Hidden bargains at the B2C garage sale

Not too long ago, the retail e-commerce sector, known generically as the B2C space, was white hot. Based on the overnight success of such B2C companies as Drugstore.com (Nasdaq: DSCM) and e-Toys (Nasdaq: ETYS), at one point last year it seemed as though just about everyone in the world wanted to start their own B2C business.

Problem is, just about everyone in the world did start their own B2C business and what was once a land of limitless opportunity, quickly became a brutal and highly competitive battleground.

For investors, this sea change in sentiment towards the B2C market has resulted in an almost wholesale collapse of B2C valuations. As it currently stands, the average B2C stock has declined by almost 35 percent in the last 3 months and almost 60 percent of B2C stocks are now within 15 percent of their 52-week low. Even Amazon.com (Nasdaq: AMZN), the sector's poster child, is off almost 40 percent from it's 52-week high.

What's more, the revenue multiples of most B2C stocks (their market capitalizations divided by their projected revenues), have declined even more dramatically with some spaces, such as children's toys, going from average revenue multiple of around 20 to 25 times 2000 revenues, down to 6-8 times revenues in the space of just a few months.