An e-commerce site is often easier to manage if you don’t have to set it up and find suppliers and initial customers. However, it would be a shame to buy an established ecommerce store and find out that the store is not currently profitable due either a lack of customers or poor supplier relationships. Because of this, it’s important to evaluate the management of any e-commerce store you are looking into purchasing. With that in mind, here are some tips you can use to successfully manage a purchased e-commerce store.
You need to be careful about what niche you are looking to enter. For example, there are lots of electronic sites – so your competition is high in that niche. Unless you have a stellar product, you may not want to enter that niche.
Niches are not perfect. But you can choose one that’s going to bring you money. Find something interesting for you, something in which you have an expertise that can help you create good ideas for your site, such as a free ebook around some complex product you’re going to sell.
Try to aim for a product which is unique and which has lots of accessories. Also,find one that is small and is geared toward online selling. People are crazy about disposable products that fit into specific niches.
When evaluating providers, you need to pose a couple of imperative questions. These include discounts for bulk orders, minimum purchasing requirements, whether they have the proper business permits, and if they offer “net 30” payment terms.
You need the information to these questions because you do not want to purchase a business with untrustworthy providers. If they foul up on orders, you might have to pay for them yourself and deal with angry customers.
The ideal approach to deciding whether you need to keep the provider is to meet with them face to face. Get to know them for a bit before deciding to keep them on or look for a new provider
While revenue is a good starting metric, what you’re really looking for in an ecommerce store is productivity and profit margins. Low margins imply low benefits. Furthermore, in the event that you need to burn through cash every month on online marketing campaigns, you may wind up not making a profit regardless of what your income is.
Get salary explanations from the seller and dissect them yourself. Salary statements may sound somewhat scary, but you need to have the capacity to make sense of them effectively. If buying through an established ecommerce marketplace like Exchange by Shopify, you will be able to get accurate financial statements from the seller that are verified by the platform.
Deal Price and Valuation
If you’ve already decided that purchasing this business is a good idea, and you have the niche, the providers and financials ready to go, you will need to determine if the seller is offering the site for a premium or a discount.
This is where the product ideas become one of the most important factors. Sellers will clearly try to offer the site for a premium, guaranteeing that they put such a great amount in design and advertising. That being said, you have to decide whether this price is justified, paying little mind to the investments the past owner made. If you don’t feel that the profit margins or productivity of the store is in line with what the seller is offering, then make a counteroffer to see if you can get the store for more of a discount.