50 Years Old. Meet ArtCove.com

50 Years Old. Meet ArtCove.com

There are a number of factors that go into valuing a business. These are widely known – financial trending, margins, traffic, proprietary tech – but in an industry that is barely 35 years old AGE is also big factor. In this case of Art Cove the business has been around for 50-years, first trading as a retailer in Queens before moving online in 1999. In 2015 they shot the store and now trade exclusively online, both direct and via core marketplaces.

In this Seller Interview we speak with Josh Simone from ArtCove. He takes us through the history as well as their marketplace expansion.

1. The business is 50-years-old. How has it changed in that time?

We started off in 1971 as a brick and mortar art supplies store. After some time we added craft supplies to our store. The business took off with the newly added craft supplies. As time went by, big box stores moved in so we shifted to eCommerce starting our website artcove.com in 1999. At first, instant success but then things started getting more competitive.

In 2014 we started selling on eBay. And in 2015 we started selling on Amazon. We did $200,000 in our first full year on Amazon, with little to no effort, we listed just a few products. In 2018 we expanded to Walmart, Etsy and started building a new website with Shopify giving us the ability to sell across Facebook and Google also. These projects are fairly new but show great promise. Like all great business you must change with the time and we have done this many times through 50 years of trade.

2. You’ve expanded to all marketplaces including Amazon, eBay and Etsy. How have these channels impacted the business?

It was easy at first. We started selling on eBay then Amazon, moving high volume product quickly. The problem is margin. These are a lot lower on Amazon. Our recent expansion shows real promise, we’ve expanded to Walmart, Etsy and started to build a new website reducing our dependency on Amazon. I think by expanding to several marketplaces we have set the business up for long term success giving us and any potential acquirer opportunities and genuine diversification.

3. With so much history you must have a loyal customer base. Do you have a good repeat buyer base?

We have a very loyal customer base. We provide outstanding customer service which keeps people coming back. We just recently rolled out a customer project board so we can see what our customers are doing with our supplies. This has really helped to build long term relationships and get to know our customers much better. We do business with Sea World, Sesame Place, The Los Angeles Lakers, The Howard Stern Show and many other large businesses. We do a lot of business with schools and non-profit organizations also.

4. What are people buying and has it changed over the years? Are their clear trends?

We have focused on everyday type products that anyone can use. We stay away from fads or short-term trends. One of our biggest products is Craft Mirrors. These are an everyday type item that always sell well year-round. We have also found that a lot of best sellers are not carried by the big box stores so this insulates the business somewhat. We have several product lines that no one carries. At the same time we are always adding new products to our website. The trends are very clear.

We run ads for our best performing products and respond well to customer feedback…making product decisions accordingly.

5. There’s so much history here. Why are you selling?

This is a three-generational business, so we do this for a lot more than the money at this point. It’s about keep the business going and taking care of our customers. We are looking for someone to take over our tradition. There’s so much history and even more opportunity here.

How does Broker Matching work on Flippa?

How does Broker Matching work on Flippa?

Flippa’s business broker network

Flippa partners with a world-leading network of business brokers. Each of these brokers has been reviewed by Flippa and hand-picked to represent our ecosystem of high-value business owners. We’ve chosen them because we believe they can help you better prepare your business for a sale, liaise with buyers and ensure you get the most out of the Flippa platform. When you join and choose to list your business for sale on Flippa we offer two options; either ‘Self Service’ or ‘Broker Matching’. The big difference between the two relates to the value of your business. Businesses over a certain value will tend to require a little more time and effort to sell and a broker is there to help. They’ll take on the process. They will work review your valuation, work with potential buyers, help prepare critical paperwork including the necessary prospectus, field offers and manage the DD process which can often be time-consuming and cumbersome.

So how does Broker Matching work? 

If you choose Broker Matching Flippa will:

1. Review and categorise your business Flippa will ensure your business meets the relevant criteria, request some additional detail including a current accountant verified P&L and ultimately categorise your business by size.

2. Match you up with up to three business broker This part of the process involves us reviewing our broker profiles and ultimately picking the most relevant broker for you. We’ll tell them a little bit about the business and review their fit.

3. Invite brokers to review your business and register their interest Once they’ve been assessed for fit we’ll invite them to formally review your business. They’ll sign an NDA and be given access to some key data.

4. Set up a ‘Meet the broker’ call Finally, it’s your chance. Talk with up to three brokers and make your decision. Once you have decided your listing will be converted to a ‘Broker Managed’ listing. Your success fees are fixed unless they have otherwise been negotiated, and from there, brokers will handle the Flippa marketplace and associated services.

If at anytime prior to your listing being converted you wish to opt for self-service instead simply contact [email protected]. Good luck. It’s a big decision to sell your business and regardless of the service you select Flippa will be with you every step of the way.

Case Study: EZTool

Case Study: EZTool

Platform: Amazon FBA
Business Model: eCommerce
Business Age: 3 Years
Sell Price: $160,000

EZTool sells watch repair kits via Amazon FBA. They’ve tapped into a niche and the growing direct-to-consumer FBA space. The search power and logistics capability of Amazon has helped them to find a sweet spot. The product is simple and suits the home watch enthusiast! This month EZ Tool Founder Angus Hess successfully found a buyer and has recently completed the sale on Flippa.


What is the product?

EZTool sells two different watch repair kits. Kit one is more conclusive with a wrench and illustrated manual and kit two – the QuickFixxer – is a 16 piece tool kit.


What makes EZTool such a good business?

There’s really two things. Firstly, it’s found a path to popularity in a niche. The product is well supported by a 41 page illustrated guidebook and comes with a 100-day replacement guarantee (nothing like a guarantee to woo customers). Secondly, they’ve successfully leverage Amazon FBA and benefit from cost-effective shipping, storage and world class customer service.


Who is the EZTool customer?

There best selling kit is perfect for watch enthusiasts and connoisseurs alike. Aimed at those who enjoy DIY as well as those looking to save money on pricey jewellers fees the EZTool products sell steadily all year round. And, they’ve found their kits have become very popular gifts.


Why was it so appealing?

Easy to understand this product had significant interest among the Flippa buyer community. Couple that widespread appeal with the FBA model, the strong consumer feedback scores and strong financial results – EZTool was generating between $5-14k profit monthly, which is in part due to low time commitment – and you have a winner.


How did Flippa assist?

The Flippa model has evolved and it’s beginning to suit higher value buyers. That alone is a big win. Flippa now has over 150,000 registered buyers representing a combined purse of over $9bn wanting to be placed. There are not enough sellers. Once they pop up, sellers like EZTool are benefited from the self-service platform, lower success fees than other channels and dedicated account management.

Flippa adjusts pricing and adds key services as it evolves to service high value digital businesses

Flippa adjusts pricing and adds key services as it evolves to service high value digital businesses

Pricing has since been updated, please see new costs here. 

At Flippa, we are always looking for ways to add value and we will always add new features to support our growing ecosystem of business owners, buyers and the brokers who often support them.

Over the last few months we’ve been working on several ways to improve our seller and buyer experience. This has included the introduction of Flippa Escrow, high value business sales, dedicated account management for both sellers and buyers and the introduction of a broker program. Moving forward, we’ll also be investing for efficiency and to protect the integrity of the marketplace. This will include:

  • ID verification to assure buyers and sellers
  • Seller declarations to pre-qualify business inclusions
  • In-platform buyer / seller messaging services
  • An easy to use profile creator

And today, we are announcing new pricing plans designed to better suit our three core services. The new plans take effect effective immediately – Monday 5th November 2018 and are as follows:

  • Asset Sales including the sale of a domain, app or starter site, i.e. something not generating any revenue, can be sold for a listing fee of $25 and success fee of 10%.
  • Self Service Business Sales  is best suited to profitable businesses with a minimum six month trading history. Sell for a listing fee of $200 and a success fee of 10%.
  • Broker Supported Business Sales will match you with a specialist broker. Best for those with annual profits of 100k+. Sell for a listing fee of $200 and a success fee of 15%.

The 10% success fee on Asset Sales and Self Service Business Sales is a reduction. This was previously 15% for Credit Card payments and 12% when using Flippa’s escrow service. Flippa still absorbs the escrow transaction cost.  

 

Note: Pricing and fees are in USD. Your sell price should always be in USD.

New Services – Buyer and Seller Management

We’re pleased to announce that Flippa has introduced Buyer and Seller Management services. These services are free and designed to streamline the sales process for you.

  • Buyer Management takes the hard work out of the search. If you are looking to buy a business over $25k, simply schedule a call with one of our buyer managers here. They’ll learn about your needs and explain the matching process. They’ll then search for businesses on your behalf and will act as matchmakers.
  • Seller Management takes the hard work out of the matching process. This service is designed for businesses priced over $25k. You’ll be matched to an account manager post listing and your account manager will ensure your profile is optimised and that buyers are verified before they are put in touch. They’ll be by your side every step of the way.  

Coming Soon

We’re excited to announce that we will soon introduce two new services designed to improve the integrity of the Flippa platform – we take the security of our customers very seriously:

  • ID Verification. Flippa has partnered with the award-winning Jumio to ensure that both buyers and sellers are verified before listing or making an offer for a business. This service will be released in November 2018.
  • Platform Messaging / Negotiation. Flippa is working on improvements to the existing messaging functionality. This will enable in-platform messaging and negotiation to ensure buyers and seller private contact details remain confidential and that all communications are confidentially and securely stored. This service will be released in January 2018.

Helping to support the thriving business sales ecosystem

We’re excited by the progress we’ve made in recent months. We are proud of our history as an asset marketplace but we have evolved. Our vision is now to service buyers and sellers of businesses globally by connecting all parties, key services, and facilitating the end-to-end business exchange in a trusted and efficient environment.