In a world full of businesses both online and offline, it is no longer a prerequisite for an entrepreneur to start their next online eCommerce business from scratch. Many entrepreneurs may have a unique vision and therefore are willing to invest the time, money and develop their skills to build up a brand, but there is another way.
Today, many online business and eCommerce store owners fast forward through the formative years of building a brand and jump straight into the eCommerce market by purchasing a successful eCommerce website, taking it over and calling their own. In fact, in 2020, there are more eCommerce sites dedicated to the inception-like concept of trading online business than ever before – eCommerce for eCommerce is thriving!
When buying an online business, you can mitigate the time and knowledge needed to start a business. Skipping past tasks such as inventory sourcing, effective user experience development, and customer generation is worthwhile if you have the capital.
When the legwork is already done, and the business is up and running, chances are all the kinks of a new online business are ironed out. Systems have been put into place, the customer base has been established, and products have been sourced. Online assets are becoming increasingly more worthwhile, and if managed properly, can quickly provide a positive ROI.
However, like buying any business, investing in existing eCommerce sites is never easy. While some offers may look like an excellent investment on the surface, there is always a chance there are some minor (or major) issues hidden beneath the surface.
Depending on the site, it could be bound to existing systems that are inadequate and difficult to evolve, and depending on the site’s performance, the upfront investment will affect your risk tolerance.
It can be easy to get caught up in endless lists of potential eCommerce businesses to invest in, and it can be easy to get lost in a sea of useless information and aspirational sales pitches.
Therefore, any potential eCommerce entrepreneur should be aware of what to look out for when looking to invest in existing eCommerce businesses online.
Ignore Pitches and Stick to Facts
It’s pretty easy to be wowed by fancy pitch presentations and aspirational speeches by those selling their eCommerce business. But as the saying goes, if something looks too good to be true, it usually is.
Instead of working in “what if’s”, skip straight to the facts and figures. Data on net income, profit margins and operational costs are key, as well as what true potential there is for growth. Ignore phrases like “you can double income if you just do this” – if it were that easy, the online business owner would have done it already.
Is it Sustainable?
Before buying any eCommerce business, do your research into what kind of demand there is for the product or service, and how long that demand will be maintained. Niche products that are all the rage now often go out of fashion as fast as they appear, so make sure to conduct adequate market research before any purchase.
Hot Tip: Forget impressive gross merchandise volume (GMV) and focus on actual profit. An online site that turns over £2 million a year may still only make an annual profit of under £10,000.
Focus on Developability
When looking at eCommerce websites, it’s important to understand how it can be developed and evolved in the future. Many eCommerce sites may look stunning on the front-end but are a mix-match of plugins and features that could break at any moment or offer no space for development.
Employing an experienced website developer to review the back-end and offer their impartial advice on the quality of the site and/or how efficient its processes are can help to determine the possibility of business development within the current platform.
If there are crucial elements that prohibit development, a whole new website may be created. If this is the case, then professional website development agencies such as Myk Baxter Marketing can provide guidance on what is needed to achieve your vision. With this information, you can barter down a price or turn to another seller to save the hassle.
Although far from an exhaustive list, these are a few tips for anyone starting to look into buying an existing eCommerce business. Digital marketing and website development experts like Myk Baxter Marketing can provide essential insights into the back-end and the developability of an eCommerce website. Through audits designed to highlight the good and the bad in any eCommerce website, MBM offer comprehensive solutions that can mean the difference between stagnation and success in the busy world of online eCommerce sales.