Investing in eCommerce: Where to Start
For online entrepreneurs, a great alternative to starting your own online store from scratch is buying an existing one. Buying a fully set up business complete with customers, suppliers, advertising campaigns and potentially employees has its risks, but can also be a worthwhile investment. If the store is making a reasonable profit, you can continue running it as is, or make changes to increase profits. Either way, there are a few things to consider.
Why is it for Sale?
Before you purchase any business, find out why it’s being sold in the first place. Choose your sources wisely – ask the previous owner, do some of your own research while avoiding the hearsay. Many online business owners sell because it’s time-consuming to run or they need the capital for a more profitable venture. If a business is for sale because it’s not profitable, it’s probably not worth buying unless there’s an obvious solution to turn things around. As long as you purchase through a reputable source like Exchange by Shopify, you’re unlikely to end up with a dud company.
What Changes Will You Make?
Buying an online store is much the same as buying a brick and mortar store. You’ll be taking over while trying to keep day to day business running as smoothly as possible. It’s your store, so you’re free to make changes, but be careful how you go about it. Change of ownership is drastic and if you make other changes soon after, you may lose existing customers, particularly if the site is down for maintenance or fundamentally different. Short-term, keep things as they are so you can make sure you’re on top of ongoing transactions, ad-campaigns and other business and marketing relationships.
Once things are running smoothly, you can look at new campaigns, new products and new target markets. Rebranding could be good for business, but keep in mind, a site makeover doesn’t have to be a do-over.
Investments Take Time and Money
Apart from the initial investment of buying the store, there will be ongoing costs. Ad-campaigns, particularly if the previous owner has let them lapse, will be one of your first priorities. Another consideration may be storage space for stock, unless you use drop-shipping, and paying suppliers.
Financials aside, a business won’t run itself. If you’re playing the roles of both owner and manager, you’ll need to be in touch with your business almost 24/7. Fortunately, this is relatively easy to do via smartphone or tablet, but if you don’t have the time or inclination, consider hiring someone to manage your business.
Unless you have a right-hand man who can manage your e-commerce site for you with occasional input, it may prove to be a time-consuming endeavour. It is, however, a highly profitable one. As an entrepreneur looking for a new venture, or someone just starting out, an online store can be a great investment. An existing business won’t take the same time and effort to get off the ground as a new one, but there’s still plenty of room to make it your own.