Following the end of the sales tax amnesty, many of Amazon’s third-party merchants will be required to add sales tax to their products. Recently, states are cracking down on Amazon merchants, mandating the addition of sales taxes to previously untaxed products to combat an e-commerce nexus precedent set 25 years ago. These new requirements come right before the busiest shopping season of the year, so with these new stringent sales tax requirements, e-commerce owners who sell through Amazon will want to ensure they comply with new regulations.
In advertising news this week, Apple announced that their Search Ads service will now have availability extended to Canada, Mexico and Switzerland. The app store feature, which works similar to Google Play by allowing advertisers to bid for their app to be shown when users search certain keywords, was previously only available in the US, UK, Australia and New Zealand.
New in SaaS listings this week we have a $120K analytics business in the website traffic space, with c.380 clients and stable MRR over the last 12 months closing in at $5.2K in August.
New in content listings this week is a highly profitable display advertising business in the scholarship niche, with c.$377K in yearly revenues and a strong CAGR of c.56% for the 2015 to (e)2017 period. If you are interested in learning more about these businesses, be sure to request a prospectus through the provided links today, as they have already received significant buyer interest.
On the subject of new content, founder Thomas Smale this week released the Ultimate Guide to Growing and Selling a Shopify Business on the FE blog. Packed with guidance and best practices from dozens of recent Shopify store acquisitions, he walk sellers through a comprehensive breakdown of what buyers look for in Shopify businesses.
This week in event news, the FE team has been traveling to Bangkok to attend DCBKK taking place October 18-22, and will then be back for Rhodium Weekend in Las Vegas from October 26-29 and Digital Footprint in Los Angeles from October 26-29. Our monthly Boston E-Commerce meetup is also coming up on October 25th at Watermark Apartments in Seaport, where our panel of expert entrepreneurs will share their wisdom on funding your e-commerce business. Click here to register! If you will be attending any of these events, or will be in the area around that time, shoot us an email so we can set up one on one meetings.
Continue reading below for more on changes to Amazon’s third-party seller tax policy, Apple’s update to Search Ads, and Walmart’s new, simpler return system.
Deal Highlights
New:
Display Advertising – 10 Year Education/Scholarship Resource – $31K gross/mo
- Over 8.5 million unique visitors and c.61 million page views in the last 12 months
- Strong revenue growth reaching a CAGR of c.56% for the period 2015 to (e)2017
- Ranks for over 65,000 keywords
- Established and authoritative brand in the niche with a decade-long track record
- Hundreds of thousands of social media followers with a 1.5 million subscriber email list
Yearly net profit: $247,000
Asking price: $724,000
SaaS – Web Analytics Platform – $5.2K MRR
- Stable MRR over the last 12 months, closing in at $5.2K in Aug 2017
- Diversified customer base with c.380 clients and a number of notable clients
- Strong traffic profile with c.160K page views over the past year
- Low owner involvement
Yearly net profit: $29,000
Asking price: $120,000
Sold:
Affiliate – Baseball & Softball Accessories – $1.6K gross/mo
In the News…
Amazon Sales Taxes to Rise before the Holiday Shopping Season
On December 1, more third-party Amazon sellers will be required to add sales tax to their products per new state crackdowns on uncollected sales taxes. Currently, a large number of third-party sellers do not have sales taxes added to the price of their products.
Amazon customers pay taxes on items purchased directly from Amazon, but many third-party sellers’ products are purchased tax-free. This will change, as the tax structure comes as an option as a way for third party merchants to start collecting for what they owe in back taxes in several states. Each state is left to act on sales taxes not having been collected on Amazon for years, so the rule will apply to merchants in particular states. The current standard for who has to collect sales tax on items sold online is a vestige of a ruling by the US Supreme court from 25 years ago barring an online retailer from being forced to collect sales tax due to the fact that they didn’t have a physical presence in the state. States have recently started to combat the ruling, asserting that merchants should have to charge sales taxes for the states they sell in.
Purchases made directly from Amazon will likely not be affected, as they are already taxed. If you are an Amazon merchant, you should look into whether you will now be required to collect sales taxes and let your customer base know in a proactive manner.
Walmart to Simplify the Return Process
Walmart will now allow users of their mobile app to begin a return before they arrive to the store in a new initiative to make the online and brick-and-mortar shopping experiences more cohesive.
In an attempt to remain ahead of the curve, Walmart is leveraging their physical presence by allowing customers to return items purchased online in their stores. Only items sold and shipped by Walmart.com will be allowed to be returned through the new Mobile Express lane service, launching in November. The megaretailer plans to have the service available for items purchased in-store by early next year, and will add items from third-party sellers “eventually.” Walmart has been upping their game as they seek to compete with Amazon, and seem to be leveraging the competitive advantage afforded them by their numerous distribution centers across the country. The positioning strategy here is one that seeks to integrate the consumer’s perception of online with in-store.
It will be an interesting precedent for the e-commerce world to watch consumer response evolve, especially as Amazon increases their brick and mortar presence.
Apple takes Search Ads Global
Apple has announced that starting on October 17, Search Ads will expand their support to include Canada, Mexico and Switzerland.
The service, which is similar to Google play in that it helps app users discover your app by recommending it as a similar option, was previously only available in the US, UK, Australia and New Zealand. Advertisers can set a daily or weekly maximum spend budget, so that ads appear based on keywords set by you. That way, the ads appear at the top of the search page when users enter specified keywords. Advertisers will also be able to specify the devices they want bids to be placed on, whether iPhone or iPad. Naturally, the more you allot to be spent in bidding, the more often your app will appear as a promoted download.
Business owners in Canada who have an app version of their store will likely want to look into using Search Ads to boost the exposure of their apps.