One of every five beauty purchases online is made via the Amazon marketplace, according to a new report.
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But there are two other reasons today: Fear of increased capital gains tax—capital gains tax is expected to increase from 15% to 25% Jan. 1, 2013, which would destroy value that owners have worked hard to build—and the fear that e-retailers will soon have to comply with the widely varying sales tax rules of states and local governments.
At the same time, there are fewer interested buyers. Consolidation has led to fewer strategic buyers, such as larger web retailers. Many are opting to spend more money on acquiring customers as they always have. It may be more expensive, but it is seen as less risky. And, unlike several years ago, there are now few retail chains without an online presence looking to buy an e-retailer as a way to move online.
Financial buyers, such as private equity groups, are still looking at the sector, but are looking at truly niche opportunities that are highly defensible. As e-commerce has matured, financial buyers increasingly see the space as highly commoditized and unlikely to provide the kind of financial returns they seek.
While Internet retail offers owners the prospect of strong earnings growth, the potential for selling a business at a significant price is not as promising.