Amazon has announced this week that beginning January 1, third party merchants will be required to collect sales tax on products purchased by consumers in Washington. Currently, due to a loophole in legislation, tax collection on third-party Amazon sales are left to the seller’s discretion. Now, Amazon will be managing the collection of sales tax on products sold by third-party merchants to customers in Washington, with other states expected to follow closely behind this precedent set by Amazon’s home state. E-commerce owners who sell on Amazon will want to reevaluate their cost structure to ensure that a raise in prices due to sales taxes will not deter their current customer base.
Advertising news this week saw Facebook add 4 new advanced features to their international advertising toolkit, with the aim of making it easier for advertisers to capitalize on the available international audience without investing hours into segmentation analyses. The move seems to be beneficial for everyone involved: advertisers can more easily reach a wider audience base, and Facebook gets to generate revenue from the 88% of its monthly viewers outside of the US and Canada who currently only make up 52% of their advertising revenue.
New in the e-commerce world will have business owners interested to know that Pinterest has developed it’s own type of QR code, which brands can print on their packaging or display in advertisements for consumers to scan, find on Pinterest, and (hopefully) purchase. Working in tandem with this new rollout is an influx of eligible brands in their buyable pins program, so business owners should look to capitalize on these handy new online shopping features to optimize their site for the holiday season. Read below to find out more details on the program and how it works.
New in content site listings this week is a $300K affiliate business in the health and wellness space, with a strong compound annual growth rate of c.46% from 2015 to e.2017, strong website traffic of over 1.1 million unique visitors in the last year, rankings for thousands of highly sought-after keywords, and an authoritative brand in the growing essential oils market. Also listed this week is a $161K display advertising site in the financial institution directory niche, which ranks for over c. 229K keywords, has strong traffic with over 2 million sessions and 3.6 million page views in the last 12 months, a lean cost structure driving strong margins, and low owner involvement. If you are interested in either of these listings don’t hesitate to reach out as they have already generated significant buyer interest.
Have you been wondering how valuing an online business is different from valuing a brick and mortar company? The FE team was recently featured on the Wharton School’s Magazine Blog Network, where we take to an audience of traditional finance to discuss the nuances involved in valuing an online business. The post, entitled A Guide to Online Business Valuation considers all online business models to feature FE’s expert tips on what to consider when determining the worth of an online business.
In event news, the FE team just got back from sponsoring the main events both evenings of MicroConf EU in Lisbon where our founder, Thomas Smale, spoke on “Lessons From Over 100 Million Dollars in Deals.” Thank you to everyone who came and talked industry insights with us over a round of drinks! Thomas was then off to Ungagged in Las Vegas on November 15th where he spoke on “A Winning Exit Strategy: Your 4-step Strategy for Increasing Your Start-up Value.” Heading to SaaS North in Ottawa on November 30th? So are we! If you will be in the area and would like to meet up, reach out in a reply to this email so we can coordinate a time for some one-on-one meetings.
Continue reading below for more on Amazon’s recent tax restraints, Facebook’s new international advertising tools, and how Pinterest is shaking up social media direct purchasing.
Deal Highlights
New:
Affiliate – Health & Wellness – $12K gross/mo
- Impressive CAGR reaching c.46% for the period 2015 to (e)2017
- Strong website traffic with over 1.1 million unique visitors in the past 12 months
- Ranks for thousands of highly sought-after keywords
- Authoritative brand with a secure foothold in the growing essential oils market
- Low owner involvement
Yearly net profit: $138,000
Asking price: $300,000
Display Advertising – Financial Institution Directory – $5.3K gross/mo
- Strong traffic with over 2 million sessions and 3.6 million page views in the trailing 12 months
- Ranks for c.229K keywords
- Robust and comprehensive branch location database
- Lean and simple cost structure driving strong margins
- Low owner involvement
Yearly net profit: $63,000
Asking price: $161,000
Sold:
Affiliate – Heat Pressing Machinery – $2.3K gross/mo
Affiliate – Drones – $1.2K gross/mo
In the News…
Amazon Pays the State Piper
Amazon has announced that it will begin collecting sales-tax for its third-party merchants in its home base of Washington starting Jan 1, which will be first to enact the new regulations due to a law it passed requiring all online marketplaces to collect sales tax on behalf of its third-party sellers.
Until recently, many third-party sellers have gotten out of having to collect sales taxes due to underregulated legislation. The current status quo on Amazon is for the company to charge sales tax on products it sells directly to consumers, while leaving third-party sellers to determine their own tax collection protocol. This was allowed due to a loophole in antiquated legislation that only required online merchants to collect sales tax on e-commerce products if they had a physical presence in the state. Now, Washington has removed the loophole by mandating that anyone living in the state pay sales tax on products purchased from anywhere, and the tax collection will be managed by Amazon.
Other states are expected to follow suit now that Amazon has set a precedent in Washington; South Carolina is asserting that current legislation in the state should already mandate that third-party sellers collect sales tax. Amazon sellers will want to keep an eye on legislation in their state and determine whether a price decrease is necessary to avoid deterring current customers.
Facebook’s New International Advertising Toolkit
This week, Facebook announced that it plans to make it easier for brands to advertise to the 2 million available people around the world by adding four new features to international advertising capabilities. The move will benefit the ubiquitous social platform as well, as only 52% of their advertising revenue comes from 88% of their audience, which resides outside the US and Canada.
The first addition to the tools is dynamic language optimization, which allows brands to create one ad campaign with text in multiple languages. Facebook will automatically show the version that corresponds to each user’s preferred language in their profile settings. The second new feature is multicountry lookalike audiences, which means brands can now automate the replication of similar audiences in different countries for ad campaigns. The third new addition is multicity targeting, which allows brands to specify the size of the population of the cities they want to target without having to know specifically which cities they want to target. Facebook will then automatically target cities that fit within the population range set by the advertiser. Finally, Facebook has added a Cross-Border Insights Finder, which allows brands to pick the primary country they currently advertise to, their industry and the goal of the ad campaign. Facebook will then compile a list of similar countries where other advertisers have had success in conversions, showing the relative cost to advertise and how competitive the advertising markets are. Advertisers can also hand-pick up to 11 countries to compare advertising objectives across a given industry.
Online business owners who get a jump on the new features in time for the holiday shopping season could very well see success in reaching a higher volume of international audiences.
Pinterest: Full Shopping Steam Ahead
Pinterest has ramped up its visual search capabilities in time for the holiday season by adding several new features designed for brands to be more easily found.
While Pinterest has supported QR codes since May of this year, this week they announced that they would be releasing “Pincodes,” which are customized QR-like codes that brands can affix anywhere, like product packaging, display ads, or the tags themselves. Shoppers can then scan these codes in the Pinterest app in order to easily find the product. Speaking of which, in tandem with the new codes Pinterest is releasing more buyable pins so that shoppers can purchase products online directly from their browsing session on the social media platform. Reportedly working with Shopstyle to widen their network of shoppable pins, Pinterest aims to expand the program to tens of thousands of influencers after the few companies testing the program seem to have had success with the shoppable pins. Finally in this new rollout comes responsive visual search, which supplements their current visual search program, Lens, that shoppers use to scan objects and find related pins. Responsive visual search means that when users zoom in on a product in a given photo, related products will pop up around the chosen item. Now, users can add keywords to their visual searches, marking the first time Pinterest has combined visual and text searches.
E-commerce business owners will want to research how best to optimize their Pinterest page for the new updates in time for the holiday shopping surge, as this can likely lead to greater exposure of their existing products.