Scaling & Selling Amazon FBA Sites – How David Flipped 6 Ecommerce Sites
At a Nick Gray, 2 Hour Cocktail Party author, networking event in Austin, TX, I met a handful of extremely accomplished and interesting people.
One was David Holmes of Red View Ventures, an entrepreneur who has bought, scaled and sold a handful of ecommerce businesses.
David Holmes has been in the Amazon space for more than 7 years and has successfully exited 2 Amazon-based businesses.
In 2020, he acquired an existing Amazon FBA business, grew it 500%, and ultimately sold it to a private buyer in 2022. His work has been featured on WebAcquisitions.com, ImportDojo, and other industry publications.
Now, he helps premium DTC brands take advantage of the full potential of Amazon through his unique launch and scale strategies.
Thinking it could be fun to buy, scale and flip an Amazon FBA site?
I met David Holmes, an entrepreneur who has flipped 6 Ecommerce sites, at a neighborhood networking event in Austin, TX last week.
I got to ask him a bunch of questions. Today we’ll dive into his specific tips to successfully scale and sell an Amazon FBA business.
He’s the best I’ve met at this, so you’re in for a treat if scaling or flipping an ecommerce business interests you.
Has anyone read entrepreneur Nick Gray’s book The 2 Hour Cocktail Party?
I haven’t read the book, yet.. but I want to! I went to a 32 person event the author hosted at Support Ninja founder Cody McClain’s house in my neighborhood in Austin, TX last week and it felt professionally hosted.
It was one of the best events I have been to, and chock full of accomplished, bright, entrepreneurs.
The event is where I met David, an entrepreneur who scales Amazon FBA sites full-time.
How has David sold 6 Ecommerce sites?
David was kind enough to give me some insight into FBA site flipping over coffee – Sharing his tips with you all below as I’ve never personally bought or scaled an Amazon site before.
Hoping to buy or scale your own ecomm business?
If you currently own an ecommerce site, or are interested to buy one, he can help you scale it. David runs an agency now and scales Ecommerce businesses with a profit-share model.
He knows what he’s doing. He helped one Amazon site go from $220,000/month to $2,400,000/month in under 6 months.
Let’s dive into David’s specific tips and experience below:
How did you first get into website investing and flipping?
I started my own content site in 2014 while I was in college. I quickly got it to $1,000/month which was a lot of money to me at the time. When I learned, I could sell it for $20,000+, I was astounded. Ever since then, I’ve been hooked.
What were you doing before you made the switch?
I used to be a mechanical engineer working in engineering consulting. I worked in accident reconstruction – where I would help reconstruct car crashes for civil litigation.
How many years have you been full-time buying and flipping websites?
I’ve been full time for 3 years now. In January 2020, I took the leap and I haven’t stopped since.
Is it more or less time-consuming than when you had a full-time job?
This isn’t what a lot of people want to hear but it’s definitely more time-consuming than a full-time job. You can’t just clock out at 5 pm. You’re responsible for every aspect of your business.
What do you prefer about having your own business vs working for someone else?
The freedom and the opportunity. I’ve been able to travel extensively while running my own business because I’m not tied down to a location.
Tell us about the first site (or last site etc you can choose one) you purchased. What niche was it? What type of site was it?
The last site I purchased was an Amazon FBA business in the skateboard niche.
Where did you buy it?
I purchased it off of Flippa in December 2019.
What stood out to you that made you want to buy it? Were there any red flags?
I had prior experience in the niche and I knew the seller from a previous skateboarding content site that I ran. There were multiple red flags – revenue was declining, product quality was iffy at best, and there was low net profit.
What did you do to optimize it/increase traffic/revenue/profit?
I did 3 things primarily:
- The business was manufacturing in the USA. I outsourced manufacturing to China – saving 45% on cost of goods sold and improving the product quality
- I optimized the Amazon Ad strategy. By doing so, I was able to grow revenue quickly.
- I optimized the Amazon listing. This helped increase conversion rate quickly and helped grow revenue.
With this 2 sided approach (grow revenue and cut costs), I was able to drastically increase the valuation of the business.
How much did you increase its value by the time you sold it?
From the initial acquisition price to the exit price, I increased the value by 5x in under 2 years. Including cashflow while operating the business, it was a 10x return on investment.
What tips do you have for people who want to buy a site and flip it, what should they look for?
Always look at the negatives first. There are always reasons you can think of to buy a site. You need to think of all of the reasons this deal could go bad. Protect your investment first and then look to grow it.
What are your tips for how they can optimize it and grow revenue?
For content sites, you want to look for easy wins first – switch the ad network (Adsense to Ezoic/Mediavine/AdThrive), add comparison tables, add interlinking between the articles.
For bigger wins, add more content, improve backlinks, and start growing pageviews.
Where did you find the buyer?
I found the buyer through Flippa.
Any tips for people looking to sell a site? How can they present it in the best light? When is a good time to sell?
If you’re looking to sell a site, sell while it is growing! It is incredibly difficult to sell a declining site – I can’t overstate this enough. It’s possible but it’s difficult. You want to sell while your site is growing or stable.
You also want to leave some easy wins for the buyer. This gives them confidence they can quickly see a return on investment.
Do you tend to sell sites when they are on an upward trajectory?
I try to but it’s difficult. What I like to do is grow the site as quickly as possible, maintain revenue for 3-6 months, and then sell it – while leaving opportunities for growth for the new buyer.
How much more of a multiple do you find can you sell for if you sell for if you sell it on an upward trajectory vs a downward?
Multiples obviously vary wildly based on niche and the exact site but generally a growing site can go for 3-4x seller’s discretionary earnings. If it’s declining, you’re looking at a 2 – 2.5x earnings multiple.
What are red flags people should watch out for when buying an Amazon ecommerce site?
Product quality and moat against competitors. Amazon has become fiercely competitive in the last 3 years. You want to truly understand how you’ll differentiate from competition and maintain a premium price point.
What are some red flags you saw before purchasing your own sites that you wish you had paid more attention to or that made your growth and flip journey harder?
I wish I had paid more attention to the product quality. There were some quality issues that I fixed but there were other issues inherent in the product. That held back growth.
How many sites have you purchased, grown and sold? Have you sold all the sites you bought?
I’ve purchased 4 sites and built 2 other sites from scratch. I’ve sold all of them now.
Have all your site purchases been successful flips? If not, can you explain what happened and why and the lessons you learned?
Not all of them have been successful. I bought 2 sites built off expired domains in the spirituality niche. I ended up selling them a year later and recouped ~80% of my initial investment.
Biggest lesson learned was time.
At the time of running those sites, I was also running an Amazon agency and my own Amazon brand. I didn’t have enough bandwidth to focus on the sites so I eventually just sold them off.
Can you tell us more about what you are doing right now? What is your business?
I help e-commerce brands launch and scale on Amazon through my agency: https://www.redviewventures.com/
What is the specific service(s) you provide for companies? Does it involve just running their Amazon ads or do you offer other services / does it involve a more comprehensive growth plan or multiple services?
I perform full Amazon channel management – including listing creation, launch strategy, Amazon Ad strategy, scaling, and optimization. My goal is to take 90% of Amazon off of your hands.
Do you offer multiple packages or do you have a single service package offering? If multiple, what are the multiple offerings and who should choose each one?
What types of companies do you work with?
I work with e-commerce companies primarily doing $200k+ in annual revenue that want to expand to Amazon. If they’re not on Amazon, we’ll help them launch their products on Amazon. If they’re already on Amazon, we’ll help them scale to become category leaders.
Do you work with all niches as long as they are Amazon sites?
I only work with companies selling physical products.
How soon do you find companies experience revenue/profit growth after starting working with you?
Typically 3 months is the sweet spot to see good traction and revenue growth.
What is the most monthly revenue growth, and profit growth, a company has seen while working with you and how long did it take to get there?
I helped one e-commerce company go from doing $220,000/month to $2,400,000/month on Amazon in under 6 months. I wrote a case study about it here.
What made that company such a perfect fit to grow with your help?
They had the capital and cash conversion cycle to grow quickly. For other brands, we’ve been able to scale but have been limited on the inventory side.
Where can someone reach out to talk more if they have questions about your company or working with you?
Yes, I predominately work on a performance/revenue share basis.