The Relevance of Markets with No Caps
E-commerce businesses have the potential to offer investors a unique opportunity for high returns. Unlike traditional markets, e-commerce does not have caps on how much profit can be made. Instead, it’s a wide-open market with no ceiling on what can be achieved if one has the skill and resources to take advantage of the opportunities that are available.
E-commerce businesses have no cap because they are driven by the power of technology and innovative digital strategies. Unlike traditional markets, where there is a physically limited amount of products and services that can be sold in a given period, e-commerce has the potential to scale quickly and nearly without constraint. On the web, businesses can reach more customers, create new revenue streams, and increase profits much more easily in comparison to brick-and-mortar.
Moreover, because e-commerce businesses are not bound by traditional capital constraints, it is possible to invest in them with much smaller amounts of money. This makes them particularly attractive to investors who do not have the resources to invest in more capital intensive markets.
E-commerce Investments Vs Real Estate Investing
Most people understand how real estate investing works. First, you look for a property that meets your criteria, likely within a specific geographic location. After buying, you use it to generate revenue, whether through renting it out or simply holding it, improving it, and waiting for appreciation. When you sell, you make profit, and then you likely reinvest into more real estate.
E-commerce investment works differently. Instead of having to find and purchase a physical property, with e-commerce businesses you invest in the companies themselves. This means that your capital is used to acquire shares of that company, giving you an ownership stake that can be liquidated when it’s time to make a return. Because e-commerce businesses can scale quickly, the returns on investment can be much higher than what is achieved in investment markets like real estate. You are also unbound by physical location when investing in e-commerce. Because most business operations are online, you can invest in them regardless of where you are based, and this gives a myriad of benefits including enhanced diversification, the possibility of getting in early on a particularly successful investment opportunity regardless of location, and overall ease of access.
Furthermore, e-commerce has several strengths over real estate when it comes time to sell or “flip”. Firstly, the valuation on an e-commerce store is based solely on its revenue and its profit, without any “comps” (comparable sales) necessarily needing to be examined. This makes the valuation process much faster and simpler, and is quite different from the valuation process in real estate, where you have limited control over the appreciation on your investment, regardless of how well you run your building/apartment complex/rented homes/etc.. Additionally, it can often be hard to pull your money out of real estate because as soon as you sell a property, the pressure is on to buy the next one and defer taxes. With proper management of an e-commerce you can grow you investment without having to cater to details entailed with real estate investments.
What About Amazon FBA stores?
As an investor looking for a solid and consistent stream of passive income, you’ve probably heard of Amazon FBA (Fulfillment By Amazon). While this can be a good option and early adopters have made significant money within this model, the market has gotten a bit oversaturated amongst the thousands of new sellers that open up Amazon stores each day.
An important fact to remember when Investing in Amazon FBA stores is that Amazon has control over the vast majority of the market and can alter their TOS at any time. This could leave your store virtually non-functional, marginless, and without recourse if these conditions aren’t continually planned for. Regulatory changes to how Amazon interacts with sellers, taxes imposed on FBA merchants, unexpected pricing shifts, and saturation of specific categories on the platform are just a few of the variables that could put a wrench into your plans. Prospective investors should carefully research Amazon’s policies and current trends in order to ensure they have taken all possible precautions before taking the plunge into Amazon FBA.
On the other hand, with an e-commerce brand on a more independent platform like Shopify, WooCommerce, or WordPress, you have more control over the future of your business. You are still beholden to the regulations that pertain to e-commerce, but there is far less worry about market saturation or a large corporation changing the rules one day and leaving you with nothing. If a platform were to fail, then all business assets are still recoverable, and you can move to a different platform with ease.
How Peoples Equity Group Works
As one of only a handful of direct-to-consumer aggregators in the world, PEG is proud to offer unique and exciting investment vehicles that are largely unavailable to the average investor. By putting your capital to work in businesses that have already been vetted, you get to enjoy the vast benefits of e-commerce investing without taking on all the risk alone. We use techniques like seller due diligence, financial analysis, and business model assessment to ensure that any transaction we make will bring maximum returns for our clients. We are also able to put in place efficient exit strategies and risk management tools to ensure that we maximize returns for everyone involved when a company is sold.
Above all else, we place a golden standard on taking care of people. We believe in transparency, efficiency, and taking a long-term approach when it comes to investing and partnerships. That’s why we are dedicated to staying on the cutting edge of technology and industry trends to make sure that we remain your most valuable partner from start to finish.
If you’re ready to take your passive income to the next level, Peoples Equity Group is here for you.
Contact our team today to get a head-start on re-imagining your financial future!
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