Content Websites vs. E-Commerce: Two of the major digital asset classes compared

Let’s kick this comparison off with qualities that both asset classes have in common:

1. digital assets, can be managed remotely
2. trading at 2-4x net profit
3. highly fragmented markets
4. plenty of exit potential

Content Website Pros

• no inventory, lean, digital only
• rapid prototyping, easy expandable
• fast roll-out of new features
• diversified traffic (should be prio 1)
• diversified revenue streams
• facilitating sales
• often long track record
• low volatility possible
• high margin

Content Website Cons

• often still heavy dependence from organic traffic
• maybe depending from advertising partners
• can be easy to replicate
• some content might get disrupted by GPT

eCommerce Pros

• strategic moat possible,e.g. via patent
• diversified traffic through organic + paid
• ever-green products
• tough to disrupt

eCommerce Cons

• inventory-heavy
• often dependent from Amazon
• heavily increasing number of (VC backed) competitors
• slow prototyping and testing
• adding own shop is directly adding additional layers of complexity as you’re now in the content + eCom game
• relatively low margins
• inventory risk

From an investor’s perspective, it’s important to know and understand the risks that are often associated with these asset classes. And, as next step, favor an investment, which can effectively mitigate these.

When using diversification to mitigate the asset-inherent risks, for example acquiring multiple websites in multiple countries within a couple of verticals,investors are able to overcome almost all critical aspects of Content Websites. Synergies can be leveraged in terms of content, SEO, tech, etc.

At eCom, a diversification strategy can help as well. Nevertheless, some cons might amplify, like inventory. Additional complexity can emerge when operating FBA+own shopify store. In fact, synergies can even decrease when amassing operations in various sectors like FBA + shopify (Content, SEO, tech, etc.), further multiplied by a geo dimension.

Want more content like this?

Follow me to get tips and insights about the digital media M&A space every day