Home Categories Design Tutorial

Four Tips for Buying an Established ECommerce Store

1.0/5.0 (1 votes total)

Harry Trott
October 20, 2017

Harry Trott
Harry Trott has written 9 articles for WebKnowHow.
View all articles by Harry Trott...

ECommerce makes up for more than ten percent of the top one million websites on the internet today. The sustainability of online retail makes eCommerce one of the more lucrative business opportunities for aspiring entrepreneurs. But like many potentially profitable ventures, valuing an online store is tricky. This is because the gross revenue does not always tell the whole story and factors like margins, sources of traffic, and customer loyalty can play a big part in determining the worth of the website. In this article, we take a look at four tips that can help a prospective buyer in their purchasing decision.

Avoid businesses that cannot be expanded

Fidget spinners have taken off exponentially over the past year. However, there is no guarantee that the popularity of these toys are here to stay. It is not a bad idea to consider buying an eCommerce store that exclusively sells fidget spinners. But make sure that your business could potentially diversify at a later stage in case the popularity of the core product goes down. In other words, do not invest in a site that restricts itself to one product category (like fidgetspinners4u.com).

Do not trust traffic and revenue numbers blindly

Website traffic and revenue plays a major role in determining the value of a website. Consequently, it is not uncommon for sellers to grossly exaggerate their traffic and revenue figures. Make use of trusted third party marketplaces like Exchange by Shopify to verify the claims made by the seller. However, this is still only one part of the overall auditing process. As a buyer, you have the right to request access to the website’s analytics backend in order to evaluate the source and quality of traffic before you can validate the numbers claimed by the seller.

Vendor agreements

A lot of eCommerce stores operate on wafer-thin margins. As a result, vendor pricing agreements are extremely critical to the health and success of the business. An agreement to sell an eCommerce site should therefore absolutely include all pricing agreements as part of the deal. In the absence of this, the new owner of a site may end up having to establish completely fresh agreements that are not only a waste of time and resources, but may also potentially erode margins.

Look for marketing gaps

Buyers looking for established eCommerce sites tend to prefer properties that are completely set up. The idea is that purchasing such a site maximizes your earnings and thus offers good ROI. While there is no doubt that you need to be looking to buy websites that are well-established, it is a good idea to invest in sites that have a few gaps when it comes to marketing. For instance, a website that does not have a good social media presence provides a clear method to beat projected revenue through investments in this marketing channel. This way, it is possible for a buyer to command a lower purchase price and double down on their returns through investments in channels that have not yet to be targeted.

Buying an eCommerce website can seem exciting to a first time buyer. However, there are a lot of pitfalls that one must avoid in order to find the right site at the right price. The tips provided here in this article should help a buyer discover those sites that are truly worthy of purchase and more importantly help them avoid listings that are unworthy.

Add commentAdd comment (Comments: 0)  



Related Resources

Other Resources