Overview
Yousbeauty is an eCommerce brand specializing in at-home hair straightening kits, catering to the beauty and personal care market. Established in October 2020, the business has demonstrated substantial growth, with annual revenue of €195,933 and a profit margin of approximately 27%. The business operates primarily in French-speaking regions and has a strong online presence across social media channels, including Instagram, TikTok, and Snapchat. The brand differentiates itself through a unique formula sourced from Brazil and a streamlined fulfillment process based in Belgium.
Despite its impressive growth, revenue and profit trends have been unstable, with a notable spike in August 2024. Additionally, the business is being sold because the owner is focusing on other ventures, presenting an opportunity for a buyer to capitalize on its existing success and expand further.
Key Insights
Website Performance and Metrics:
The brand maintains an eCommerce store with a branded design and a variety of products.
Trustpilot reviews indicate a mix of customer sentiment, with 79% of reviews being 5-star and 21% being 1-star.
Strong social media presence with:
Instagram: 22,000 followers
TikTok: 30,000 followers
Snapchat: 24,000 followers
High customer retention, with repeat purchases occurring 3-4 times per year.
Financials:
Annual Revenue: €195,933
Annual Profit: €53,790
Monthly Revenue: €16,327
Monthly Profit: €4,482
Profit Margin: 27%
Revenue and profit trends are unstable, requiring further inquiry into seasonal fluctuations and advertising impacts.
Multiples Analysis:
Profit multiple: 3.0x
Revenue multiple: 0.8x
These multiples appear high relative to industry standards, suggesting the valuation might be inflated.
Operational Efficiency:
The owner spends 5-10 hours per week managing advertising, supplier coordination, and customer support.
The business operates with minimal overhead, relying on outsourced contractors for advertising and logistics.
Fulfillment is handled in Belgium, with sourcing from Brazil and China.
Existing supplier relationships have been maintained for 5+ years, ensuring stability.
Automated marketing and fulfillment processes reduce hands-on involvement.
Customer Data and Relationships:
Over 11,000+ customers, indicating a solid customer base.
Email subscriber list of 11,149+.
Refund rate is low at 1.3% (€4,000 annually), suggesting product satisfaction among the majority of customers.
Growth potential through influencer marketing, B2B partnerships, and product line expansion.
Legal and Compliance Due Diligence:
Ownership of brand assets, including domain, social media accounts, and supplier contracts.
Trademark or patent status needs confirmation.
Potential compliance concerns related to haircare product formulations and regulations in expanded markets.
Challenges Identified
Revenue and Profit Instability:
The financial performance has been inconsistent, with a notable revenue spike in August 2024 but generally unstable trends.
Further verification of the past two months' revenue and profit is necessary before making a final acquisition decision.
High Valuation Multiples:
The business is priced at high revenue and profit multiples, requiring further negotiation or deeper analysis to justify the valuation.
Customer Satisfaction and Reputation Risks:
While the brand has positive Trustpilot ratings (79% 5-star), the presence of 21% 1-star reviews raises concerns about product consistency and customer service.
Scalability and Supply Chain Risks:
The business relies on suppliers from Brazil and China, which may pose risks related to delays, import regulations, or price fluctuations.
While fulfillment is managed in Belgium, international expansion would require logistical improvements.
Owner Dependency:
Despite automation, the business still relies on the owner's involvement in advertising and supplier coordination.
Transitioning to a hands-off model may require additional hiring or outsourcing.
Recommendations
Conduct Further Financial Verification:
Request the past two months' revenue and profit details to assess recent performance trends.
Evaluate advertising costs and ROI to ensure profitability is sustainable.
Negotiate a More Reasonable Valuation:
Given the high multiples, consider negotiating for a price that aligns better with the industry average.
Assess whether recent growth is organic or the result of aggressive marketing spending.
Expand Customer Acquisition Strategies:
Implement a subscription model to leverage high repeat purchase rates and secure recurring revenue.
Expand into international markets beyond French-speaking regions.
Explore B2B partnerships with hair salons and retailers.
Address Operational Bottlenecks:
Secure a backup or alternative supplier to mitigate risks related to sourcing.
Consider producing the formula locally to cut costs by up to 75%.
Hire a Virtual Assistant (VA) to take over administrative tasks and free up operational bandwidth.
Assess Legal and Compliance Factors:
Verify any trademarks or patents that might impact the business’s expansion potential.
Ensure compliance with regulations in target expansion markets to avoid potential legal hurdles.
Conclusion
Yousbeauty presents a promising acquisition opportunity in the beauty and personal care industry, with strong brand recognition, a loyal customer base, and significant growth potential. However, the instability in revenue and profit, high valuation multiples, and operational dependencies pose notable risks that require further investigation.
Before proceeding, we recommend:
Further financial validation of recent performance.
Price negotiation to align with more reasonable valuation multiples.
Implementing growth strategies to stabilize and scale the business efficiently.
Securing supply chain and legal compliance for long-term sustainability.
If these factors can be addressed, Yousbeauty has the potential to become a highly profitable and scalable investment.
