hey, we are actually a users of Amazon. We’re actually Amazon sellers. Um, is there any funding that you can give to us? And, you know, maybe let’s say you raise $20 million. Uh, that means that you’ve bought about $5 million worth of profit out of four X, multiple. Right? And, and you, you, you become a little larger to where now you’re at seven, $8 million, and you’re able to sell this now at a seven to nine X multiple.

So it’s kind of like multiple arbitrage. Um, and you’re just taking these kind of smaller businesses, making them into one bigger one. Yeah. But let our larger aggregator just buy you out. That’s what I think people should be doing better in the Amazon spaces, go to these conferences, meet people, partner up with that, create a smaller, larger company though. Uh, and then try to get bought out by somebody else who these larger aggregators will probably just go IPO. I think that’s just the next step. Cause they’ve raised billions of dollars. The next step is just to create more value for the shareholders. Yeah. Besides raising money, I think IPO’s and next step,

Matt Clark (31:49):
I think them, and then I guess with this kind of model you’re talking about on a smaller scale, but then like you think it’s actually feasible for them to run hundreds of thousands of these tiny brands,

Shakil Prasla (31:59):
That’s it? I’m sure it’s hard to, it’s hard for me to run these businesses, but I think the good thing about Amazon is, you know, your, your logistics is kind of set up, uh, being done by Amazon. A lot of the customer service is being done. Uh, you know, your job is to take that product from the manufacturer, make sure it gets delivered to, uh, the warehouse. Um, and, and like, the problem everyone’s facing right now is these container prices are going up.

Inflation’s here. Uh, unit prices are going up. Um, but I think, um, to be running multiple businesses, even a hundred or even a thousand, you just need more people. And where like, these guys have been good as they’ve gotten so much money, they’ve hired a lot of smart people. So I think it’s, it’s manageable as long as you have the human power or human resources to do it. I think it’s, I think it’s manageable.

Matt Clark (32:51):
Yeah. I mean, it seems like they’re doing well. I mean, like we know, I don’t know if they just have like a few tricks that they implement, but we know some people that have sold businesses to them and they’re like, yeah, literally within a few months they like doubled our sales. Cause they’ve got their certain levelers and tricks that they pull on the ad side or ranking side. So, and I think they’ll also just buy a ton of inventory. So then their costs go way down. Yeah,

Shakil Prasla (33:08):
Yeah. I know what they’re doing. Yeah. I mean like the, the kind of the last example you gave is if, even if you’re able, let’s say your unit cost is 10 bucks and now you’re buying in bulk. Now your unit cost is $7. So you’re saving that $3 for selling a hundred thousand units a year. You just made $300,000 extra in profit, but at the four X multiple, you just added an extra $1.2 million value to the company. Yeah. I mean, that’s, that’s kind of the, one of the low hanging fruits I’ve always gone after is see if I could buy in bulk as well do to increase my profits.

Matt Clark (33:40):
Yeah. It seems like one of their biggest risks. Cause they just do something on the marketing side that becomes like systemic. Like you’ve heard of these people that, you know, getting banned because of their doing tricky stuff on the review side or buying groups and that kind of thing. If they did something systemic like that, and it just like spread like a virus through their entire company like that. Yeah. It’d be bad, but they’re probably not that stupid. Okay.

Shakil Prasla (33:58):
Yeah. And that would suck, but I think, I also think they’re pretty large where, um, they must have good relationships with, uh, you know, there’s either the Amazon reps or, or somebody, I think they are a big fish and I don’t think, uh, anybody would really rock with no, you know, just mess around with them, but I’m sure they’re smart enough not to
do too many gray hat or black hat stuff. Yeah.

Matt Clark (34:23):
Yeah. Cool. Uh, yeah. So I think that that’s about it. So thanks a lot for joining us Shakil.

Shakil Prasla (34:28):
Thanks for having me. All right.

Matt Clark (34:30):
So that was Shakil Prasla, uh, you know, super excited to have him here. I appreciate him coming down here from, uh, you know, he lives up north in Austin, Texas, and we’re in here in downtown. So appreciate him doing this with us. If you have any questions for me or Mike about, e-commerce definitely send us a message over at amazing.com/branded. You fill out that little form. We check those before each episode and we will answer your questions live. Or if you have any other people you think we should interview or other topics, you can pop them in there also. So thank you for listening and we’ll see you on the next episode.

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