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Business Trends

7 Digital Business Trends for 2022

January 13, 2022 by Paul W

With the new year upon us, it's a good time to look at new business trends and which business ideas are attracting the most interest from business buyers. We reviewed a snapshot of website data from 13,000 page views into the first week of January to spot digital transformation trends. What we found is that there have been some significant shifts in the digital economy from last year’s report.

top 7 digital businesses for 2022

Some key findings before we count down to number one:

  • B2B solutions continue to dominate the list.
  • COVID impact: "interactive video" landed high on our rankings last year, but fell off the list this year as people may be anticipating the end of COVID.
  • Recurring revenue (vs. transactional): buyers are seeking a model that continues to deliver dollars, versus one that is focused on individual sales.
  • Lead generation debuts on our list as business owners look for more ways to drive targeted traffic to their sites.
  • Niche e-commerce and cloud service providers dominate the list at #1 and #2 respectively versus enterprise software and interactive video last year.

Read on from #7 to #1 for insights into what business buyers are seeking now.

#7 Lead Generation Platforms

These are sites that offer incentives, aggregation, or expertise to help buyers find what they are seeking. Typically, they are in the form of directories, coupons, resume templates, etc., that offer convenience and information to the user leading to revenue when the user makes use of a service or product.  

#6 Email Services

Email marketing services for businesses consist of ways to make outreach campaigns easier and more effective. They typically have a CRM and/or AI integration and consist of apps, plug-ins, and platform solutions that often employ a SaaS model. Email outreach is popular with businesses because it often has a higher ROI than other marketing channels.

seo tools

#5 SEO Tools

Optimizing not just traffic, but relevant traffic to your website is the heart of SEO. A good Google or Bing ranking can drive organic traffic to a website. But the pieces that make up a good ranking rely on data analysis and an understanding of competitors. Software solutions for SEO are frequently SaaS models. Some of the big names are Ahrefs, Semrush and Ubersuggest.

#4 Content Platforms

These are content-based sites that could be blogs, product reviews, or articles. They usually focus on a particular interest or hobby and make money through the posting of display ads to customers, affiliate marketing, paid subscriptions, or events. Content can vary from general consumer to technical professional.

#3 Enterprise Software

This is software geared to helping businesses manage their day-to-day company activities such as procurement, accounting, project management, supply chain, risk management, and compliance. Many of these companies follow recurring revenue models and service SMB to large business organizations.

#2 Cloud Service Providers

These are network services provided to organizations, which can be application or data based. Essentially, these third parties are providing an infrastructure solution through their remote servers. Typically, companies pay for the data they use but applications are likely to involve a more set recurring charge.

niche ecommerce

#1 Niche Ecommerce

This includes Shopify retail sites and other e-commerce. These retailers either fulfill goods themselves or through a third party such as Amazon FBA or dropship warehouses. Offerings are often within tightly-focused niches, e.g. personal gear, pantyhose, or women's tunics. The majority of these websites are B2C, though there are many B2B niche e-commerce sites as well.

We hope you found the findings of our digital business trends for 2022 to be revealing. For bigger tech acquisition trends in 2022, check out Storybee's up-to-date list.  If the acquisition route intrigues you, search our latest Internet businesses for sale. 

Filed Under: Business Trends

Ecommerce Sales for Third Quarter 2021

November 22, 2021 by Paul W

Summary: While up over last year, ecommerce retail sales stay nearly even to date for 2021, according to the latest statistics from the U.S. Department of Commerce.

Third Quarter 2021

  • The estimate for U.S. retail ecommerce sales for the third quarter of 2021, adjusted for seasonal variation, but not for price changes, was $214.6 billion, a decrease of 3.3 percent (±0.4%) from the second quarter of 2021.
  • The third quarter 2021 ecommerce estimate increased 6.6 percent (±0.9%) from the third quarter of 2020 while total retail sales increased 13.1 percent (±0.7%) in the same period.
  • Ecommerce sales in the third quarter of 2021 accounted for 13.0 percent of total retail sales.

e-commerce sales third quarter 2021

As you can see from this graph, the percent of ecommerce sales vs. total retail sales has leveled off this year, but is still elevated over most of 2020. 

Take a look at first quarter and second quarter 2021 numbers for comparison. 

For more articles about ecommerce trends, see our Data Shot series.

Source: U.S. Census Bureau News, Press Release, November 18 2021

To view brokered and non-brokered businesses on Hatchit, feel free to browse our latest posts.

Filed Under: Business Trends

Data Shot: Price Multiples for Ecommerce Businesses

September 21, 2021 by Paul W

Data Shot is a series that gathers and reviews data from The Hatchit Marketplace. You will be able to use it as a guide in your business transaction process, and as a way of identifying useful insights.

price multiples

How Price Multiples Work

This Data Shot looks at the relationship of earnings to price multiples. Shannon Pratt, a leading expert in business valuation methodology, has written extensively on this topic. His research has demonstrated the relationship between the size of a company and its multiple. Pratt explains, “Larger companies are less risky, and therefore, are priced in the market reflecting lower discount rates and higher market multiples.” However, does this conclusion apply to our smaller e-commerce companies? We looked at 132 ecommerce businesses for sale on Hatchit with less than $2 million in SDE (seller’s discretionary earnings).

E-commerce business valuation multiples                       

Note: To ensure accuracy, statistical outliers were eliminated.

Typical Multiples

You can see how the dots congregate around the mean of 3.49 with relative symmetry, and that the trend line is essentially flat. So, company size is not driving valuation multiples in our dataset. Why is this? It’s possible that there are simply an insufficient number of observations, particularly at the higher end of the SDE range, where we might expect to see a “break”. Or, perhaps the size band we’re looking at is too limited. Alternatively, it’s also possible that in an online environment with competitors like Amazon, risk is not reduced as readily with size as it might be in other environments. Regardless, the graph offers buyers and sellers of <$2 million SDE e-commerce businesses a sense for typical multiples in the space.

Questions to consider with your adviser or business broker

  • At what size level do multiples begin to increase with e-commerce websites and other companies? How might I use this information in my acquisition search?
  • What factors affect the profit multiple of my small business: IP and other assets? Marketing strategy? Revenue consistency?
  • How can I maximize my ROI (return on investment)?

Read other Data Shot articles on Amazon FBA and Shopify stores or deal multiples and profitability. 

Image from Pixabay

 

Filed Under: Business Trends

Ecommerce Sales for Second Quarter 2021

September 1, 2021 by Paul W

Summary: The digital economy continues to expand to record levels, according to the latest statistics from the U.S. Department of Commerce.

Second Quarter 2021

  • The estimate for U.S. retail ecommerce sales for the second quarter of 2021, adjusted for seasonal variation, but not for price changes, was $222.5 billion, an increase of 3.3 percent (±0.7%) from the first quarter of 2021.
  • The second quarter 2021 ecommerce estimate increased 9.1 percent (±1.4%) from the second quarter of 2020 while total retail sales increased 28.2 percent (±0.7%) in the same period.
  • Ecommerce sales in the second quarter of 2021 accounted for 13.3 percent of total retail sales.

sales growth graph

As you can see from this graph, the percent of ecommerce sales vs. total retail sales has taken a big jump up over the last year and a half but continues to moderate in the most recent quarter. 

For more articles about ecommerce trends, see our Data Shot series.

Source: U.S. Census Bureau News, Press Release, August 19 2021

To view brokered and non-brokered businesses on Hatchit, feel free to browse our latest posts.

Filed Under: Business Trends

Data Shot: Deal Multiples for Amazon FBA and Shopify Stores

July 6, 2021 by Paul W

Data Shot is a series that gathers and reviews data from The Hatchit Marketplace.  You will be able to use it as a guide in your business transaction process, and as a way of identifying useful insights.

comparing amazon and shopify

Comparing Amazon and Shopify

This Data Shot reviews the prevalence of Amazon FBA sites and Shopify stores on Hatchit, based on 295 web and tech company listings.  As background, Shopify provides an e-commerce platform to set up your own online business, whereas Amazon FBA sites provide sellers an opportunity to sell products within the Amazon marketplace. In total, the two platforms make up over 60% of all posts in this category. When comparing site appearance on our platform, Amazon and Shopify are tied at 20% a piece.

amazon and shopify

Profit Multiples

The number of Shopify and Amazon e-commerce companies on Hatchit is competitive. How does the average selling price relate to its profits? What about KDP and Associates businesses that don’t have physical inventory? How do their profit multiples compare?

 

profit multiples

Questions to consider with your adviser or business broker:

-Amazon businesses command a 28% selling premium over Shopify businesses. Why?

-How is running an Amazon business different from a Shopify store?

–Is there a bigger market of buyers for Amazon vs. Shopify stores? Does this influence the profit multiple?

-Why do Amazon Associates and affiliate sites have such a high profit multiple? What makes them desirable businesses?

Read our Data Shot article on price multiples for e-commerce businesses or deal multiples and profitability. 

Image from Pixabay

Filed Under: Business Trends

Ecommerce Sales for First Quarter 2021

June 10, 2021 by Paul W

Summary: The digital economy continues to expand, according to the latest statistics from the U.S. Department of Commerce.

First Quarter 2021

  • The estimate for U.S. retail ecommerce sales for the first quarter of 2021, adjusted for seasonal variation, but not for price changes, was $215.0 billion, an increase of 7.7 percent (±0.5%) from the fourth quarter of 2020.
  • The first quarter 2021 ecommerce estimate increased 39.1 percent (±1.4%) from the first quarter of 2020 while total retail sales increased 16.8 percent (±0.5%) in the same period.
  • Ecommerce sales in the first quarter of 2021 accounted for 13.6 percent of total retail sales.

ecommerce sales 2021

As you can see from this graph, the percent of ecommerce sales vs. total retail sales has taken a big jump up over the last year but has moderated in the most recent quarter. 

For more articles about e-commerce trends, see our Data Shot series.

Source: U.S. Census Bureau News, Press Release, May 18 2021

To view brokered and non-brokered businesses on Hatchit, feel free to browse our latest posts.

Filed Under: Business Trends

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