Buying an existing business can prove to be a profitable endeavor. Whether you are looking to buy an online store because you are passionate about selling a particular product or you simply want to turn a profit, purchasing an existing eCommerce business means you get an already established store that comes with customers, negotiated supplier deals, and guaranteed traffic to the store.
So, if building a business from scratch isn’t your go-to method as there are many uncertainties, buying an established eCommerce business is the right choice for you. However, if you aren’t that experienced in this field, read on while we cover aspects that should be considered before making an investment.
Research is key
As with every investment, you want to know why and where you are putting money on the table. First, you need to determine why the business is being sold. Secondly, you have to ask yourself whether a purchase is financially sustainable at this particular moment. Next, raise the question of whether the product is just a fleeting trend and consider its seasonality. And finally, avoid gimmicks and stick to the facts.
Due Diligence
Once you go over the budget process, it’s time to buy the business. As it stands, eCommerce is booming and Amazon is leading the numbers with more than 729 billion dollars predicted in revenue for 2022. As a result, if you decide to buy Amazon business assets, you can’t go wrong.
But, prior to acquiring a business, you need to go through the due diligence phase, which includes the following key metrics:
- Product Reviews;
- Product Ranking;
- Seller Rating;
- Inventory Performance;
- Fulfillment Performance;
- Conversion Rate.
You can use various analytic tools to see whether the business can back up its claims with numbers and that your investment won’t go down the drain. A good way to get the best out of a deal is to hire a broker. This isn’t to say that you can’t buy a business through a private sale; nevertheless, a broker will work to ensure that both parties are satisfied.
Where does the traffic come from
As mentioned above, reputable analytic tools will help you understand the nature of the business that piques your interest. You’ll want to check the traffic trends and find out where all the traffic is coming from and then see the growth or the dips in the last few months.
Furthermore, make sure that the eCommerce website hasn’t received any search engine penalties and look for any worrying spikes of traffic. If there are any spikes, ask for explanations or verifications of where they came from.
Request financial reports
Don’t hesitate to ask for financial reports as it’s your right to do so. No buyer wants to be in the position of being a victim of padded stats. Go through the reports and look for any hidden or undisclosed payments. If found, ask that they be disclosed, as you don’t want a business built unoriginally.
Storefront design
Inquire about how the seller used to run things and whether they used freelancers or full-time employees. Ask how often they updated the blog, whether they used some sort of marketing or social media for promotion. Get a firm grasp of how they treated the customers and what you need to do to improve the customer service.
If you are experienced with managing a business then that’s great, but if not, outsourcing to someone that knows the trade quite well is always an option on the table.
There’s always room for improvement
Just because a developed business is in your hands, that doesn’t mean that the work is over. Think of new fun ways to make your website user-friendly and more accessible. See whether business costs can be lowered and how. Take a glance at the current state of your company’s SEO aspect.
If a product isn’t selling that well, maybe it’s time for rebranding or adding new twists to it. What matters the most is that there is always room for improvement that can lead to better sales.
If you have a pre-existing business that is similar to the newly acquired one, maybe it’s a good idea to merge them and create your niche.
Final thoughts
Investing in eCommerce is always a good idea if you have the know-how. Read carefully as many aspects can make or break your journey in this field. Once you buy the business, it’s important to never stop building on the pre-existing success so that the sales never stop racking up.
