Home – New Forums Selling online Buy an existing ecommerce business?

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  • #997116
    Steve T
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    Hi

    Anyone think it is worth buying an existing online business?

    I think there is a lot of things to look out for but if the seller can demonstrate a solid business and sales history (rather than a newly created business website) would it have less risk/benefit rather than going through the process of staring from scratch?

    Interested to read your thoughts and especially anyone who has done this.

    Thanks
    Steve

    #1210472
    John Romaine
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    Absolutely, especially if it will save you time.

    You’ve got to have someone look at it that knows what to look for though, otherwise you could just be buying problems.

    #1210473
    Adam Martelletti
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    [USER=76820]@Steve T[/USER], There are a lot of things to consider when it comes to e-commerce depending on what model they have setup if its drop shipping, You need to make sure that the suppliers are happy to continue with you once taken over.

    Sales history is one thing but you want to be looking at the ROI from each sale. If none of the sales are recurring customers or coming in through organic ranking/content/listing and all sales come through from paid advertising I wouldn’t touch it and just build your own from scratch.

    It’s very easy to set up an e-commerce store run sales with very little to no profit and flip it as an e-commerce store if you’re paying less than $50k I would say it best to invest your money into your own built from scratch.

    I’m far from an e-commerce expert but I have built and sold 2 in the past and that my opinion.

    #1210474
    John Debrincat
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    Steve T, post: 251214, member: 76820 wrote:
    Hi

    Anyone think it is worth buying an existing online business?

    I think there is a lot of things to look out for but if the seller can demonstrate a solid business and sales history (rather than a newly created business website) would it have less risk/benefit rather than going through the process of staring from scratch?

    Interested to read your thoughts and especially anyone who has done this.

    Thanks
    Steve
    Hello Steve,

    Buying and selling an ecommerce business is the same as buying and selling any business. Don’t let the fact that it is only online confuse the issue. It is important to understand why the owner is selling.

    Buying an existing business that is in good condition can have its advantages. However you need to undertake full due diligence to ensure that there are no hidden issues.

    Part of the sale should be associated online assets like domain names, emails and websites / online stores. But that should be true in the sale of any business but often overlooked.

    Also if it is a company then are you buying the company or just the business?

    When buying a business I would strongly recommend that you get legal, financial and tax advice.

    John

    #1210475
    bb1
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    Forget the fact it is Ecommerce, it can be Ecomm, a retail store, a gardening business, etc. You need to do your due diligence, check the books, get a professional to check them, and still take them with a big grain of salt. But in reality it is jut another business.

    Generally I would say that as long as the figures stack up and are legit for an existing business, there would be less overall risk as if you have done your homework it would have existing cash flow, so you should be up and running from day one, where as a new business you start with nothing and go in a negative direction for a while.

    #1210476
    bb1
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    Adam Martelletti, post: 251217, member: 100324 wrote:
    [USER=76820If none of the sales are recurring customers or coming in through organic ranking/content/listing and all sales come through from paid advertising I wouldn’t touch it and just build your own from scratch.

    Why? From this I am assuming you think every business using paid advertising isn’t worth it. If they are still making a healthy profit from paid advertising, why wouldn’t you touch it. Sure organic is better (possibly), but it comes down to the profit margin and if it is still viable with paid advertising why not.[/USER]

    #1210477
    ozcart
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    Absolutely agree – doing due diligence regardless of the type of business being purchased is essential. Where do new customers coming from? What percentage of customers are return orders? How do the products stack up compared to competitors? How competitive is the industry? Where are new sources of competition or products likely to come? Where are competitors selling? Plus of course financials. If it’s an online business, they’ll likely have Google Analytics stats that you can analyse as well. +1 on John’s comment about the value of domains and other intangible assets like trademarks is an important one that is often overlooked.

    #1210478
    Steve T
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    Thanks for the replies, lots of good points to look for and consider.

    #1210479
    Paul – FS Concierge
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    Hi Steve,

    The biggest difference between buying an online and an offline business is the website factor – a physical store is typically governed by a lease which is largely understood by everyone.

    An online business however might be driven by any number of factors eg – a lot of money spent on advertising, SEO, 3rd party platforms such as EBAY, social media platforms etc.

    Understanding how a visitor lands on the site in the first place and whether you have the skills and/or resources to make sure the level of sales does not decrease is a factor when deciding about a purchase.

    A current theme that people will be thinking of is the arrival of Amazon – some businesses will win and some will lose so factoring that in will also help.

    #1210480
    Warehousing Fulfillment
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    Steve T, post: 251256, member: 76820 wrote:
    Thanks for the replies, lots of good points to look for and consider.
    Hi Steve, curious to know what you decided. How would you manage the physical management ? Regards
    #1210481
    Steve T
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    Hi Warehousing Fulfilment

    I ended up not deciding on anything at all.

    At this stage I find it all to be too fraught with complexity and risk to buy or attempt to start up something.

    Thanks for your question

    Cheers
    Steve

    #1210483
    letsgetdowntobusiness
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    Probably a good decision to not do it just yet, it sounded like you weren’t quite ready

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