These days, the eCommerce industry is absolutely booming. Just look at the success of companies like eBay, Alibaba, and, perhaps most notably, Amazon. If you haven’t done so yourself, there’s a good chance that you know someone who has purchased something from one of these sites fairly recently.
As a result of their popularity and success, lots of people are becoming interested in getting into the eCommerce game. However, due to market saturation, they may find it rather difficult to start an eCommerce website from scratch.
That’s why it is a good idea to consider investing in eCommerce websites that have already been established and have already seen some success. With the right research and marketing plan in place, you may be able to improve its sales and grow your business faster than you ever could with a brand-new eCommerce website.
Before you start shopping around though, it’s important to keep a few things in mind when buying eCommerce websites.
An eCommerce website needs to have steady, reliable traffic if it’s going to survive among its competition. How are you going to make sales if no one is checking out your site?
Before you buy any eCommerce website, make sure you thoroughly analyze its traffic. You’ll want to know the sources of traffic and any weekly, monthly, and yearly trends. Note any major increases or decreases in trends and evaluate the top traffic sources.
Have there been any major changes recently? Can you see any ways that you can maintain or increase the traffic?
Also, it’s important to check out both the number and quality of the links used to access the store. Make sure that the number of links to the website has only increased over time, and that none of them are spam links.
If you’re buying an established eCommerce business, then they likely already have relationships and deals with particular suppliers in place. You need to know who they are and what their relationship with the previous owner was like, what the deals are and how they were established, and whether or not they can be easily replaced if necessary. You don’t want to be stuck with a supplier if they have proven to be unreliable in the past, as they may end up costing you, customers.
Try testing any suppliers you are unsure about with a few orders to see if they’ll be easy to work with and if you can trust them with your business.
While the seller may be showing you great numbers when it comes to revenue, take the time to look into their margins and overall profitability. If these are both low, then no matter what the revenue is, you may end up operating at a loss.
Ask the seller for detailed income statements and analyze their trends over the last 5 years or so. Are the margins and revenue increasing or decreasing? Have there been any sharp increases in costs? See if the seller can explain any of these trends to give you some further insight into whether or not their eCommerce site would make a good investment.