It wasn’t too long ago that retailers and other stores were competing to have brick and mortar businesses, or a store in a mall. Now, because of the increasing availability of on-demand shopping and a massive pandemic, e-commerce has been gaining lots of momentum and popularity whereas malls are on the decline. In 2021, consumers around the world spent nearly $5 trillion shopping online.
The impressive figures, ease of use, and lower costs are just a few of the reasons why so many people and businesses are switching gears to focus on e-commerce. If you are looking to get your piece of the e-commerce pie, then read more as we go into detail about things to consider when venturing into this lucrative world.
Buy or Build?
The first question to ask is whether you want to buy or build an e-commerce store. They are easy to set up using platforms and services such as Shopify, Wix, and Squarespace where most of the heavy lifting is already done for you.
If you build it, there is no guarantee that they will come. Building a site has quite a few pros and cons. Starting from scratch is great if you have an idea in mind. When starting fresh, the capital to start off is a lot lower than purchasing an established e-commerce business.
If you have built this business yourself and require printers, manufacturers, or some type of supplier, then likely you will have a longer standing history with them. Not to mention that you will have a greater feel for patterns and trends in whatever the store’s specialty is.
Because an e-commerce business is still a business, you won’t necessarily see profits over night. The same goes for finding consumers, customers, or an audience; it takes time to grow.
An important metric to pay attention to is traffic and clicks on the site, so establishing a healthy baseline for your fresh e-commerce business could prove to be difficult to measure early on. There also are supply and storage issues that can come up and end up costing you money.
Buying an already established e-commerce business comes with it’s own fair share of ups and downs. When buying, it is almost like a guarantee that you are making money, assuming that the business was already flourishing.
It saves a lot of time and headache of having to create and figure out the logistics of the whole operation. Unlike building an e-commerce store from the ground up, you will already have a following and all the metrics that you need to know if expanding and growing is one of your goals.
There are only a few downsides to buying an already operating e-commerce store, but they can be daunting. The first issue is the initial cost. If a store is rather successful, then it can be expensive.
If you’ve bought it, then expect to have to take time in order to figure out the systems and inner workings of the business as well.
Buying an e-commerce store is kind of like buying a used car in some respect. When buying a preexisting business, there are five essentials to pay close attention to so you have a better idea of what you are getting yourself into.
Price Window
To make sure that you are getting the best deal when buying an e-commerce site is checking the pricing window. The pricing window gives you a look into the past financial activity for transparency sake.
This helps to predict any issues that come up, or trends over the period of time that they are showing. Mostly these glimpses into the business are either from the previous three, six, or twelve months. Obviously, the farther back you can see, the better.
How Old Is the Website?
Acquiring a slightly older and more established e-commerce site is what a lot of buyers prefer to do. These sites can provide a trove of information and metrics that newer businesses might not have figured out.
They also will likely have a steady influx of cash and followers that is accounted for and supporting the business.
Traffic
Traffic to an e-commerce site is important. By looking at the metrics, you can determine whether people find the business through paid advertisements, social media posts and links, or searches. It’s ok if they aren’t balanced, but it gives the buyer insight into how they can further grow or improve the business.
One simple way that some e-commerce sites try to attract a bit of traffic is by including a blog. By harnessing the power of SEO, this can be a very cost effective strategy. Not all use this method, but it is a great way to reach more potential customers.
Google and Facebook ads are an easy and, if done right, very cost effective way that e-commerce sites get traffic. These use a system called “pay per click,” which means that you only pay for ads when a user clicks or interacts with them.
This method of advertising also gives a lot of insight into the target audience that the business is trying to reach.
Arguably the cheapest and most cost effective way that businesses and entrepreneurs will try to drive traffic to their website is using social media. It is free to use and post and have a presence on, but using the targeting ads feature can be an extremely powerful tool.
If the e-commerce site that you are considering doesn’t have a social media account set up, it’s not a big deal. If you lucked out and they have a large following, then you potentially struck gold.
Reviews
Pay attention to the reviews and ratings from customers. Buying an e-commerce business with good reviews and reputation will help convert clicks into sales, whereas negative reviews truly tarnish the image and opinion of the brand. Do yourself a favor and try to make sure that the e-commerce site is viewed favorably, instead of having to overhaul its image.
Mailing List
Mailing lists might seem a bit outdated, but they are extremely valuable. If the business has collected email addresses, then growing and reaching out to customers is that much easier. You can use the emails of past and current customers for general or direct marketing campaigns to entice them to make more purchases.
Email blasts also provide you with valuable information such as how many people opened the message, how they interacted with it, and how many of those emails were converted into sales.
Where to Buy
Buying an e-commerce site sounds easy, but you might not know where to look for them. Fortunately there are a number of marketplaces and outlets that have listings, also known as brokers. You could also go the private route, but that can be rather risky.
Website Brokers
As mentioned before, there are a ton of websites that specialize in selling websites, domain names, and e-commerce websites. Sites like Empire Flippers, Flippa, and MicroAcquire are some of the most well known brokers. When dealing with a broker, they often charge the seller a commission fee once the sale is final. Some brokers also have done a bit of the research for you as far as how much money the e-commerce business makes annually and other metrics.
Private Sellers
Buying an e-commerce site through a private seller is risky. Not to say that all private deals shouldn’t be trusted, but there is always the chance that the details were fudged and now you are stuck.
If you trust the seller and have gone over the numbers and are confident that this will be a successful venture for you, then buy away; otherwise, buyer beware.
With the information in the article above, you should be better informed about purchasing an e-commerce business. Whether you want one as a side hustle or as your main source of income, there are a lot of different factors to account for. Do your homework and research and make sure that the business is something that will make you money, not lose it before reaching for your piece of the e-commerce pie.