How to Start a Security Company in Texas?

Are you considering starting your own security company in Texas? Awesome! The Lone Star State is a great place to do business, and there’s plenty of opportunity in the security industry.

It is both a lucrative and challenging endeavor. But it’s important to understand the steps necessary to set up your security company in Texas. In this blog post, we’ll walk you through the steps you need to take to get your security business up and running.

Let’s get started!

9 Steps to Start a Security Company in Texas

1. Create a business plan

Any successful business needs a solid plan to guide it through the early stages of growth and development.

This is particularly true for security companies, which need to have a clear understanding of their target market, their unique selling points, and their financial goals.

Creating a business plan for your security company means taking the time to research the industry and craft a detailed roadmap for success.

You’ll need to identify your target market, develop a marketing strategy, and set financial benchmarks for your business.

The process can be daunting, but taking the time to create a comprehensive plan will pay off in the long run. By clearly defining your goals and outlining a path to achieving them, you’ll give your security company the best chance of success.

Startup and ongoing costs

The startup costs are minimal, and the ongoing costs are very low. Insurance is the major expense that, in Texas, will cost you around from anywhere between $3000 and $4000 for a 6-month term.

Next, you need to include the License fee that you have to pay to the Texas Department of Public Safety Regulatory Services Division. Class A License will cost you about $350, Class B around $400, and you’ll pay $540 if you decide to go for Class C.

You’ll also have to buy uniforms and defense gear for your staff or security personnel. The Uniform will cost you about $100 per person. In case of armed security, you’ll also need to purchase firearms. A used handgun will cost anywhere between $400 and $2500.

You’ll also need to maintain an office, the cost of which will vary depending on the location and office space. The average cost of leasing office space is around $50 per Square Foot per year in Austin, Texas. In the security business, it’s not essential to have a big office, so you can save a lot of money by just maintaining a small office.

Having a basic business website will cost you around $400. Marketing materials such as flyers, business cards, and brochures will cost you around $2000. Also, don’t forget to include another $200 to $400 as monthly marketing expenses if you plan on acquiring new clients.

The biggest ongoing cost for your security business will be salaries paid to the staff. According to Indeed.com, in Texas, the average salary for a Security guard and a security officer is $15.55 and $19.57 per hour, respectively. So you can calculate the expense accordingly.

Pricing

There is no easy answer when it comes to pricing for security services. The amount you can charge will depend on a number of factors, including the type of service you provide, the location, and the size of your target market. In general, however, you will want to charge enough to cover your costs and make a profit.

On average, companies charge somewhere around $24 per hour for unarmed security services, whereas for armed security services, the average price lies around $34 per hour. If it’s a high-risk job, the charges can go up to $60 per hour.

Security is an important service, and customers are often willing to pay premium prices for peace of mind. With that said, it is also important to be competitive. Research the prices charged by other businesses in your area, and make sure your rates are in line with the market. By carefully considering your costs and the needs of your customers, you can develop a pricing strategy that maximizes profits and keeps your business running smoothly.

Target Market

The target market for a security guard company is businesses and organizations that require on-site security personnel. This can include everything from small businesses to large corporations, as well as government agencies and other institutions.

Security guard companies typically offer a variety of services, including armed and unarmed security guards, mobile patrols, and event security. They may also offer additional services such as investigative work, loss prevention, and executive protection.

As a result, they must be able to tailor their services to meet the specific needs of their clients. In order to reach their target market, security guard companies must have a strong marketing strategy that includes advertising, public relations, and sales. They must also have a well-trained staff that is able to provide quality service.

Profit Potential

A security guard company can generate a significant amount of profit if it is managed properly. On average, a security company can bring in $45,000-$65,000 annually per security guard. So, if you have 10 guards on your team, you can easily make over $500,000 in revenue with a gross profit margin of 30% to 35%.

Of course, net profits will be calculated by subtracting associated costs, such as insurance and labor. After deduction, take home profit percentage (net profit margin) falls between 12% to 18% of gross revenue.

2. Pick a name for your security business

Choosing a name for your security business is an important decision. After all, the name is likely to be one of the first things potential customers notice about your company. Fortunately, there are a few simple tips you can follow in choosing a great name for your business.

Start by brainstorming a list of keywords that reflect your business. What services do you offer? What type of client are you targeting? What are your core values? Once you have a list of keywords, try combining them to create interesting compound words or phrases.

Don’t be afraid to think outside the box – sometimes, the best names are the ones that are unexpected and unique.

Ask for feedback from trusted friends or colleagues – they may have suggestions you haven’t considered. And remember, it’s worth taking the time to find a name that you love rather than settling for something that’s just okay.

Here are some important things to keep in mind when naming your security company:

1. Keep it easy to say and spell: Think about how people will say it. The way someone says your name is important too—and if they can’t even pronounce it, they’ll never be able to remember who you are! Make sure there aren’t any hard-to-pronounce sounds in your name and that it flows easily off the tongue.

2. Avoid any negative connotations: Make sure your name doesn’t have any negative connotations associated with it—like having an offensive meaning in another language.

3. Don’t infringe on someone else’s trademark: Before you name your security company, make sure you don’t choose a name that’s already been taken by another company. It’s easy to check for these conflicts on the Federal and state trademark records on the website of the United States Patent and Trademark Office (USPTO).

4. Ensure the domain name is available: You’ll need to check that your desired domain name isn’t already taken by another site or business before going forward with any plans. If it’s not, congratulations! Go ahead and reserve it now so no one else can snatch it up before you do!

You can also check out our naming service, where we can help you find a perfect name for your business.

3. Register your security company as a legal entity

After deciding on the name, the next step is to register your company as a legal entity.

There are 4 types of business structures that you can choose from: Sole Proprietorship, Partnership, Limited Liability Company (LLC), and Corporation. The best structure for you depends on your business’s needs and goals.

A sole proprietorship is the simplest and most common type of business structure. It’s easy to set up, and you have complete control over the business. However, you’re also personally liable for all debts and obligations, which can be a risk if your business is unsuccessful.

A partnership is similar to a sole proprietorship, but there are two or more owners who share responsibility for the business. This can be a good way to raise capital and spread the risk among multiple people. However, it’s important to have a clear partnership agreement in place to avoid disagreements down the road.

A limited liability company (LLC) is a type of corporate structure that offers limited liability protection for its owners. This means that each owner is only responsible for their own actions and not for the debts or liabilities of the business. An LLC is a good option if you’re looking for some protection from personal liability but don’t want the formalities of a corporation.

Finally, a corporation is a legal entity that’s separate from its owners. This means that the owners are not personally liable for the debts or liabilities of the corporation.

A corporation can be a good choice if you’re looking for significant liability protection and want to establish your business as a separate entity. However, corporations are subject to more regulations than other business structures and can be more difficult to set up.

Choose the right business structure for your security company by considering your risks, liabilities, and goals. It’s important to consult with a business attorney to ensure that you’re taking all the necessary legal precautions.

4. Register your company for taxes

Any company that plans on doing business in the United States must register with the state and federal government for taxation purposes.

For that, you need to obtain an EIN, or employer identification number, from the IRS. This unique number is used to identify your business for tax purposes and must be included in all tax filings.

Once you have received your EIN, you will need to use it when filing your business taxes. Failure to register your business for taxes can result in significant penalties, so it is important to make sure that you take care of this important task.

5. Obtain necessary licenses or permits

Next, you need to apply for a license from the Texas Department of Public Safety – Private Security Bureau. This organization is responsible for regulating Texas security companies. Security licenses are divided into three categories or classes:

Class A – This is required for a Private Investigation Company to operate.
Class B – This Security Contractor Company License is required for a company involved in one or more of the following: alarm, armored car, guard, electronic access control device installers, courier, and locksmith.
Class C – This license is required for those businesses involved in both Class A and Class B license activities. It allows you to provide both private investigations services and security services at the same time.

To apply for a license, you will need to submit an application and supporting documentation to the Texas Department of Public Safety – Private Security Bureau. You’ll need to pass a criminal background check and submit your fingerprinting.

Once the application is complete, it will be reviewed by a licensing specialist who will determine whether the applicant meets all of the requirements for licensure.

If everything is in order, the applicant will be issued a security license which will allow them to legally operate as a security company in Texas. Once your application has been reviewed and approved, you will be issued a license which must be renewed on a yearly basis.

6. Purchase required Insurance

The Texas Department of Public Safety requires you to have a certificate of insurance before they issue a license. This is because the DPS wants to make sure you can pay for any damages your company or employees cause.

Here are some of the insurances you can consider for your security company:

General Liability insurance
Overhead expense liability insurance
Payment protection insurance
Workers’ Compensation (not a requirement in Texas)

Texas law requires that your insurance policy have minimum limits of:

$100,000 for each bodily injury and property damage.
$50,000 for each personal injury incident.
Total aggregate amount of $200,000 for all occurrences

7. Buy technology and equipment for your security business

If you’re in the security business, you need to stay ahead of the curve by investing in the latest technology and equipment.

There are a lot of options out there, so it’s important to do your research before making any purchase. But with the right tools, you can give your clients the peace of mind that comes with knowing their property is well-protected.

Uniform – When you’re on-site, it’s important to look professional. A proper uniform can help your team feel more confident, and it also helps with customer service.

Flashlights – Having good lighting is an important part of any job, especially when it comes to security work. You need to be able to see clearly at night and during low-light conditions to ensure that all threats are detected quickly and dealt with efficiently.

Walkie-Talkies – Communication is key when working with other security personnel, so make sure you have walkie-talkies available for communication purposes. They make it easy for everyone to stay in touch and organized!

Defense Gear – You never know when a situation may arise where you need defense gear, so it’s important to keep some handy at all times in case of emergencies or unexpected situations that require quick action.

8. Setup your business website

In today’s digital world, having a website is critical for any business that wants to be successful. If you don’t have a website, you’re missing out on potential customers or clients, and you’re essentially invisible to the online world.

Having a well-designed website will allow you to showcase your services, list your prices, and provide potential customers with a way to contact you.

In order to set up a website, you’ll need to buy a domain name and hosting and then design and build your site. You can either do this yourself or hire someone to do it for you. Once your site is up and running, be sure to promote it through social media and other online channels.

Also, be sure to populate your website with content that is relevant to your business, and that will appeal to your target audience. Regular updates will help to keep visitors coming back, and well-written articles can help to establish you as an expert in your field.

9. Promote your business

A security business is only as good as its reputation. If you want to attract new clients, you need to make sure that your business is visible in the community and that potential customers have a positive impression of your company.

By creating a strong online presence, security companies can reach a wider audience and build trust with potential customers.

In addition to traditional methods like search engine optimization and social media marketing, security companies can also use online advertising to reach their target market.

You can also consider exhibiting at local business expos or security trade shows. This will give you a chance to meet potential customers and showcase your services. You can also distribute flyers and brochures in local businesses and neighborhoods.

Partnerships are another great way to promote your brand. By teaming up with other businesses in the industry, security companies can boost their visibility and gain access to new markets. Partnerships can also help to build relationships with other businesses, which can lead to referrals and word-of-mouth promotion.

20 Body Positive Clothing Brands To Love Your Body More

The body positive movement has gained traction in the fashion world. Although often misunderstood, body positivity simply advocates for accepting all body types, no matter someone’s size, gender, ability, or ethnicity.

Well-established brands are changing old ways to make fashion more inclusive. Plenty of new brands are also on the scene doing exciting things to redefine beauty and body acceptance.

However, some brands use body positivity as a buzzword without actually changing anything about their mission. So when shopping for body positive clothing, it’s essential to know if a brand is authentically supportive.

We’ve done the work for you. This list highlights 20 of the top clothing brands that are doing body positivity right.

YITTY

Lizzo is a trailblazer in the body positivity and acceptance movement. YITTY is her new shapewear line that makes fashion more inclusive. Launched in early 2022 in partnership with Fabletics, YITTY’s trendy leggings, bodysuits, and bras redefine the shapewear market.

In her Vogue cover story, Lizzo notes how the mainstream body positive movement has pushed women of color and LGBTQ+ people to the sidelines. However, YITTY is pushing back and recentering inclusivity.

The brand celebrates bodies of all shapes and sizes. YITTY doesn’t retouch any photos on its website. Instead, models of all sizes confidently show off their natural bodies in these comfortable, fun shapewear pieces.

YITTY shapewear works with your body, not against it. Compression pieces are lightweight, don’t roll down, and provide full coverage. YITTY’s shapewear pieces are available in sizes XS to 6X.

TomboyX

TomboyX’s slogan is “We Fit You.” Its gender-affirming underwear and swimwear do just that. Naomi and Fran, the brand’s founders, couldn’t find underwear that fit them the way they wanted, so they made their own.

The brand’s gender-neutral underwear comes in various cuts and prints, making an often stressful shopping experience easy and fun for trans and non-binary customers.

TomboyX’s products go beyond trends and focus on making people feel comfortable in their bodies and identities. For example, the Gender Euphoria collection’s foam cup inserts, tucking underwear, and compression tops are beloved gender-affirming favorites for many customers.

TomboyX now offers loungewear and athleisure pieces like eco-fleece hoodies and cute onesies. All products go up to size 6X. In addition, the site includes a sizing chart with non-judgmental measuring instructions.

Girlfriend Collective

Girlfriend Collective makes size-inclusive, comfortable activewear made from recycled materials. The brand celebrates bodies of all types, centering BIPOC, LGBTQ+, and curvy models on its website.

Its matching sets, classic leggings, and other athleisure pieces range from XXS to 6X, making comfortable elegance accessible to everyone. In addition, girlfriend Collective’s bike shorts, leggings, and bras work with your body, not against it.

The brand is also inclusive of the pregnant body with its maternity line. Pregnancy is a time in someone’s life that traditional activewear companies often ignore. Its maternity line is, as the site states, “made by a mother-to-be for mothers-to-be.”

Universal Standard

Universal Standard touts itself as the world’s most inclusive fashion brand, and they may be right. The brand is about size equality, offering sizes 00 to 40 and working with customers to find their perfect size.

As its name suggests, Universal Standard is shifting the standard regarding sizing. It has a sizing system that reflects a more accurate representation of women’s bodies. For example, Universal Standard’s “medium” size is a traditional size 18-20.

Curvy and BIPOC models are the norm for Universal Standard. One of its central beliefs is that shoppers should be able to see themselves in a brand and have access to stylish, well-made clothes that fit them.

Another revolutionary aspect of Universal Standard is its Fit Liberty program. Customers buy the size they are at the moment. If their size changes within a year of purchase, they can exchange their pieces for a new size. This program is entirely free.

Chromat

Chromat, founded in 2010, is a luxury bodywear brand that has been pushing the boundaries of the fashion world since day one.

The world of swimwear marketing is notoriously gendered and harmful to people’s self-esteem. Chromat shuns pre-conceived notions of the “bikini body” by centering models of all gender identities, sizes, and ethnicities in its marketing.

Inclusivity has always been a keystone of Chromat’s innovative New York Fashion Week shows. As a result, people from all backgrounds, such as educator Ericka Hart and writer Devin-Norelle, walk down the Chromat runway with infectious joy and confidence.

Founder Becca McCharen-Tran has a background in architecture, reflected in Chromat’s structured swimwear that enhances the body instead of smothering it. The brand also incorporates sustainability into its swimwear, using recycled nylon from plastic bottles and fishing nets.

Big Bud Press

LA-based indie brand Big Bud Press seamlessly combines vintage vibes with modern silhouettes. This brand is a cult favorite for its fun patterns and creative art direction.

Big Bud Press focuses on unisex clothing and other accessories. It’s all about what you want to wear when you want to wear it. People of all gender identities and sizes are models for the brand.

Big Bud Press prides itself on hiring models that reflect the sizes and identities of its actual customers. It never airbrushes or retouches model photos. Big Bud Press stocks size XXS to 6X to make everyone feel welcome.

Lé Buns

Australian brand Lé Buns is all about creating sustainable, inclusive apparel and swimwear. The brand specializes in basics and neutrals that can transition from day to night and season to season.

Lé Buns wants you to find the perfect fit. Its website features an exhaustive size guide with visual aids that walk you through how to measure yourself. The size guide also provides sizing details for the models featured in their shop so you can better understand how clothes would fit your body type.

Another unique feature of this brand’s site is the “Shop in Your Size” feature. You can exclusively shop for designs in your specific size, modeled by women in your size range.

Also, Lé Buns does not size its products using the words “small,” “medium,” or “large.” Since those words can have negative connotations for some people, sizes are based on body measurements.

Hackwith Design House

Hackwith Design House is a Minnesota-based brand that knows fashion is not “one size fits all.” This body positive brand crafts professional and formal clothing for women with natural bodies, not just thin models.

It can be hard to find well-made, stylish plus-size clothing. Each Hackwith piece is made-to-order and sewn by hand by one of the studio’s three sewers. Its flowy dresses and ruffle tops don’t sacrifice shape and quality for comfort.

Hackwith Design House incorporates sustainability with its body positive mission through its Sustain Plus line. The Sustain Shop is the brand’s upcycle platform where customers can donate their gently used pieces and buy new-to-them Hackwith clothes.

ASOS

ASOS is one of the top online clothing stores in the US and UK. The brand’s marketing falls in line with more traditional retail brands. However, ASOS has made strides in becoming more size-inclusive.

The ASOS website is mindful of customers’ different sizes. For example, there is a “Shop by Fit” section where shoppers can filter clothing through categories like “maternity” and “plus size.” In addition, the ASOS Curve collection has thousands of fan-favorite items in sizes ranging from 18 to 30.

The brand recently launched a virtual Fit Assistant that digitally maps a piece of clothing onto models of different sizes. This feature lets shoppers see a model similar in size to themselves so they can visualize how something would fit. Unfortunately, the Fit Assistant is only available for select items.

Savage x Fenty

Rihanna’s iconic Savage x Fenty intimates brand is changing the face of the lingerie industry. From fearlessly slinky lingerie to cozy onesies, Savage x Fenty does not shy away from making bodies of all shapes and sizes look sexy and cool.

Rihanna disoriented the fashion world with her 2018 Savage x Fenty runway shows. One show featured a diverse cast of models, from supermodel Bella Hadid to plus-size model Raisa Thomas. The brand even spotlighted two pregnant models in full-scale lingerie.

Savage x Fenty offers lingerie and loungewear up to size 4X because everybody should feel sexy in their skin. Gone are the days of beauty being defined as a singular, thin ideal. Instead, Rihanna is shaking things up and forcing the world of fashion to be more inclusive.

Rebdolls

Rebdolls is a minority-owned fashion label that brings the motto #SexyForAll to life with its form-fitting dresses and trendy outerwear.

Founder Grisel Paula worked as a plus-size model for many famous brands. However, she was annoyed that the plus-size clothing at photoshoots was often less fashionable than other sizes. So she decided to change the game with Rebdolls.

Rebdolls is about diversifying the fashion world and creating on-trend clothing for everyone. The brand carries sizes 0 to 32 and never compromises fit and style. Customers love the way Rebdoll’s clothes make them feel comfortable, sexy, and unashamed of their bodies.

Models of all sizes are represented in the brand’s marketing. It’s easy for clothing brands to talk the talk when it comes to body positivity, but Rebdolls walks the walk.

Parade

Parade is a sustainable brand where body positivity is the norm, not an exception. Founder Cami Tellez believes “sexiness isn’t one-dimensional,” and we couldn’t agree more. The brand thinks underwear should be comfortable for everyone, regardless of size.

The brand is known for its innovative underwear design. People of all sizes are consulted and involved in product development to ensure every piece is genuinely inclusive. Its briefs and bras are made with your body in mind and are available in sizes XS to 3X.

Also, Parade is one of the few brands that openly welcomes customer feedback about gender- and size-inclusive options.

Parade donates some of its proceeds to various non-profits, including Black Women’s Wellness. Initiatives like free breast cancer exams and free therapy further support Parade’s mission to be body positive for everyone.

Decade

Decade arose from founder Molly Spittal’s mission to create the perfect pair of jeans. As she worked on designs, she soon realized that the industry standard for sizing jeans was wildly out of line with the average body.

Decade constructs its denim to fit every body shape without compromising comfort. The brand’s sizing method, Ratio-Fit, provides three different styles in sizes 25 through 50. In addition, the “See it in size” section lets you see the jeans on models of various sizes, not just a size zero.

All Decade denim is made from 100% cotton denim and is built to fit your body perfectly. Each pair has a break-in period where the denim softens and shapes to your body type. It’s basically memory foam in the form of jeans.

The small brand has one physical location in Vancouver, BC. You can even get a personalized fitting if you are lucky enough to visit.

Sotela

Sotela is an LA-based fashion brand that celebrates humans in all their forms through its gorgeously crafted, ethically made clothing.

Sotela’s two main pillars are positivity and sustainability. Sotela builds its clothes to accommodate one to two size variations. You can still wear them if your body changes or fluctuates in weight. In addition, all pieces are made from natural fabrics and sweatshop free.

The brand is known for its flowy, nature-inspired pieces. Bottoms like linen shorts and organic cotton skirts have elastic band waists so that they can last in your closet for years. These clothes are made to be comfortable without looking frumpy.

Sotela never uses “small” or “large” to describe its clothing. Instead, its sizing uses measurements specific to your body type and typically goes up to a size 10 for most pieces.

ARQ

ARQ is a female-owned intimates brand based in Oregon. The small brand has blown up in popularity over the last few years because of its high-quality, wildly comfortable underwear and bras.

ARQ does a great job of featuring models of different sizes and gender identities wearing its products. All of ARQ’s underwear is super soft, versatile, and comfortable. In addition, each piece is gender neutral, with no “women” and “men” categories listed on the online shop.

The brand operates with a small but innovative team. Each piece is made by hand in ARQ’s Oregon studio using natural fabrics. Sizes range from XXS to 6X.

Wildfang

Wildfang is a fashion label that fully embraces gender fluidity and aims to create a safe space for women and the LGBTQ+ community.

Founded in 2012, Wildfang embraces body positivity by throwing the gender binary out the window. Wildfang models of all sizes rock skirts, suits, and matching sets in colorful patterns. From jumpsuits to corsets, there’s something for everybody in Wildfang’s inventory.

Wildfang currently offers sizes XS to 3X and encourages its customers to wear what they want when they want. Clothes can be a huge part of someone’s identity, and Wildfang is about making people feel comfortable in their bodies.

SmartGlamour

SmartGlamour, a small clothing line based in New York City, sets the new standard for body inclusivity. Every SmartGlamour design is available in sizes XXS through 15X with a ton of design flexibility.

Designer Mallorie Dunn launched SmartGlamour in 2014 because she was tired of fashion media’s inaccurate depictions of women, femmes, and non-binary folks. As a result, models of all experience levels, sizes, ethnicities, and abilities are well-represented throughout SmartGlamour’s online shop.

The brand offers a variety of clothing accessories, from dresses to intimates, outerwear to tote bags. Everything is made-to-order, and the SmartGlamour crew can customize things like hem length, bust size, and waistband height.

Phlemuns

Phlemuns is shattering the binary with its innovative genderless clothing. James Flemons founded the LA-based brand in 2013, and has been going strong since.

Its unisex designs are beautifully crafted by hand. The mesh tanks, graphic tees, and bodycon dresses all have cut-out visuals that would make your grandma blush. In addition, Phlemuns sexy, cool designs come in sizes XS to 2X.

Phlemuns’ mission is to bridge the gap between high fashion and everyday communities. The brand makes everybody feel like they can look good in something they see on the runway.

Its designs elevate simple silhouettes into something haute couture and high-brow. Celebrities like Lil Nas X and Bella Hadid have been seen wearing the brand’s nonbinary, Y2K chic pieces.

Aerie

Aerie, the lingerie line of American Eagle, is one of the first big brands to adopt a more body positive philosophy. The brand made headlines in 2014 when it announced it would stop photoshopping and airbrushing its models.

Aerie’s choice was (and still is) a revolutionary move in an industry obsessed with “perfection.” The brand knows that most of its customers are young women who shouldn’t have to compare themselves to unrealistic beauty standards while shopping for underwear.

The brand is known for its comfortable loungewear and affordable intimates up to size XXL. With the #AerieREAL social media campaign, the brand features the natural beauty of real-life customers wearing Aerie pieces.

Admittedly, Aerie still has a long way to go. Although models are not retouched in their photos, they’re still conventionally attractive and thin. In addition, there’s not a whole lot of diversity when it comes to showing Aerie bras on a diverse range of bodies.

ModCloth

Along with Aerie, ModCloth was one of the first big companies to pledge an anti-photoshop policy in 2014. The brand doesn’t alter its models’ shape, size, or physical features in post-production, which is a huge win for the body positivity movement.

ModCloth offers vintage-inspired clothing in sizes XS to 4X. The plus size collections are just as adorable as the straight sizes, making it’s signature quirky style accessible to more shoppers.

Like many other big-name brands, ModCloth can still do more to be more size-inclusive.

Sure, plenty of fashionable and cute plus-size clothes are available on its website. However, plus-size products are in a separate category from all the other clothes. Also, most women modeling the straight sizes are thin, with no different body types represented under specific listings.

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How Does ShopRunner Make Money? Business Model of ShopRunner

ShopRunner is a popular expedited shipping service that connects retailers with customers. It provides free two-day shipping and returns.

ShopRunner makes money by charging partner retailers a commission on orders placed by ShopRunner members and from subscriptions to its membership program costing $79 per year.

Founded in 2010 by Lucille Logan and Rick Fawcett, ShopRunner was created to provide customers with a reliable expedited shipping service on orders from their favorite retailers. ShopRunner aimed to provide small and intermediary retailers with a means to compete with global giants such as eBay and Amazon.

Over time, the company also got into the business of providing data. In 2018, ShopRunner acquired Spring, an ecommerce startup.^[1] ShopRunner used this acquisition to improve its online store interface.

What is ShopRunner & How Does It Work?

ShopRunner is a membership-based expedited shipping service that allows customers to get free two-day shipping from partner retail stores. Members also get free return shipping. In addition to free shipping, ShopRunner members also get access to exclusive offers on partner stores.

Some ShopRunner partners also support an Express checkout system. It uses customer data stored on ShopRunner’s servers to streamline the process of filling out forms during checkout. Instead of manually filling out their address and payment information, customers simply click one button to place their order. During Express checkouts, ShopRunner will use the default delivery and billing address provided by the customer.

The ShopRunner website also has its own ecommerce section that includes item showcases, pricing, and links to partnered stores. Customers can browse through categories and select an item they are interested in. When they are ready to place the order, ShopRunner takes them to the page for that item on the partner’s website.

New retailers join ShopRunner’s expedited delivery program but not all retail partners will support ShopRunner’s entire suite of services. Some might support Express checkout but not have options for free two-day deliveries.

Membership costs $79 per year, but certain users might get free access. PayPal members are eligible for a free one-year trial. American Express card owners also get free access to ShopRunner.

To start using ShopRunner, users must first create an account. This can be done by visiting the ShopRunner website and filling in a few basic details. ShopRunner also offers free trials, which can be redeemed without entering any payment information.

ShopRunner asks for an email, name, and password during signup. After that, users can fill in their payment and address details for Express checkout. The site also asks users which retailers they use most frequently, to craft personalized offers for them.

Retailers who are partnered with ShopRunner get access to the platform’s logistics network and software ecosystem. ShopRunner collects data on a user’s location, spending patterns, purchase history, and retailer preferences. Then, it automatically decides which items on the store are eligible for free two-day shipping, and displays a ShopRunner logo next to those items.

Currently, ShopRunner is partnered with over 150 retailers and brands, many of which are international. Some of the popular brands include Eddie Bauer, Neiman Marcus, UnderArmor, NBA Store, Hugo Boss, Brahmin, and Jimmy Choo. Special offers include percentage-based discounts, flat cash discounts, complimentary gifts, and limited-time sales.

Many partnered stores don’t have a minimum order value requirement for two-day free delivery, but some do. During checkout, customers need to select the delivery option with the ShopRunner logo on it. ShopRunner itself isn’t responsible for packaging or shipping the order.

Instead, it acts as a data and logistics partner for stores. It provides them with the software framework and financial incentives to offer a two-day free shipping option. ShopRunner uses its marketing and item recommendation algorithm to drive sales, increase traffic, and boost revenues for retail partners.

Shipping companies like FedEx, UPS, and OnTrac handle the movement of goods from a retail partner’s warehouse to the customer’s doorstep. They coordinate with ShopRunner. It acts as an intermediary between these shipping companies and the store.

Certain customers might even be eligible for same-day delivery, depending on their location and distance from the store. The cutoff time for same-day delivery is 1:00 pm, so any orders placed before this time are delivered on the same day. ShopRunner generally doesn’t deliver on holidays and weekends because delivery windows are decided by the shipping partner.

Returning an item is a very simple process. All a customer needs to do is log into their account on the ShopRunner website and print out a shipping label for the item they wish to return. They select a reason for returning the item and get a return label.

Sometimes, return labels are available only through the retailer’s website. If this is the case, ShopRunner will still waive all return shipping fees. Similar to deliveries, ShopRunner itself does not fulfill the returns, it relies on shipping partners.

Business Model of ShopRunner

ShopRunner uses a Business to Business to Consumer (B2B2C) model. It connects businesses with shipping and logistics companies such as FedEx. The company also acts as a bridge between consumers and retail partners by providing value-added services such as express checkout and exclusive offers.

At its core, ShopRunner is a data analytics company. It gathers massive amounts of data on customer spending patterns, retailer preferences, and location. Then, it uses this data to generate product recommendations.

Once a partner store integrates ShopRunner into its platform, they provide access to their inventory information. ShopRunner combines this with customer data to decide which items should be eligible for free two-day shipping, or same-day delivery. It also comes up with exclusive offers that can only be accessed by ShopRunner members.

Stores pay a commission that is based on a percentage of the order value. There is no recent data on the actual percentage value, but it was between 3 to 5% in 2013.^[2] ShopRunner convinces retailers that its service is worth the commission by bringing in more traffic and generating higher turnover.

Using its massive data network, ShopRunner is able to craft unique marketing campaigns. This drives traffic to ShopRunner’s website, where people register for $79 a year to get free shipping from their favorite stores. ShopRunner then utilizes its store search and item showcase functionality to redirect traffic toward partner sites.

If a customer shops for certain item categories or brands on ShopRunner, they can see photos, specifications, and pricing for that item on the ShopRunner website. But, during checkout, they are redirected to the partner site where they finalize the order and make payment. This helps retail partners grow their traffic, revenue, and brand awareness.

In a way, ShopRunner’s business model resembles that of Visa and MasterCard. These payment processors aren’t credit providers nor do they issue the cards. Instead, they help bring in customers by attracting them with their convenient, safe, and fast electronic payment network.

As a result, stores are willing to pay an interchange fee on every transaction made through Visa or MasterCard. Payment providers also have massive amounts of data on customer spending patterns — just like ShopRunner. They then use it to craft marketing campaigns to draw in even more users.

The more users there are on ShopRunner, the more profitable it is for retailers to partner with the company. And ShopRunner gains money every time a user places an order using their two-day delivery option. Stores also don’t have to deal with the hassle of logistics since ShopRunner acts as an intermediary between them and shipping companies such as FedEx.

Small and intermediate retailers don’t have the volume or revenue to create and maintain an inhouse shipping network. By using ShopRunner’s services, they can simplify revenue generation and provide customers with free two-day shipping. That can do this while not spending any money on shipping, other than the fee they pay to ShopRunner.

As more stores partner with ShopRunner, the company becomes more attractive to customers. And so, it is a cyclical process that grows based on momentum. ShopRunner also partners with payment processors like American Express, PayPal, Chase, and Apple Pay to provide its Express checkout service.

Through a combination of its data-driven marketing and logistics, ShopRunner helps generate repeat customers for retail partners. It also provides an express shipping service to frequent online shoppers who get deliveries to their doorstep within two days. Since the company doesn’t own any warehouses or physical locations, it saves on operational costs.

ShopRunner’s biggest rival is Amazon Prime as they offer similar services. However, Amazon Prime is based on Amazon’s in-house logistics and shipping network. In contrast, ShopRunner is a software intermediary between logistics companies and retailers.

Because Prime is part of the largest online retailer in the world, customers can get a much wider selection of items through Amazon. In comparison, ShopRunner is more focused on fashion and accessories. As a result, customers can find a more premium selection of clothing brands and luxury products on ShopRunner.

ShopRunner also doesn’t have any monthly plans, while Amazon Prime has a monthly subscription. However, ShopRunner’s yearly subscription is cheaper compared to Prime. Conversely, Prime offers extra services like Prime Video and Music.

ShopRunner is a better service for shoppers who primarily purchase clothes and accessories. It is also a service that focuses on long-term memberships and customer retention.

In December 2020, ShopRunner was acquired by FedEx.^[3] This has likely resulted in the company finding a number of synergies to reduce expenses and allowing FedEx to prioritize its own shipping options for ShopRunner customers.

While FedEx is a publicly traded company, it doesn’t publish separate figures for ShopRunner’s revenue. For that reason, it is hard to judge how successful the company’s business model is.

Even though FedEx doesn’t separate operating costs and revenue for ShopRunner, it is likely that the company is profitable. It has low operating costs and a proven revenue model. ShopRunner’s main expenses are platform development costs, staffing, and advertising.

How Does ShopRunner Make Money?

ShopRunner makes money from two different revenue streams. These are memberships and commissions.

ShopRunner is owned by FedEx, which does not break down the revenue it generates from subsidiaries. It is not publicly known how much the company makes from each individual revenue stream.

Memberships

ShopRunner charges $79 per year to customers who use its service. The company only has yearly membership plans, without any monthly subscription options. ShopRunner generates subscription revenue based on how many paying members it has.

Currently, it is unknown how many paid members are active on ShopRunner. The website received 755,600 visits in September 2022.^[4] Of this figure, 51.7% was direct traffic.^[5]

Commissions

When retailers partner with ShopRunner, they pay a commission on each order that is placed using ShopRunner’s expedited shipping option. The amount is calculated on a percentage basis.

However, there is no recent data on the percentage. Data from 2013 suggests that the commission is between 3% to 5% of order value, but this could have changed in the years since then.^[6]

ShopRunner Funding, Valuation & Revenue

ShopRunner is owned by FedEx (FDX), a publicly traded company on the New York Stock Exchange (NYSE). The company’s stock traded for just under $153 in October 2022, giving it a valuation of $39.7 billion.

Prior to its acquisition by FedEx, ShopRunner raised $115 million over two venture capital rounds between 2013 and 2018. Notable investors include August Capital, Alibaba Group, and American Express Ventures.^[7]

ShopRunner was acquired by FedEx in December 2020 at a price of $228 million.^[8] There is no public valuation data for the company prior to this purchase.

ShopRunner’s annual revenue is estimated to be $35.7 million.^[9] There is no way to verify this since FedEx doesn’t separate ShopRunner’s revenue in its annual reports. However, FedEx reports its financial results as a public company.

For the fiscal year of 2021, FedEx generated $83.9 billion in annual revenue. It had a net income of $5.2 billion. Which is an increase of 307% over the $1.2 billion in net income it had in 2020.^[10]

Year	Annual Revenue	Net Income
2019	$69.6 billion	$540 million
2020	$69.2 billion	$1.2 billion
2021	$83.9 billion	$5.2 billion

Is ShopRunner Profitable?

ShopRunner is likely profitable. While FedEx doesn’t release any details on the revenue of ShopRunner, its subsidiary, the company has a streamlined business model with low operating costs and reliable revenue sources. That likely means that it’s generating significant revenue.

FedEx is a profitable company and has been steadily increasing its net income in recent years. The company made $5.2 billion in profits in 2021. That represents a 307% increase over the $1.2 billion it made in profits in 2020.^[11] FedEx likely bought ShopRunner because it offered the company a number of synergies allowing FedEx to prioritize its own shipping services for ShopRunner customers.

Conclusion

And that’s how ShopRunner makes money. It’s a win for customers because they get to shop from all of their favorite online stores without having to pay for shipping and handling. It’s a win for retailers because they get more customers coming through their doors.

As you can see from our analysis above, we feel that ShopRunner has a strong chance of succeeding based on these factors:

A large number of potential customers are interested in paying for a membership program rather than paying shipping fees for every order.
A large number of potential merchants want their products featured on ShopRunner’s site.

As more and more people become aware of this new way of shopping online (and realize how much money they’re saving!), we think ShopRunner will continue growing its user base and merchant network exponentially over time.

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How Does M1 Finance Make Money? Business Model of M1 Finance

M1 Finance is a popular online fintech platform that offers automated investment advisor services to consumers.

M1 Finance primarily makes money via fees, interest, or other revenue from Invest, its investment product. The company also makes money from fees, interests, or other revenue for its other financial services, Borrow, Spend, and M1 Plus.

Founded in 2015 by Brian Barnes, M1 Finance aimed to disrupt the fintech market by offering transformative and accessible money management services. Brian Barnes came up with the idea when he realized that the fintech industry had become stagnant. He then created his own app that was modern, sleek, and packed with features.

From the start, automated portfolio management was one of M1 Finance’s key features. Because the platform is so accessible, it reached $1 billion in assets under management (AUM) by 2020.^{^[1]} Over time, the company launched new services like custodial accounts and smart transfers.

What is M1 Finance & How Does It Work?

M1 Finance is a hybrid fintech company that offers robo-advisory services and brokerage accounts for investors. It has over 80 uniquely tailored portfolios, each crafted by industry veterans and designed to cover a diverse range of investment strategies. The platform caters to both amateur and advanced investors by featuring a wide range of personalization options.

Investors who wish to take a more hands-on approach can pick and choose individual assets to invest in to create a customized portfolio which is then managed automatically by M1 Finance. On the other hand, investors who wish to spend a minimal amount of time within the app can let M1 Finance automatically manage their portfolios for them.

The company uses a pie-based model to represent investment strategies. Each asset occupies a slice on the pie. Users can create their own pie or download expert pies and merge them into their investment strategies. Slices on the pie can be stocks, Exchange Traded Funds (ETFs), Over the Counter (OTC) listings, and more.

Users assign target weights to each slice, which represent the holdings for that asset in proportion to the overall portfolio. A pie can contain other pies as slices. Each pie in M1 Finance holds up to 100 slices.

Friends on the app can share pies with each other. Every owner of an investment account on M1 Finance has their own pie. A single M1 Finance user can have up to five different investment accounts.

After a user has set the slice percentages, funds transferred to the portfolio are automatically allocated based on the percentage of the holdings for each slice. Users can easily see which assets are underperforming or overperforming their target weight. Slices that underperform shrink, while overperforming slices increase in size relative to the rest of the pie.

Slices can be edited or removed at any time. They can also be moved between different pies. M1 Finance will try to maintain slices at their original percentages by managing fund allocation.

M1 Finance claims to be a commission-free platform. It doesn’t charge users for basic operations like opening an investment account or making trades. However, users pay regulatory fees for trading stocks and ETFs.

These regulatory fees are charged by the Securities and Exchange Commission (SEC). A Trading Activity Fee (TAF) is also charged. Regulatory fees are usually measured in pennies and cents on most transactions.

M1 Finance also charges money on wire transfers, check requests, and transaction recalls like many traditional banks. It applies an inactivity fee of $20 to accounts that stay dormant for over 90 days.

In addition to its automated portfolio management and financial advisory services, M1 Finance also offers margin loans and credit cards. It also has a checking account called M1 Checking with a virtual Visa debit card. The checking account is insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC).

Investors who use M1 Finance’s loans and rewards cards can sign up for a Plus membership. It costs $125 per year and provides users with a multitude of benefits that apply to various services throughout the M1 Finance app. With the Plus membership, M1 Finance investors get access to smart transfers and custodial accounts.

Plus members can also trade during both AM and PM windows. Interest rates are dropped to 5% for margin loans, as opposed to 6.5% for non-Plus members. In addition, M1 Finance members also enjoy superior rewards on their credit cards.

Business Model of M1 Finance

M1 Finance attracts customers by offering an all-in-one fintech platform to investors. It also acts as a digital bank system for those who aren’t interested in trading immediately. By storing their funds in a checking account and generating interest, M1 Finance provides prospective traders with a secure and convenient launch platform.

This also adds value to the website and app by providing investment education. This is especially useful for novice traders who are still learning the ropes. Some customers want an explanation of how things work rather than just relying on the robo-advisor to do their trading for them.

Through M1 Finance’s automated investment algorithm, users can easily allocate cash to various assets in their portfolio. This is done on the basis of preset weights that are represented by slices in a pie chart. By automating the investment process, M1 Finance improves user productivity and helps with reliable profit generation.

As a result, users prefer to use M1 Finance over more basic investment platforms that require more manual work and a larger time commitment. M1 Finance encourages users to spend more by portioning all their investments into neatly organized portfolios. These portfolios can be custom-made, or downloaded from a curated list that is crafted by industry veterans.

M1 Finance also has a feature that allows users to automatically invest their cash balance. This keeps users invested in the M1 Finance ecosystem and helps them iterate on their profits. In addition to helping users make smart investments in regular markets, M1 Finance also facilitates crypto trading.

By introducing crypto to its platform, M1 Finance captures a market segment with sparse competition. Currently, there are very few robo-advisor crypto trading platforms. M1 Finance is able to leverage its existing experience and technology base from traditional investing and apply the same to crypto.

In addition to automated investing, M1 Finance also offers a digital bank account and credit card. It also has margin loans that provide a line of credit using the portfolio value as collateral. With margin loans, investors can increase their buying power and capitalize on market trends at the right time.

Diversifying its offerings allows M1 Finance to attract a wide customer base. It also helps ensure more stable revenue generation, since the company offers a wide range of services within every stage of the investment cycle.

M1 Finance’s biggest rival is Fidelity as they offer similar services. While Fidelity has robo-advisor services and a wide variety of portfolio management options, it isn’t as streamlined or intuitive as M1 Finance. Fidelity users get a less polished mobile app, which means they are restricted to a computer if they want the best experience.

Fidelity also focuses on a more hands-on approach to investment, while M1 Finance allows users to build a passive portfolio with automated funding. Users who want a traditional advisory experience from a brokerage choose Fidelity. In comparison, M1 Finance is a far superior choice for casual traders who want to grow their portfolio with a minimal time investment.

M1 Finance is a private company and does not release its financials. While the company is estimated to have an annual revenue of around $63.1 million per year, it also has considerable expenses. These include things like staffing, hosting, platform, and development expenses. Due to the lack of data on M1 Finance’s financials, it is unclear how much the company spends on these expenses.

How Does M1 Finance Make Money?

M1 Finance makes money from four different revenue streams. These are fees and other revenue it earns from its Invest, Borrow, Spend, and M1 Plus services.

As M1 Finance is a private company, details about how much revenue it generates from these different revenue streams aren’t public.

Invest

This is the part of M1 Finance that deals with investing. Users create a brokerage account and add funds to start trading. M1 Finance provides them with automated portfolio management and investment recommendations.

Revenue is generated from interest on brokerage cash, lending securities, and payments for order flow. M1 Finance lends out cash from the accounts of investors to banks who pay interest on it. The company also gets paid by market makers for bringing business to their exchange.

Borrow

By using their portfolio as collateral, investors can borrow money from M1 Finance. They receive a line of credit based on 40% of their portfolio value, with a minimum balance amount of $2,000. Margin loans provide greater leverage to traders by increasing their buying power.

In exchange for borrowing money, users pay interest to M1 Finance. The rates vary from 5% to 6.5% on margin loans.

Spend

Since M1 Finance is an all-in-one fintech solution, it also offers a digital bank. Users can open a checking account and receive a virtual debit card. Like regular banks, M1 Finance loans out the cash in a user’s account and receives interest in return.

It then splits this interest with the user. M1 Finance also gets money from interchange fees whenever a user makes a purchase with their debit card. This interchange fee is received by Visa who then splits a portion of it with the card issuer.

M1 Plus

Members of the M1 Plus program get access to better interest rates, PM trading windows, bonus rewards, cashbacks, and many other perks. While the first three months are free for new members, a yearly subscription to M1 Plus costs $125.

M1 Finance Funding, Valuation & Revenue

M1 Finance is currently a private company, and its financials aren’t available to the public. Right now, it is unclear what the company is valued at.

However, M1 Finance has raised $323.2 million over seven venture capital funding rounds. Notable investors include Chaifetz Group, SoftBank Vision Fund, Clocktower Technology Ventures, Left Lane Capital, and Coatue.^{^[2]}

In a July 2021 series-E funding round that raised $150 million, M1 Finance was valued at $1.45 billion.^{^[3]} Since then, the company has not had any public valuations.

Annual revenue for M1 Finance is estimated to be around $63.1 million.^{^[4]} But there is no official report to verify this. Given the recent upward trend in the fintech market, it is possible that M1 Finance could be making more than this figure.

Is M1 Finance Profitable?

M1 Finance is likely profitable. The company has very little overhead and likely employs a small workforce due to its mostly automated and online product. However, the company might have significant product development and advertising expenses that could affect its profit margins.

But given that the company has several reliable sources of revenue generation, it could be in a better place than some other startups. With global fintech revenue estimated to reach $188 billion in 2024, M1 Finance still has room to grow and expand into new markets.^{^[5]}

Conclusion

We hope you enjoyed reading this detailed analysis of how M1 Finance makes money.

At the end of the day, M1 Finance is a company that wants to make it easy for you to get your financial house in order. The company has created a platform that anyone can use regardless of their experience with investing. They offer investment products that are designed to help you grow your money and reach your goals.

They have been able to differentiate themselves from other competitors by offering what many call “commission-free approach”: low-cost access to portfolios with no minimum balance requirements, no account opening fees, no annual maintenance fees, and no originating fees for clients who choose to use M1 Finance’s line of credit option.

We know it can be challenging to understand the business model of a company like M1 Finance, but we’re excited that you’ve taken the time to learn more about them and how they operate.

If you have any questions or feedback, please don’t hesitate to reach out via email or Twitter (@Soocial).

Thanks again for reading!

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How Does Magic Eden Make Money? Business Model of Magic Eden

Magic Eden is a popular Non-Fungible Token (NFT) marketplace where users can buy or sell NFTs. It also functions as a primary marketplace, allowing users to mint NFTs.

Magic Eden primarily makes money by charging 2% fees for every transaction on their platform. The company also makes money from Magic Tickets.

Founded in 2021 by a group of four crypto entrepreneurs and software engineers, Magic Eden was intended to provide users with a safe and accessible Solana NFT marketplace. It placed a strong focus on its community from the start, and provided unique rewards to members who purchased its Magic Tickets.

Within a short period of time, Magic Eden became the largest Solana-based NFT marketplace. It gained popularity by hosting a wide range of NFTs and adding extra services such as blockchain games. In August 2022, Magic Eden became a multi-chain NFT marketplace by adding support for Ethereum.^[1]

What is Magic Eden & How Does It Work?

Magic Eden is a non-fungible token (NFT) marketplace built on the Solana blockchain. It is a platform where users can buy and sell unique pieces of digital art that are typically available in photo format. Since Solana uses a proof of history consensus mechanism, transaction processing speeds are very high on the network.

Simultaneously, transaction costs are much lower compared to a proof of work blockchain like the original Ethereum. The low transaction costs and high processing speeds make Magic Eden an excellent platform for buying and selling NFTs. Each NFT is unique and carries proof of ownership within a token in the Solana blockchain.

Creators of digital art can receive royalty payments on Magic Eden every time their work is sold to a new buyer. This is a characteristic inherent to NFTs, irrespective of the platform used to trade them. However, the use of a proof-of-history blockchain like Solana incentivizes more people to buy and sell NFTs due to the network speed and low transaction costs.

Magic Eden is classified as a secondary market since it hosts NFTs after they’ve been minted on the supplier’s website. The supplier’s website is the primary market. Users often may not have control over the specific NFT being minted on a primary market.

But it is also cheaper compared to buying the same NFT through a secondary market like Magic Eden. To provide additional functionality and stand out from other NFT marketplaces, Magic Eden has a launchpad section. Here, users can directly mint NFTs from newly launched collections.

Each collection on launchpad shows the NFT theme and price, along with the number of units being sold. Often, the creator’s website and social media accounts are linked in the launch page. There are NFTs for games, shows, web3 apps, and more.

Each NFT collection featured on launchpad has a timer showing the sale duration and time to launch. For creators, Magic Eden is the secondary marketplace of choice because of the massive liquidity potential that it guarantees. According to data posted by Magic Eden, the site accounts for 90% of daily traded Solana NFT volume.^[2]

It is also the best way for a creator to gain exposure for their brand, since Magic Eden gets as many as 10 million unique user logins each month. Magic Eden also boasts higher average session times, at 14 minutes per user.^[3] These numbers are in a different league compared to other web2 and web3 marketplaces, which is an indicator of Magic Eden’s higher engagement rates.

Magic Eden also helps NFT creators execute a cross-launch on both Ethereum and Solana at the same time. To get listed on Magic Eden launchpad, creators fill out an application form. Here, they enter basic information regarding their project and the network they intend to launch it on.

In addition to its marketplace and launchpad, Magic Eden also has a gaming section. Currently, the platform hosts over 35 games from various genres. Users can entertain themselves and win crypto rewards at the same time.

To get started on Magic Eden, users must first have a Solana compatible wallet. There are several decentralized finance (DeFi) apps that connect users to the Web3 and blockchain world. Magic Eden recommends Phantom wallet as an easy way for beginners to transact with the Sol token.

By using a crypto exchange such as Binance, owners of a Phantom wallet can fill their wallet with funds. Binance allows users to buy Sol using fiat currency. Once users have funds in their wallet, they can simply connect it with Magic Eden.

There is no need to create an account, nor does Magic Eden ask users for one. It is an inclusive platform, free to all. Anonymity is a huge bonus of using the Magic Eden marketplace, since it doesn’t associate purchases with names or identities.

Magic Eden supports both Solana and Ethereum for purchases. Some of the popular Solana wallets supported by the platform include Slope, Exodus, Brave, and Solflare. Ethereum wallet support includes MetaMask, WalletConnect, and Coinbase.

For users who are new to the world of Web3 and NFTs, Magic Eden also supports credit cards as a payment method. Users can switch from crypto to credit cards.

The details page also contains metadata, information about the creator, and market trends. Users can also view the creator royalty percentage and transaction fee percentage on this page. An NFT’s MoonRank and HowRare.is rank is displayed next to the title. These are ratings that help buyers understand the value of an NFT.

Business Model of Magic Eden

Magic Eden operates as both a primary and secondary market for NFTs. While the platform has no listing charges for creators, it takes 2% on every transaction. These transaction charges are separate from royalty amounts set by creators.

Since Magic Eden is the top NFT marketplace on Solana, it has no real competition. It offers users a very convenient means to research and buy their favorite NFTs, resulting in huge amounts of daily traffic. Magic Eden supports payments through both Ethereum and Solana wallets.

It even allows users to pay with their credit cards. By simplifying the process of purchasing an NFT, Magic Eden encourages users to spend more money on the site. It also adds value through the company’s launchpad section and gaming section.

Users spend more time on Magic Eden compared to other NFT marketplaces, because it has a wider variety of listings and more activities to engage in. There are games, auctions, launches of new NFTs from popular creators, and exclusive community programs.

Magic Eden also has its own collection of NFTs, called Magic Ticket. Funds from purchases of Magic Tickets go directly to the company. Users get various benefits like access to MagicDAO, which is a discord-based Decentralized Autonomous Organization (DAO).

In addition to NFTs, Magic Eden also acts as a host for crypto and web3 games. The platform hosts over 90% of all NFT gaming secondary trading volume. Magic Eden has processed $1.9 billion in secondary trading volume, with over 100K daily wallet connections from 22 million unique monthly visitors.^[4]

Magic Eden’s biggest rival is OpenSea, as they offer similar services. While OpenSea started out on the Ethereum network, it integrated the Solana blockchain in July 2022.^[5] This made the company a direct competitor to Magic Eden.

In terms of trading volume and market share on the Solana blockchain, OpenSea is dominated by Magic Eden. Magic Eden has 97.2% of the market transaction share with an intraday trading volume of 24,383. In comparison, OpenSea has 2.5% of the Solana market share with an intraday trading volume of just 623.^[6]

User onboarding is a streamlined process on both platforms with very few steps. However, Magic Eden supports a higher number of Solana wallets. For creators, OpenSea charges a slightly higher transaction fee at 2.5% of the sale price. This makes Magic Eden a slightly more attractive alternative since it charges 2% per sale.

Magic Eden is a private company and does not release its financials. While the company is estimated to have an annual revenue of around $13.3 million per year, it also has considerable expenses.^[7] These include things like staffing, hosting, platform, and development expenses.

Due to the lack of data on Magic Eden’s financials, it is unclear how much the company spends on expenses.

How Does Magic Eden Make Money?

Magic Eden makes money from two different revenue streams. These include transaction fees and Magic Tickets.

As Magic Eden is a private company, details about how much revenue it generates from these different revenue streams aren’t public.

Transaction Fees

Whenever an NFT is sold on the Magic Eden marketplace, the company charges a 2% transaction fee. This is equal to 2% of the sale value, and is separate from the royalty fee.

Magic Eden doesn’t charge any listing fees to creators, and honors their royalty contract. By charging a 2% fee on every transaction, Magic Eden generates significant revenue since many NFTs sell for large amounts of money.

Magic Tickets

These are NFTs created by Magic Eden. They are used as a means to foster community interaction. Magic Ticket users enjoy unique benefits, like access to the exclusive discord-based DAO.

Customers can purchase three different tiers of Magic Tickets from the marketplace. These are Normie, Degen, and OG, in the order of least to most expensive. Each ticket tier has a fixed floor price and total supply.

Magic Eden Funding, Valuation & Revenue

Magic Eden is currently a private company, and its financials aren’t available to the public. Right now, it is unclear what the company is valued at.

However, Magic Eden has raised $159.5 million over three venture capital funding rounds. Notable investors include Paradigm, Greylock, Electric Capital, 44 Capital Management, Lightspeed Venture Partners, and Sequioa Capital.^[8] In a June 2022 series-B funding round that raised $130 million, Magic Eden was valued at $1.6 billion.^[9]

Annual revenue for Magic Eden is estimated to be around $13.3 million.^[10] But there is no official report to verify this. Given the recent upward trend in the NFT market, it is possible that Magic Eden could be making more than this figure.

Is Magic Eden Profitable?

Magic Eden is likely profitable. The company has very little overhead and likely employs a small workforce due to its mostly automated and online nature. However, the company could also be facing financial difficulties in 2022 due to the downturn in crypto and NFT markets. That’s led many investors to stop actively trading or investing in NFTs.

It also has multiple reliable sources of revenue generation. The global NFT market size is estimated to reach $211.7 billion in 2030, so Magic Eden still has room to grow and offer new services.^[11]

Conclusion

So there you have it! Magic Eden is a marketplace for NFTs on the Solana blockchain that’s taken the crypto world by storm. It’s clear that Magic Eden has a strong business model and is well-positioned to thrive in the future. But what does this mean for investors?

If you believe Magic Eden will continue to grow its user base, then the platform’s current valuation seems reasonable. However, if you think Magic Eden will lose users to other NFT marketplaces—or if you think the idea of NFT marketplaces is flawed—then you should probably steer clear of Magic Eden until you can find out more about how it plans to address these challenges.

One thing is certain: Magic Eden has made an impact on the blockchain industry and will continue to do so as long as it continues to execute its strategy.

Thanks for reading—and have a great day!

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How Does CarMax Make Money? Business Model of CarMax

CarMax is a popular used-car retailer. It also offers auto loans with flexible credit requirements and affordable down payments.

CarMax primarily makes money via used vehicle sales. It also makes money from wholesale vehicle sales, extended protection plan (EPP) revenues, third-party finance fees, service revenues, and other revenues.

Founded in 1993 as a subsidiary of Circuit City, CarMax was created as a test platform to see if the big box retailer formula worked with used vehicles. The company didn’t make a profit until 1999 and split off from Circuit City in 2002.^[1] By 2005, it had 65 stores across the country.

During a decade long span from 2006 to 2016, CarMax grew its revenue from $6.26 billion to $15 billion. It also expanded from 70 stores in 34 states to 160 stores in 37 states.^[2] CarMax’s largest stores can have over 500 vehicles on their lots.

What is CarMax & How Does It Work?

CarMax is a used car retailer that also offers automobile financing. The company is one of the largest US automobile retailers both in terms of sales volume and revenue. In 2021, CarMax sold over 751,000 used vehicles to retail consumers.^[3]

It has 238 stores nationwide, and boasts the largest used car inventory of any automotive retailer. In exchange for a one-time non-refundable fee, users can ship vehicles to their local CarMax dealership for a 24-hour test drive. If they aren’t satisfied with the experience, there is no obligation to buy the vehicle.

CarMax gives users access to vehicle stocks from all over the country. Hence, they can access a much wider range of makes and models compared to the local used card dealership. CarMax stocks every type of light vehicle from sedans to SUVs.

Every vehicle sold on CarMax comes with a basic 30-day money-back guarantee. There is also a 90-day limited warranty on every sale. CarMax checks every single vehicle with its unique 125+ point inspection process.

This inspection process includes checks for flood damage, crash damage, and vehicle history. Any vehicle that doesn’t meet CarMax’s rigorous quality standard gets sent to their wholesale auction catalog. Here, dealerships compete with each other to score the best prices on batches of used cars.

During the inspection process, vehicles are checked thoroughly- both internally and externally. Engine components, brake lines, tires, frames, electrical equipment, and all associated systems go through a comprehensive inspection process. Worn parts are replaced and CarMax spends an average of 15 hours reconditioning each vehicle before it is certified for sale at a retail location.

By the time a car is ready to be sold, it feels close to brand-new. Scratches, dents, discoloration, and dimples on the body are fixed. Interiors are cleaned, and CarMax even installs new upholstery if existing items are excessively damaged.

Since CarMax’s in-house refurbishing process is highly automated and supervised by experienced professionals, the defect rates are extremely low for vehicles sold to retail customers. CarMax provides a 90-day or 4,000 mile warranty on every one of its retail vehicles. That is a demonstration of the trust this company has in its refurbishing process.

Customers choose CarMax over traditional used car retailers because of its no-haggle policy, transparent pricing, integrated financing, and diverse inventory. Vehicles that are typically not popular within a certain state or county can be easily found on CarMax. Once a customer has found a vehicle that they like, they can have it shipped to their location.

CarMax also allows customers to reserve a vehicle up to seven days in advance for a test drive or appointment. If a customer visits their local CarMax dealership and finds a vehicle they like at the physical location, they can take it for a free 24-hour test drive.

If the vehicle is on the CarMax app but not in the local dealership, customers can choose to have it shipped over. CarMax is partnered with a third-party logistics company for this service, so it charges an upfront non-refundable fee to ship the vehicle. However, the customer isn’t obligated to purchase a vehicle even if they have it shipped from the other side of the country.

While customers can certainly complete the entire purchasing process through their app, they can also visit a local CarMax dealership. Processing times are extremely low, and typically get completed within one to two hours.

If a customer lives within 60 miles of a CarMax store, they can have the vehicle delivered to their home for free. CarMax offers financing solutions within the app. Customers can also obtain financing from their preferred lender or pay via cash.

CarMax’s financing is done via CarMax Auto Finance — which is a division of the main company. While the interest rates are slightly higher compared to traditional credit unions, CarMax offers loans to customers with poor credit. This makes the company’s in-house financing solution an excellent choice for buyers with low credit scores.

The approval process on CarMax’s auto finance is very quick. The company typically checks a customer’s credit and generates a finance plan within minutes. Like its vehicle pricing, the loans are also covered by a no-haggle policy.

This means that customers get exactly what they see. There are no hidden charges. Customers can also trade in their current car. When a customer approaches CarMax with a vehicle for sale, they receive an appraisal within an hour.

The offer given by CarMax is valid for seven days. CarMax also accepts leased cars, and contacts the leasing company to provide a payoff quote. Customers can get an online offer, but the final value of their car is decided at a physical location through appraisal by a certified technician.

Business Model of CarMax

CarMax functions like a supermarket for vehicles with an in-house logistics network. The proprietary software used by CarMax generates optimal prices for vehicles sold by customers. The company’s comprehensive refurbishing program allows it to sell vehicles at higher prices compared to traditional used car dealerships.

Because there is no haggling or hidden fees, customers often prefer CarMax over traditional used car retailers. Even if the price is higher, they get a much more streamlined buying experience. There is no arguing over the price, since it is fixed, customers get exactly what they see on the app.

The car comes with an official certification from CarMax that guarantees zero issues with critical systems such as the engine, brakes, tires, and frame. If a customer is not satisfied with their purchase, CarMax offers a full refund up to a period of 30 days from the date of purchase. Since the paperwork is completed within one to two hours, customers spend minimal time interacting with sales executives and managers.

CarMax also offers a much wider range of vehicles compared to traditional dealerships, because it operates an interconnected national marketplace. The company gets its vehicles from rental services, auction houses, individual customers, and various other sources. Its business model relies on a constant stream of vehicles into the platform to provide more options for potential buyers.

To maximize turnover, CarMax uses an AI-powered algorithm that decides which makes and models the company needs based on market dynamics in specific locations. This algorithm also decides on the best payoff price for cars that are purchased by CarMax. Because there is no lengthy appraisal process, customers prefer selling their old vehicles to CarMax.

Sellers are given a quote within minutes when they apply through the online app. An on-site appraisal usually results in a price that is similar to what they were quoted through the online application. This transparent selling process strengthens customer trust, resulting in repeat transactions from the same CarMax user over a period of several years.

CarMax also sells to wholesale buyers such as dealerships. A proprietary software assesses the cost of repair for each car. Any unit that is deemed too expensive for repairs is usually auctioned off through the company’s online auction platform.

To minimize refurbishing costs, CarMax operates its own centralized repair centers. Through the use of automation and smart logistics, the company reduces operational costs and generates higher profit margins on each car it sells. Local car dealerships struggle to provide a similar level of quality and consistency, since they don’t have the same scale or technological base.

By offering in-house financing solutions via CarMax Auto Finance, the company adds further value to its business model. These loans typically have a slightly higher rate of interest compared to loans offered by banks. Customers use this service for its flexible credit requirements which allows them to get quick approval for a loan despite poor credit.

Through its loan services, CarMax turns visitors into buyers. It builds a long-term relationship with each customer, encouraging them to make future vehicle purchases through CarMax. Even during periods of economic stagnation or volatility in the automotive market, CarMax manages to make steady revenue thanks to its financing services.

CarMax operates in the middle market of used vehicles. It focuses on vehicles that are between 0 to 10 years old. And the pricing for these ranges between $11,000 on the low end, to $37,000 on the high end.^[4] CarMax also sells more luxury products.

These include sports cars such as Camaros, Mustangs, and even Porsches. CarMax makes big profits on these rare items since it pays less than the fair market price to the seller.

Sports cars are a bigger liability, and less likely to sell. But when they do, the margins are very large. CarMax is one of the only used car retailers that allows a customer to view and order a sports or luxury car from any corner of the country.

In 2021, the average selling price of a used vehicle within the United States was $26,700.^[5] CarMax capitalizes on the middle and upper segments of the market, maximizing its profit margins.

CarMax’s biggest rival is Carvana as they offer similar services. Carvana is more focused on the online aspect of buying and selling used cars. The company has fewer physical locations compared to CarMax, and boasts a 100% automated car buying experience.

Carvana is also famous for its unique car vending machines. These available at a few select locations. Customers can visit these vending machines, insert a special token, and watch their car get delivered in real-time. Carvana is for people who want a unique, futuristic buying experience.

With CarMax, customers get to drive in their vehicle before they buy it. In comparison, Carvana offers 3D virtual tours of each vehicle on its online app. CarMax is better for customers who want a more traditional buying experience.

CarMax has significant operating costs. These include costs of sales, administrative expenses, interest expenses, advertising expenses, and salaries. In 2021, the company spent $2.7 billion on operating expenses.^[6]

Most of this was selling, general, and administrative (SG&A) expenses, which amounted to $1.9 billion. Interest expenses made up $860 million.^[7] CarMax aggregates employee compensation and benefits, store occupancy costs, advertising, and overhead costs into the SG&A category.

Compensation and benefits cost the company $1 billion in 2021. Store occupancy costs were $399 million. Advertising costs were $217 million while overhead costs accounted for $260 million.^[8]

How Does CarMax Make Money?

CarMax makes money from six different revenue streams. These are the company’s used vehicle sales, wholesale vehicle sales, Extended Protection Plan (EPP) revenues, third-party finance fees, service revenues, and other revenues.

In 2021, CarMax earned $18.9 billion in total revenue.

Used Vehicle Sales

This is the primary business and revenue stream of CarMax. The company buys used cars from individuals, and sells them back through after refurbishing. CarMax charges slightly more money for used cars compared to local dealerships.

However, customers are willing to pay this price in exchange for convenience and quality assurance. In 2021, CarMax made $15.7 billion from the sales of used cars.^[9]

Wholesale Vehicle Sales

If a car doesn’t meet CarMax’s quality standards for retail sales, it is transferred to its wholesale auction program. After registering for the auction, dealerships place their bids through an online process.

CarMax offers free shipping for the cars sold through their auction. In 2021, the company made $2.6 billion from the sales of wholesale vehicles.^[10]

EPP Revenues

Extended protection plans include service plans and guaranteed asset protection (GAP) coverage. In the event of a crash or theft, GAP covers the difference between the value of the car and the amount owed in the loan. Extended service plans offered by CarMax last up to five years.

These plans cover essential components like the engine, transmission, electronics, suspension, and cooling system. CarMax also includes emergency roadside assistance. In 2021, CarMax made $412.8 million from EPP revenues.^[11]

Third-Party Finance Fees

CarMax is partnered with third-party finance providers who evaluate customers applying for auto loans. Providers pay a fee to CarMax on a per-contract basis.

CarMax also pays the providers a fixed fee. In 2021, CarMax lost $39.6 million on third-party finance fees.^[12] However, this has been a source of revenue for the company in the past.

Service Revenues

The extended service plans offered by CarMax don’t cover every component. Regular maintenance parts like batteries, brakes, wheels, and wiper blades must be purchased separately by the customer. Tire replacement costs during emergency roadside services are also paid for by the customer.

Service revenues refer to the money made by CarMax from parts sales and labor charges. In 2021, the company made $92 million from this revenue stream.^[13]

Other Revenues

Apart from used vehicle sales to retail consumers and dealerships, CarMax also had a franchise business for new vehicles. It shut down this business segment in 2021. The company made $102.6 million from the sales of new vehicles and accessories in 2021.^[14]

CarMax Funding, Valuation & Revenue

CarMax (KMX) is currently a public company trading on the New York Stock Exchange (NYSE). It made its debut on the NYSE in February of 1997 with an introductory stock price of $20.^[15] As of October 2022, the company’s stock traded for just over $63 at a valuation of $10.1 billion.

The company raised $98.2 million through a post-equity funding round in 2021.^[16] Since then, CarMax hasn’t gone through any public funding rounds. This indicates that the company is likely making more than enough money to sustain its growth and development for the foreseeable future.

CarMax has been profitable for a long time. In 2021, the company made $18.9 billion in revenue. It also had a net income of $746.9 million.^[17]

Year	Total Revenue	Net Income
2019	$18.1 billion	$842.4 million
2020	$20.3 billion	$888.4 million
2021	$18.9 billion	$746.9 million

Is CarMax Profitable?

CarMax is profitable and has been for a long time. It made $18.9 billion in revenue in 2021 with a net income of $746.9 million. The company sold over 750,000 cars to retail customers in the fiscal year of 2021, which was a 9.7% increase compared to 2020.^[18]

However, in 2021, gross profit per unit dropped by 3.3% to $2,113 due to an increase in delinquencies and the closure of retail locations.^[19] Despite this, the company managed to stay profitable due to its efficient logistics and proprietary pricing algorithms. With used car sales volumes trending upwards, CarMax is likely to increase its profits in the near future.

Conclusion

So there you have it! CarMax is a company that has mastered the art of both buying and selling used cars, and they do it with a “no-haggle” policy that ensures all customers are treated fairly.

CarMax has been able to expand rapidly over the years and has been able to do so because it has focused on providing customers with high-quality used vehicles at fair prices. This strategy has worked well for them thus far and will continue to be successful as long as they maintain their focus on providing customers with great experiences when buying cars from them.

CarMax has proven that it can be a successful business model, but it’s not the only one out there. There are other companies that offer similar services to CarMax, and they’re proving just as successful. This means that you have options when you’re considering investing in a used car retailer business.

If you’re interested in investing in a used car retailer like CarMax, we recommend doing your research and learning as much as you can about how these businesses work before making any decisions. We also recommend speaking with an investment professional who can help you find the right investment opportunity for you and your goals.

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