Buy an Online Business for Sale: A Comprehensive Guide

Whether you’re buying an online business for sale or building one from scratch, a successful e-commerce business can help you live out your dreams. Do you wish to travel around the world while earning a steady income every month via a dropshipping website? A profitable and successful e-commerce business can help you achieve just that.

Many in the past have been able to build successful businesses and quit their hectic 9 to 5s, so why can’t you?

Need help making your e-commerce dreams a reality? Get in touch with us now!

However, you must remember that in order to reach the point in your life where you’re able to ditch your corporate life for a comfortable four-hour work week, you must conduct your due diligence and put in the work first. While many have been able to achieve this life, you should prepare yourself for months or even years of hard work to get there.

A quick fix to achieve this level of success relatively faster is through the purchase of an e-commerce business, which eliminates the need to spend countless hours looking for good suppliers, creating marketing campaigns, and setting up automated emails.

Before you dive right in and buy an online business, you must consider a few things and conduct thorough research. And this is where our all-encompassing guide comes in. To ensure you are spending the right amount and generating a sufficient return on your investment, take a look at our expert opinion and suggestions.

In addition to learning how to invest in an online business for sale, you must also determine where you should look for profitable companies up for grabs. Here’s a link to our guide to help you in that department too:

Where You Should Look for an E-Commerce Business for Sale

Why You Should Buy and Not Build

You may find that buying a business is relatively more expensive than building your own from scratch. This is because the costs and expenses of starting a brand-new entrepreneurial journey are typically spread out over the first several months or years. However, it is pertinent to note that the risks associated with buying an online business for sale are lower than starting your own e-commerce company.

Whether you’re building your own e-commerce business or buying one, we can help you! Get in touch with our expert e-commerce manager now!

Most of the grunt work associated with building a new business, such as creating a customer base, establishing a steady cash flow, and hiring the right team, has already been laid out in one that’s up for sale. Such businesses not only have a reliable, proven product, but they also have a well-established reputation. These qualities combined are more likely to bring you repeat purchases without a crazy marketing spend.

Since most sellers who have put their online business for sale will still want to see their company succeed, they’ll likely offer additional guidance and support after the handover to help you take it to new heights of success.

There are various potential reasons why a business owner may want to sell their company. They may simply want to cash out or reinvest and focus on other ventures. Whatever their primary reason may be for selling, as long as their business is profitable, lenders are generally more willing to finance such an acquisition. You may find it more challenging to find willing lenders for a startup that hasn’t reached its break-even point.

The following are some additional benefits of buying an electronic commerce business for sale.

1. Adopting the Best Practices

Trial-and-error is a common form of learning and growing when it comes to starting new e-commerce businesses. You may find best practices after going through copious amounts of poor hiring decisions, inefficient business models, and working with the wrong suppliers and switching them out every few months. 

However, when you buy an e-commerce business, you can skip this learning curve and adopt the default best practices that ensure the company’s current success. You will gain insights on which suppliers to steer clear of at all costs, how much marketing spend to expect at the current stage of the business, and what marketing channels are the most efficient.

Additionally, you can review and keep or update numerous other elements of the business, including its marketing collateral, branding materials, and the existing technology stack. This will save you the time and trouble of having to rebrand or research accounting software and CRM solutions.

Want to know how to choose the right CRM for your business? This guide might help!

2. A Steady Cash Flow

When you look for online companies for sale, you’ll find that most of them already have a positive cash flow, which is a great advantage to have right from the get-go. Typically, such a business's sales levels are sufficient to cover any debts, offer you a reasonable salary, and provide sufficient savings for reinvestments in the business.

You’ll find that most of these businesses already generate sufficient revenue to cover the relevant costs of running a business. This fact leads to better-suited lenders offering more favourable and attractive financing terms.

Given that 20% of all new businesses fail within the first 2 years, with 45% and 65% of them failing within the 5th and 10th year, respectively, we think the odds will likely be in your favour if you choose to buy an already well-established brand.

3. Proven Brand Recognition

An average startup takes approximately 3-5 years to become profitable. If you don’t want to wait that long, you can benefit from the already established customer base, brand recognition, and a steady revenue stream of an already existing business for sale. These things combined will also reduce the startup time.

Moreover, buying an online business for sale means you won’t have to spend a significant amount of time hiring and training new employees or investing huge amounts for a go-to-market strategy. You can instead focus on utilising your strengths to further expand and grow the business and not think about filling out hefty paperwork, finding suppliers, purchasing inventory, or determining the cost of goods sold.

The Cons of Buying an online business for sale

When you’re looking into a web business for sale, you may conduct lengthy due diligence to ensure you’re not investing in something worthless. However, not all underlying issues will be evident to you right from the beginning. For example, you may not find the intricate issues present by merely looking at the company’s financial statements.

This brings us to some of the primary disadvantages of investing in an already-established business instead of building one from scratch. Let’s take a look.

1. There’s No Guarantee of Success

As we mentioned earlier, nearly 65% of businesses fail within the first ten years. This means that a business’s past performance is not a guarantee of the same results in future. You must take external factors that influence a business’s performance, such as the changing consumer tastes and competition, into account.

In addition to this, some companies prosper because of the established relationships, the know-how, and the personality of the owner. Some personality traits, such as charisma, as well as connections and skills, make it easier for owners to convince investors to support and invest in doomed products.

To find out things you won’t find on a business’s income statement, speak to its customers and vendors and learn about its reputation. You can evaluate the business’s social media reviews, website reviews, consumer ratings, and any other online feedback you can find on platforms such as Google, Yelk, LinkedIn, and Better Business Bureau.

If you’re still willing to purchase an online business with a less-than-idea reputation, you should assess how much money and time it’ll take to repair and rebuild it.

2. It Can Prove Relatively More Expensive

In order to generate a good return on their investment, owners with a significant market presence typically set a relatively higher asking price. In such instances, you must compare the costs of buying an existing business versus building a new one.

Even if you’re buying a relatively lower-priced business that’s struggling you must evaluate its conditions carefully to find any hidden costs. Such businesses have a lower price tag due to a poor cash flow or insufficient demand.

Look for any red flags, such as negative customer reviews, high employee turnover rate, or fluctuating revenue, to gauge whether there have been any past mismanagement issues that may impact the business’s future success.

3. Unforeseen Problems May Arise

Not every online business for sale will prove to be a turnkey establishment. You can ask the seller all the right questions and scour all the financial statements but still face unforeseen problems during your day-to-day operations after the purchase.

You must root out all inefficient processes by observing each element of the business, including how it was being run and what the workplace culture was like. Moreover, factor in some of the potential future costs into the overall amount for the acquisition. For example, you may find that the technology being used in the company for sale is outdated and needs to be replaced.

Online Business for Sale: 14 Steps To Take

1. Shortlisting the Right Niche for YOU

Typically, e-commerce websites that sell a broad range of popular products and have a broad market also face thousands of strong competitors. Therefore, we recommend differentiating not only your brand and value but also your products. Doing this will ensure you’re not competing on price, which ultimately leads to no significant profits.

If you’re still leaning toward a more saturated market, you’ll need to set an extremely valuable unique selling point (USP). It’s vital to remember, however, that creating a valuable USP requires a significant amount of time and has a higher associated risk. Therefore, if this is your first time investing in an e-commerce business, we recommend finding a more profitable and less competitive niche. 

Profitable Products

Logically, finding a product based on your interests alone is not enough. You must look for products that’ll help generate sufficient revenue. Look for products with a high profit margin and the most profit per sale and steer clear of products that are barely able to break even.

Picking a niche may seem pretty easy, however, you should remember that it’s crucial in creating a foundation for your e-commerce business. Therefore, you should spend as much time as you think is needed to get it right. Not thinking things through will only lead to disappointments in the future.

Your Interests & Hobbies

To find something you can add value to and are interested in, you must take your hobbies into consideration. If you’re able to find products that match your interests, you’ll likely invest the time and energy that’s required to turn it into a successful business venture.

A study from Vistaprint found that a whopping 33% of small business owners in the United States struggle to find the motivation they had in the early stages of setting up their business venture. Stats like these make it evident that your hobbies can prove really helpful.

In addition to hobbies and interests, you can also look for niches where you have sufficient expertise, which will help you create good quality, authoritative content for your website. Such content will help you bring in and engage your audience, build a good reputation, and build authority, which will consequently give you a competitive edge and the ability to charge a premium.

Note: Having disposable products on your site will ensure you have returning customers, giving you a chance to build a regular customer base. On the other hand, small products with related accessories are difficult to find and have a relatively lower turnover. 

Profitability & Competition

While there’s no denying that perfect niches don’t exist, you can easily find ones that are profitable. These niches typically have similar or the same characteristics. It’s important to note, markets with little to no competitors aren’t always a great option. Such markets may indicate that their customer base is significantly small or even nonexistent. Therefore, we recommend considering niches where there’s at least some competition.

Of course, you’d want to invest in an e-commerce business that is profitable. You can research a company’s profitability by searching for relevant keywords and their search volume. Taking a look at the search volume will help determine how many users on average are interested in your shortlisted products. If your niche has a significant search volume, that means the market and its relevant products are a good fit for you.

Unique vs. A General Niche

Last but not least and as we mentioned earlier, operating an online general store is not always a good idea–having more products doesn’t always mean you’ll attract more customers. Moreover, you likely won’t be able to target numerous audience segments as a beginner. One of the strong phrases that emphasises the importance of uniqueness really well and has stayed with us is:

“If you try to be all things to all people, you won’t be anything to anybody.”

This means that if you try to sell your products to everyone, you’ll end up selling them to no one. Therefore, when you’re selecting a business niche, ask yourself who your target audience is and what problem you’re trying to solve for them. If you’re still unsure about your specific target audience, it means you still need to narrow it further down. 

For example, let’s say you want to sell technology. You should focus on a specific part of that technology to sell. Are you going to sell laptops? What about keyboards? Maybe you can narrow it further down to colourful keys. Continue narrowing your selection down until you find a niche with extremely specific buyers and products.

You must also be careful when looking at trending products. Many of these products are likely just a fad that’ll die in some time. You must look for exit strategies or alternative markets for your niche in such cases. No matter which niche you choose, you must have a well-thought-out plan for every possible scenario.

2. Researching Your Competition

Researching your niche adequately will give a deeper insight into where you’ll find your competitors. Learning about your competitors will also help you avoid all their mistakes and take inspiration from their best practices which have proven efficient in bringing in more profits. Doing this will give you a competitive edge by providing you with opportunities to do better than your competitors. Here are a few questions to help you get started:

• Is the traffic coming into your competitor’s website organic, paid, or a combination of both?
• Are they operating under a FBA model or selling their products directly to their customers?
• Will you be able to build a strong brand identity that’ll give you a competitive edge?
• Will you be able to create content that will be entertaining and educational for your customers?
• Can you generate higher-quality product images and merchandise your product better than your competitors?
• The Online Business for Sale Likely Has a Strong Brand Identity

As a first-time e-commerce entrepreneur, you’ll likely know the importance of having a clear and consistent brand identity and brand voice. In this case, it means getting yourself accustomed to the brand identity and voice of the e-commerce company you’re purchasing. You may also find this opportunity to determine whether the already-established elements are working or require changes for further progress and development.

We recommend assessing such elements as soon as you can. You need to comprehend your target audience’s problems and pain points and your branding should effectively reflect your knowledge of their issues. Your primary emphasis during promotional campaigns should be on communicating how your brand and products or services can help solve your customers’ pain points.

Moreover, to stay updated with the brand’s online presence, you must become active on social media. Stay authentic to your brand, respond to direct messages and comments, conduct polls, and engage with your audience on each social media platform. Pick the platforms you’ve identified as the most suitable places to reach out to and engage with your target audience.

It’s also pertinent to remember to include all this information in your business plan, which is a step-by-step, comprehensive guide outlining your entire plan for the business. Contrary to popular belief, a business plan isn’t only required when you’re setting up a new business. It’s also crucial when you’re buying an online business because it helps set the direction for the business under your control.

Competing on This Is a Big No-No!

A significant part of competitor and market analysis revolves around getting a general idea of the standard prices for your chosen products or services. However, you should steer clear of competing over and matching the prices with your competitors. Competing on prices will only make it much more difficult for both you and your competitors to generate profits in the long run.

Furthermore, competing on prices will naturally attract customers that are price-sensitive. These customers often let go of quality for relatively lower-priced products and bargain deals. Consequently, you’ll find it harder to satisfy such customers or turn them into loyal customers with a significant lifetime value. Such crowds are not profitable and should be avoided if possible.

Your primary goal should be to gain a competitive edge. You can do this by developing a better product and improving your offering. Such initiatives will enable you to charge a premium price and higher rates than your competitors. As a result, you won’t need to compete on prices and the perceived quality of your products will also naturally enhance.

3. Gather Supplier Information

Another important prerequisite for purchasing an e-commerce business is understanding how it operates. This includes determining how many suppliers are required for the products you’ll be selling. Here are a few questions to ask yourself before making up your mind regarding the existing supplier network:

• Are they offering high-quality products?
• Are the suppliers offering an attractive wholesale price?
• Who are they? Are they the middlemen, manufacturers, or wholesalers?
• Where are they based and where do they ship?
• Are they cost-effective?
• Do you want to continue working with them?

Based on the complexities of the online business for sale, you’ll likely have a plethora of suppliers at your disposal. It may be more suitable for you to continue working with some of them while letting go of the others. If you’re lucky, you’ll find a business with a well-established network of highly effective and efficient suppliers. In any case, it’s crucial for you to identify how the suppliers interact with your business and the industry at large.

Have a One-On-One With Your Supplier

Directly reaching out to the suppliers and having a detailed one-on-one conversation with them is a great idea to understand their relationship with the business. The suppliers that the company has been working with may not be aware of the strategic shift inside the company, and you can use this opportunity to relay this information to them. Doing so will give both parties a chance to get to know each other better and get a clear view of the full picture.

Your discussions can include some of the more crucial aspects of the relationship, such as going rates. Utilise your negotiation skills, assessments, and competitive research to convince the supplier to bring the rates down to acceptable levels. Your research has likely opened up new avenues for supplier partnerships. Therefore, if the current suppliers are not willing to bring the rates down, you can walk away from them and negotiate deals with others.

Consider Supplier’s Authority

If you’re selling digital products, your suppliers will likely have little to no power over you. On the other hand, if you’re selling complex products with numerous intricate parts, you can expect the suppliers to charge you a relatively higher rate–simply because they have the power to do so in such cases. Their power comes from the fact that your business heavily relies on suppliers for critical elements and switching suppliers comes with its own set of complications and risks.

We recommend avoiding supplier relationships where the suppliers have complete control and power over you. Moreover, you should also understand how much a supplier relies on your business. 

If you’re one of the few clients they have an ongoing relationship with, you may have the upper hand. This is especially true if you generate a significant chunk of their revenue for them through your purchases. Alternatively, if the supplier has an abundance of clients, they’ll have the upper hand and charge you more, giving you far less leverage.

Look for Alternatives

Supplier power greatly influences businesses in every industry. You’ll find that the weaker suppliers in your market are typically more flexible while the stronger ones have the ability to restrain profits. 

Your first step should be to research the supplier’s market. Find out whether they’re the only ones operating in their market or if you have alternative options. Moreover, evaluate whether they have good ratings and feedback. If you’re looking to increase your profits and cut costs, this may be one of the key areas where this can be done.

If you can find multiple suppliers for your specific products or parts, you can either pick an entirely new group of suppliers or use this to negotiate prices and reduce costs. Suppliers who operate in saturated markets are more sensitive to price competition. On the other hand, if you don’t have a lot of options to choose from, your current suppliers will have the upper hand, enabling them to set the prices they desire.

Depending on the business, suppliers have a certain level of power over their clients. To get the most out of these professional relationships, you must know your suppliers’ strengths and weaknesses. We recommend doing your due diligence and conducting a thorough analysis when buying an online business. Doing so may help increase your profits by a significant margin. 

4. Evaluate the Current Inventory

When you buy an online business for sale, you’ll also have to check whether the purchase includes all of its current inventory and whether the asking price includes the associated costs. Most business owners include their unsold inventory when selling their company because they likely won’t be needing it. However, this can prove problematic, especially if the business lacks an effective inventory management system or if the inventory is of low quality.

Set Inventory Management Strategies

Managing your inventory is a big part of running an e-commerce business. It’s up to you if you want to stick to the practices and strategies passed down to you by the previous owner or create an entirely new system that works for you. 

If you’re thinking about purchasing a relatively larger e-commerce brand, we recommend using warehouse or manufacturing management software. These systems enable business owners to scale their business by automating their inventory management.

Alternatively, you can decide to take a completely different path and avoid dealing with inventory altogether. For example, regardless of whether the previous owner was selling physical products, you can adopt an entirely digital strategy or use the dropshipping business model to avoid dealing with large inventory levels. Doing this is not only helpful in lessening the business load, but it also helps the environment by reducing waste.

See if It Fits Your Business Goals

You will likely want to adopt and test out different strategies from the ones the previous owner was using for the business. This can also include the specific products that the business is developing and selling. Naturally, this means that before buying the online business for sale, you must analyse its current products and conclude whether or not they align with your future goals.

You could consider selling the current products before implementing the newly developed strategies, especially if they are unpopular. Alternatively, you can simply convey your intentions to get rid of the current inventory to the previous owner and use it as a basis for your price negotiations. 

Check Your Current Inventory’s Quality

You’ll likely need to conduct a thorough evaluation of the current inventory before deeming it completely useless. If the previous owner was using an outdated and unoptimised storage system, you may end up with the business’s least popular, outdated products.

In addition to evaluating the physical quality of the current inventory that’s been left behind, you should also assess its makeup by going over previous shopping patterns. Ask yourself the following questions:

• Is the current inventory generally weak at driving sales?
• Will they sell right away or later?
• Does the inventory include seasonal products?

You can also consider using an inventory management system to manage this inventory to better understand how and if it fits your future goals and needs.

With a deeper understanding of the business’s current inventory, you can use all the information you’ve collected to your advantage. You can choose to sell the inventory or use it to hone your product management skills and test the inventory management software.

5. Specify Who Will Control the Supply Chain

As mentioned, you can use third-party software and tools for your inventory management needs and requirements. However, you must also determine how to arrange your supply chain. This includes all aspects of the supply chain, such as logistics, transportation, retailing, and manufacturing. 

Here are the three options that’ll likely be available to you in terms of supply chain:

• Dropshipping
• Third-Party Logistics (3PL)
• Second-Party Logistics (2PL)
• First-Party Logistics (1PL)

You’ll be acting as the supply chain manager who’s integrating all these processes. Therefore, it’s your responsibility to ensure that every part of your business’s supply chain flows cost-effectively and seamlessly.

It’s vital to note that each logistics system comes with its own set of advantages and disadvantages. Ultimately, the final decision will depend on how much time you can allocate to handling the supply chain processes.

Can your business afford to outsource shipping? Can you commit some business time to packaging goods yourself? Questions such as these will help you make up your mind when purchasing an online business.

Dropshipping: No Control Over Manufacturing

Owing to this model’s hands-off approach, dropshipping has become an extremely popular choice–especially among first-time e-commerce entrepreneurs. A third party is responsible for manufacturing your products in a dropshipping model. You’ll typically need to sell the acquired products at a higher rate than the cost of goods to generate a profit.

For example, you must’ve come across the print-on-demand (POD) model that numerous online brands have started using to stop dealing with inventory altogether. Such brands create designs and graphics for their merchandise and partner with POD providers to outsource the manufacturing side of things. In addition to custom print merchandise, such platforms also offer dropshipping services, enabling you to manage your inventory with a single service.

You can essentially sell any product you want after purchasing an online business through this model. For example, most dropshipping stores sell technology-related items, including flashlights, massage devices, and more.

In the end, the final decision will be based on how much control you’re willing to let go of. You’ll likely be giving up the timeliness and quality of your products by outsourcing your manufacturing, which requires you to forfeit your ability to control. While this model allows business owners to focus on other key aspects of their business, it also puts the brand’s reputation at risk.

3PL: Little Control

Third-party logistics entail outsourcing both fulfilment and delivery to third parties. Your 3PL partner will be responsible for all aspects of these two processes, including packaging, transportation, and delivery. This model gives business owners the opportunity to direct their efforts towards other elements of the business, such as marketing. However, it is pertinent to note that this model, unlike 1PL and 2PL, will likely require you to pay higher prices.

2PL: Semi-Control

This model requires business owners to forfeit partial control to an outsourced secondary party for their supply chain process. Typically, the business owners are responsible for manufacturing the product, while the 2PL partner takes over all delivery-related tasks. 

When you’re reviewing online companies for sale, research their owners’ responsibilities in the business. You’ll find that most owners utilise the 2PL model where they’re responsible for the majority of the supply chain processes while the 2PL partner alleviates some of the burden.

1PL: Total Control

The 1PL model gives business owners complete control over their e-commerce business’s logistics. You’ll be responsible for creating and developing the product, transportation, and delivery. It’s vital to remember that this model is the trickiest, most complicated model out of all the options available, especially if you don’t have a lot of resources for extended staff.

We recommend using supply chain and logistics tools and software to help you throughout all the various stages, including optimising costs and route planning, which can help you enhance efficiency, cut costs, save time, and reduce the chances of late deliveries.

With knowledge of setting up the logistics of the business, you must create a list of the pros and cons of each supply chain model to shortlist the best one for your future goals. Ask yourself the following questions:

• Do you want to work at every level of the supply chain?
• Do you wish to take a hands-off approach?
• Which tasks do you envision delegating yourself as the owner?

In the end, you’ll need to determine how you want to balance profits with time and which one to prioritise over the other.

6. Assess the Current Web Design of the Online Business for Sale

Brick-and-mortar stores can typically afford to overlook and skimp on their website. However, e-commerce store owners don’t have this luxury because their sales are generated online and rely heavily on engagement and conversions. It is absolutely crucial for online businesses to polish and refine their website to ensure they stay up-to-date, relevant, and engaging.

Ensure It Aligns With Your Brand & Strategy

If you’ve decided to buy an online brand and refine its aesthetics, you must ensure that your new web design aligns well with your new goals and mission for the business. Your web design should be cohesive in terms of the typography, colours, and fonts you use. If you’re entirely rebranding the website, make sure that each and every section has been updated. Even a single off-brand page could negatively impact your traffic and increase bounce rates.

We recommend adding videos and animated content to your landing pages as they can easily grab your users’ attention and help you stand out from competitors. We specifically mentioned this strategy because, according to recent stats, adding such engaging elements on landing pages can increase your conversions by a whopping 86%.

To take things a step further, you can also consider monetising exclusive videos for potential customers with the help of a video management platform. You can offer subscription-based courses and webinars to your audience to develop authority and use your expertise to your advantage. 

Resolve Any Underlying Issues

There are numerous cases where business owners have to rework the original web design after their purchase. Whether you come across some technical problems or don’t like the aesthetics of the website, you should focus on resolving the issues and altering the website according to your goals and requirements as soon as possible. Even if you’re satisfied with the business idea and model, you may feel the need to refurbish the website to convert prospective buyers.

We recommend reviewing the website’s landing pages as a starting point as they are most likely to be the first interaction between your customer and your brand. Your consumers will either come organically through search results or through targeted ads. Determine whether your landing pages are effective enough to not only attract but also keep your viewers on your website.

You may want to consider adding more pages to optimise your landing pages. According to recent stats, simply increasing the number of landing pages on your website from 10 to 15 can help generate 55% more leads. The reason behind this is that your customers are likely looking for more seamless, customised, and tailored experiences. Effective design can help make your customers feel special, which proves beneficial in almost all cases.

Moreover, we also recommend reviewing the shopping cart to see if it lacks mobile-friendly and user-friendly features. This emphasis on shopping carts comes from the fact that your potential customers may abandon their carts and never return due to the slightest issue on your shopping cart–even if ALL the other parts of your website function perfectly.

Assess the Website

You may have guessed by now that there are several components of a website that help prospective buyers throughout the buying journey. Your website’s experience, graphics, and copy are crucial parts of a web design that can make or break your brand image and profitability.

When you’re reviewing e-commerce websites, put yourself in the customer’s shoes to determine any technical or non-technical issues that should be addressed immediately. Here are some questions to ask yourself when evaluating the website:

• What are the brand’s competitors doing that works in their favour?
• Is it easy for your target audience to navigate your website’s interface?
• Does the website entail clear call-to-action (CTA) buttons?
• Is the copy wordy or short and sweet?

As an e-commerce business owner, you have the unique responsibility of operating in a digital-only landscape, therefore, your website should effectively represent the hub of your operations. Spend some time learning and understanding how to integrate third-party software for this purpose and how to enhance user experience. Lastly, remember to keep track of your website’s key metrics for improved performance.

7. Select the Most Suitable E-Commerce Platform

You will likely inherit the platform the e-commerce business currently operates on. While some platforms generally require no coding experience to set up an e-commerce store, others need you to have high levels of technical expertise. Take your abilities into consideration when evaluating the current platform the business operates on and ask yourself whether it enables you to pursue your goals or limits you.

Take a Look at All the Other Options Available

While this would likely be the last step when you’re reviewing the current e-commerce platform, we’re discussing it first because of its importance. After reviewing the pros and cons of your chosen e-commerce business’s current platform, it’ll be time for you to start researching and getting to know the nitty-gritty details of all the options that are available to you.

Your primary goal here should be to find a balance between all the features that you’re looking for in your new e-commerce platform—which may include things like fulfilment management, cost-efficiency, creative flexibility, and ease of use. Some of our top choices include:

• Squarespace
• Wix eCommerce
• BigCommerce
• Magento
• WooCommerce (WordPress)
• Shopify

Want to take a deep dive into these platforms? Compare their pros and cons here!

Evaluate the Costs of Switching Your E-Commerce Platform

You should expect significant changes when buying an online business for sale. Switching to a different e-commerce platform could prove beneficial in trying to achieve your goals if you think the current one’s sustainability is questionable. However, you must first consider the costs associated with switching the e-commerce platform before making any final decisions.

It’s highly likely that the e-commerce brand you’re looking to purchase has solely relied on its current platform since its inception. If the brand has a considerable number of repeat customers, switching the current platform could throw them off and make the company appear questionable. In addition to prompting current repeat customers to question the company’s legitimacy, it could also impact their perception and knowledge pertaining to the brand.

So, it goes without saying that switching the e-commerce platform doesn’t only cost money but could also cost you your repeat customers, loyalty, and brand image. If you decide to go a different route, it’s crucial to inform your consumers of these changes. According to research, about 73% of customers expect companies to understand their unique expectations and needs.

Assess the Performance & Offerings of the Current Platform

Determine whether or not the current platform fits into your mission once you’ve determined your overall future goals and reworked the brand’s strategy. You can ask the current owners about their current stage in the business and see if it aligns with where you want to take the brand. You may want to consider a different, more accommodating platform if your goal is to scale up and expand into new markets.

Moreover, you must assess the current platform that the business is using to evaluate its process for accepting and fulfilling orders. At this point in your research, you should be accustomed to the company’s supply chain—and the e-commerce platform they’re using fits into this context. Check if the platform enables you to fulfil orders with a simple click of the button—if not, you may need to consider switching to one that does.

8. Evaluate the Effectiveness of the Current Marketing Strategies

Take a look at the brand’s current social traffic, paid traffic, and search engine optimisation (SEO) traffic to understand how effective its current marketing strategies are and whether or not you need to tweak some things.

It’s vital to remember that you likely won’t be able to gain access to the business’s marketing strategies that it has launched in the past. However, you can ask the previous owner to share the metrics gathered through their past campaigns. Find out how the website and its relevant pages have previously ranked on search engines and whether they’ve seen more success through social traffic or paid ads.

Assess the Current Customer Acquisition Strategies

Ensure that you know who the business’s target market is and how best to reach its audience members. Conduct due diligence and thorough research to find out whether the market is shrinking, growing, or stable at the moment. You must also know whether the business relies too heavily on a handful of key customers. If the current owner utilises the 80:20 rule (80% of your revenue comes from 20% of your customers), you may want to consider strategies for if those customers leave.

Use Automation To Simplify the Process

You’ll have to wear many different hats after purchasing an online business for sale. Your tasks will cover everything from day-to-day operations to fulfilment. You can automate the processes for writing copy and managing your social feeds using digital solutions instead of wasting your time and energy on such tasks.

There are several tools out there that can help you integrate numerous products under a single store, determine the expected returns from your online marketing campaigns, and reduce all the manual work. Moreover, some software options even allow users to automate their posting on social media platforms.

Running social media pages takes a lot of time off your hands that you could rather be spending on core business operations. You can use tools to schedule posts in one sitting instead of publishing posts every day to save yourself some time.

Drive Social Traffic by Leveraging Your Online Presence

If paid traffic (discussed below) has proven ineffective for the business in the past or if you’re running on a low budget, you can consider a more affordable option: social traffic. You can focus on creating engaging content on the relevant social media platforms instead of generating traffic on certain platforms. For example, you could feature product tutorials and feedback from satisfied customers on your Facebook or Instagram page.

Take some time to think about all the different marketing campaigns you can work on for the e-commerce store to hone in on social traffic. With a deeper understanding of the audience your potential e-commerce website serves, ask yourself the following questions:

• Will the audience respond well to short-form TikTok videos?
• Should we offer free gifts in the mail?
• Are in-person promotional events more suitable for the audience type?
• What will the audience best respond to on social media platforms?

Determine the most effective methods of reaching your customers and develop your marketing campaigns accordingly.

Effectively Gather Leads via Paid Traffic

Sometimes companies reach a point where they’re unable to expand their audience and traffic through organic strategies online. This is where paid traffic comes in. You should consider asking the previous owner how they’ve incorporated paid traffic into their strategies in the past. Did they use advertisements on search engines and which products have garnered the most leads? Asking questions like these can help you build effective strategies for paid ads.

If the previous owner has yet to start investing in paid traffic, you can consider incorporating it into your marketing plan as an effective method of generating traffic. According to recent stats, 27% of all web traffic comes from paid search, so it wouldn’t be wise to ignore this important aspect of marketing. You can begin by reviewing all the different channels where you can generate paid traffic. Some recommendations include YouTube ads, Bing Ads, Google Ads, Instagram Ads, Yahoo Ads, and more. You can use them as an opportunity to grow and expand your business in the future.

On the other hand, if a significant chunk of the website’s traffic is already coming through paid search, you’ll likely be required to continue paying this cost after you’ve purchased the electronic commerce company from the previous owner.

SERP Rankings for Specific Keywords

SEO helps increase a website’s ranking on search engines, such as Yahoo and Google. Buying an e-commerce business gives you a nice head start on things when it comes to SEO, which otherwise would’ve taken you months to develop. 

SEO involves web optimisations that gear websites toward better search engine results page (SERP) rankings through optimised meta descriptions and title tags and by honing in on specific keywords. If you’re not as familiar with the concept of SEO and don’t have any real-life technical experience, you may feel overwhelmed.

Luckily, there are numerous tools available online that can help you conduct an SEO audit and assess the results without any confusion. Here are a few tips to keep in mind:

• If the website has poor backlinks, Google will penalise it 
• Google ranking is impacted by domain age and page rank
• Long-term SEO strategy benefits aren’t present in relatively new websites

We recommend using SEMRush to determine the website’s top organic keywords, the total number of keywords, the number of backlinks, the number of referring domains, and the authority score. If you want more data points and a more comprehensive report, you can purchase the premium insights report on SEMRush.

SEO Strategy

We recommend buying an online business for sale that already has an active blog featuring topics related to its industry. For example, if you’re considering buying a business operating in the technology sector. Their blogs in this case should focus on things like new devices in the market and emerging digital trends—everything should be related to the products that the brand is selling. 

Once you’ve determined the keywords or products that the website is focusing on, enter them on Google to see if an article published on it is appearing on the first page of the SERP. If it’s on the first page of Google’s SERP, the business is doing well in terms of SEO and its efforts have already started to pay off.

Marketing enables businesses to attract prospective customers and drive better profits through both unpaid and paid means. If you want your e-commerce business to prosper, you must find the right balance between social traffic, paid traffic, SEO, and more to generate an acceptable return on your investment. 

9. Weigh Out the Pros and Cons of the Current Email Lists

We’re all well aware that if we start an online business from scratch, we won’t have any email subscribers. Purchasing an already-established e-commerce business saves you the time and investment required to build an email list as it’ll likely come with an already-populated one. While this may seem like a really good thing, there are still several associated risks to consider. For example, you may find that the business’s emails end up in the spam folder or that the email list contains a significant number of inactive users.

Integrate Email Automation Tools

As mentioned previously, automation is a great strategy that helps eliminate the burden of manually creating and sending out content on a regular basis. It also ensures that you’re communicating with your target audience at the right time and place. You can simply automate the entire emailing process instead of drafting emails and sending them manually when ready.

Email marketing automation allows business owners to create and launch automatic email campaigns. For example, you can send interest-based product recommendations to various audience segments, trigger emails based on specific actions visitors take on your website, and send leads after customers sign up for emails.

For example, you can send them an informational pamphlet for free for subscribing to your mailing list. Such automation campaigns turn cold leads into warm ones and prospective buyers feel comfortable making future purchases.

Select an Email Marketing Provider

Similar to how you had to set your priorities when choosing a website design and e-commerce platform, you’ll need to assess your preferences for running email marketing campaigns. What type of emails do you wish to create and how frequently do you want to send out emails? Questions like these will help you determine a suitable email marketing provider for your e-commerce business.

Ask yourself how much money you’re willing to cough up on an email marketing system. You can also have a discussion with the previous owner to find out their returns on email marketing. You can then use this number as an initial benchmark. You’ll need to ensure that you can justify your marketing spend given the expected returns.

Moreover, it’ll also prove helpful to jot down a list of essential features that your email marketing system must include. This list can include everything from colour selection and layouts to tracking abilities.

Check Your Sender Score and Reputation

Your sender score is utilised by email providers when they receive your message to determine whether it belongs in the spam or the primary inbox. Your sender reputation is greatly dependent on the number of rejected and accepted emails you’ve sent, the frequency at which you send out emails, the total number of reports your emails have received in the past, and several other relevant factors.

Keeping an eye on your sender score is crucial because if it’s damaged, no matter the size of your email list, it won’t be able to help you attract and convert your customers. For this reason, your first step should be to utilise your Sender Score to find out your reputation rank. If your rank is sufficiently high, your emails will likely end up in the recipient’s primary inbox without fail.

Moreover, you should also consider cleaning the email list once you’ve purchased the e-commerce business. We recommend doing this to ensure it’s free from inactive users. These users bounce your marketing and can further harm your sender score.

Once you’re done cleaning up the email list and getting rid of inactive recipients, you can automate the email marketing processes as much as possible. Doing so allows business owners to automate lead collections and convert more website visitors into customers.

Fostering an engaged community of repeat buyers becomes relatively easier after capturing more subscribers. You can greatly increase your website’s value by setting up a powerful email marketing automation strategy. This is especially beneficial for those who are planning to sell the business in the future.

Having pre-made email lists is one of the many great perks of buying an existing online business instead of building one from scratch. It gives you time to focus on your core business operations instead of wasting it on collecting leads due to the absence of a subscriber base. However, you must consider your needs and the involved risks before making a final decision.

10. Evaluate the Financial Side of Things

You could have the best business idea and even better marketing campaigns, it won’t matter if you don’t know how the company takes care of its finances. You must evaluate how the previous owner managed their finances and think of ways to improve their financial management strategies where you see fit. Consider some expert financial tips and integrate useful tools to take things a step further.

Pick a Reliable Financial Management Platform

Learning how to manage your finances as you progress after purchasing the business is also extremely crucial. You’ll need to figure out how to appropriately pay your employees especially if you’re inheriting a workforce from the business. Furthermore, to ensure a healthy supplier relationship, you must ensure timely payments to them as well.

You’ll likely feel burnt out very soon if you try to do this yourself manually. For this reason, we recommend using a third-party management platform. Many of these tools allow business owners to manage taxes, payments, invoices, and more. You’ll find that taxes, specifically, require a considerable amount of accounting knowledge. Having an application for this will enable you to focus on your core business operations.

Take a Look at the Income Statement

You need to review and evaluate the company’s income statements yourself before buying it. You’ll likely need to become familiar with some general accounting terms as the new owner. This is because your company’s financial statement will be the foundation for your financial analysis. Moreover, we recommend determining the value of your business acquisition cost through a deep dive into its Profit & Loss Statement.

Look for any identifiable trends in the past five years instead of only looking at recent profits. Here are a few questions you should find the answers to:

• Are the company’s revenues seasonal?
• Are the revenues increasing?
• Is there a sudden spike in costs?
• Have the profit margins decreased or increased?

You can also consider including the previous owner in discussions pertaining to these things to get a clearer picture of the business’s financial situation.

What Are the Primary Sources of Revenue?

Figuring out how the company makes money is one of the most essential first steps you must take when thinking of buying an online business for sale. You should also determine how much the business makes on a basic level. For this purpose, evaluating revenues alone is simply not enough. You must take a closer look at the company’s margins. How much money does the business make on every sale? Does it heavily rely on a small number of high-ticket buyers or a large volume of customers?

You should also find out how the company manages to generate profits. Does it primarily rely on organic traffic, social media campaigns, or email marketing? Finding the answers to these crucial questions will help you understand how the company’s budget ensures its profits. Your ultimate goal here is to boost the company’s overall sales.

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Your e-commerce will likely flounder without a solid bottom line. Therefore, you must have an informative and engaging discussion with the previous owner before moving forward with the purchase of the online business for sale. Ask for all the relevant financial and profit & loss statements and take everything they say with a grain of salt. In the end, you alone will be responsible for making an objective decision.

11. Consider All the Legal Matters

Buying an online business for sale may seem quite complicated from a legal standpoint. As the previous owner hands over their business ownership to you, you’ll need to understand how that will impact the entity’s legal ownership and how your new role will impact your personal taxes.

We recommend documenting all the terms of your purchase after seeking legal advice instead of rushing and getting things done quickly to move forward. Doing so will ensure that all the assets are correctly identified and transferred and the sale is legally binding. This will come in handy if you’re looking to avoid any disputes and issues in the future.

Hire Professional Help

If this is your first time buying an e-commerce business, you’ll only get the full picture of all the involved legal matters once the ownership is transferred over to you. You could consider seeking help from a legal professional instead of the constant back and forth for information. Hiring a professional will also help you cover your copyright and trademark bases and prevent you from breaking any law.

Evaluate All the Legal Assets

You must determine all the materials and assets that the previous owner has legal ownership over during your due diligence of the company’s legal matters. Some companies also copyright their names, depending on their size, so it’s best to double-check if it’ll be a good idea for you to do so. Also, check if you’re buying any of the company’s trademarks during the purchase. Such assets are to be listed in the legal documents of the sale.

Conduct Due Diligence

It’s vital to conduct due diligence before buying an online business for sale. To do this accurately, we recommend creating a checklist of things to review when purchasing a digital asset. These can include things like information on traffic sources, Google AdSense, financial trends, and even trademarks.

We recommend asking the previous owners for any paperwork they may have related to their business’s legality. This paperwork should include legal documents for employees as well as the company’s filing status. Once you’ve reviewed these documents, it’s time for your research.

Unless it’s a small, one-person company, regardless of the size of the company you’re buying, the owner must have registered with the local government agency. 

You must also review the business’s filing status. If you’ve decided to run the business by yourself, you will be the sole proprietor. However, you must remember that this role can attract several personal legal risks. If you want to steer clear of any focus on you after your purchase of the business, we recommend registering it as a Limited Liability Company (LLC). 

It may seem daunting to navigate through the legalities of buying an e-commerce business. However, you can have open and candid discussions with the current owner to learn about their experiences. You can always hire a legal professional for help if you find yourself or the owner in a tough spot. These professionals can help alleviate all the legal pressure while you can focus on other, more pressing business matters.

12. Sale Price And  Value of the Online Business for Sale

All the steps discussed above offer a solid foundation for the correct and proper method of buying an e-commerce business for sale. However, it’s important to remember that the previous owner is trying to persuade you to buy something from them. Essentially, they are looking to earn a profit and gain something from all the work they’ve put into building the business. Consequently, it’s your responsibility to determine the sale price and valuation.

Take Your Ideas and Goals Into Consideration

If you want to understand how much you should pay for the online business for sale, you’ll have to take the literal valuation approach (discussed below). However, realistically, you also need to take your business goals and ideas into consideration as they can influence the value of a business for you. For instance, you may be able to justify paying a premium price for a business if you feel confident in your ability to increase its yearly profits.

You should still attempt to negotiate to bring the proposed rate down as much as possible—even when taking your business ideas into account. Don’t forget that sellers are trying to make as much money as they can through this transaction. It’s very likely that their first proposed rate only represents an initial starting point for further discussions. You can use your negotiation skills, persuasion, strategies, and power to lower the price and find an acceptable rate to pay.

The Valuation Process

We recommend using multiple to create a foundation for your valuation of the business. Sellers will cite their investments in marketing and design and other elements to try to sell their website at a premium. However, such sunk costs are of no use to you. Regardless of the previous owner’s investments, you need to figure out if the price they’ve set works for your processes and budget.

It is standard practice for businesses to set their selling prices at 1-3 times their annual profit. To put it simply, a business selling for €30,000 to €90,000, it’s likely generating an annual profit of €30,000 per year. Spending three times the yearly profit would mean you’d have to wait a couple of years to see sufficient returns or do something to increase the business’s yearly profits sooner. Therefore, we recommend targeting the lower end of the spectrum.

13. Decide How You’ll Finance This Purchase

You can reach out to the Small Business Administration, an online lender, or review traditional banks to determine how you’ll finance the purchase of an online business for sale. You may be able to find sellers who offer financing or equity financing for purchasers. Your risk profile, cash reserves, and asking price are some of the key deciding factors when it comes to choosing the right type of financing.

Off-Balance Sheet Financing

Off-balance sheet financing is a specific accounting method which allows companies to record certain liabilities or assets in a way that prevents them from appearing on the balance sheet. When companies are about to reach their borrowing limit or need a large amount of capital, that’s when they typically use this accounting method.

Using the off-balance sheet accounting technique allows companies to keep certain things off their balance sheet to ensure their leverage and debt-to-equity ratios remain low. Consequently, this allows them to raise more capital while benefiting from a relatively lower interest rate.

We recommend using this method if you need to borrow a large sum of money or if traditional loans are impossible for you to get. This is mostly because of the high risks associated with this.

Mezzanine Capital

Mezzanine capital combines equity and debt financing giving the seller the authority to convert the debt into an equity interest if there’s a default. However, it is pertinent to note that, unlike equity financing (discussed below) this financing type isn’t secured by specific assets of the company.

Mezzanine capital is based on the expected as well as historical cash flows. While the interest on this financing type is relatively high, it is tax-deductible. 

It works in a similar fashion as when most people buy a property or a house: you’ll be required to pay a downpayment and the remaining amount will be treated as a loan that you’ll pay over time.

Equity Financing

Through equity financing, business owners are able to retain a certain percentage of business ownership. The primary advantage for you here is that you’ll be paying a relatively lower amount for acquisition and gaining insights and expertise from the previous owner. The downside is that you’ll have to let go of some of that autonomy.

Some business owners prefer getting rid of the entire ownership to focus on other ventures, while some like to maintain limited control. It is also pertinent to note that an objective third-party company valuation will determine the previous owner’s equity share.

Debt Financing

Debt financing is when the buyer takes over the responsibility of the business’s existing liabilities and debt, which are then reduced from the asking price. This means that you’ll need to generate sufficient cash flow to cover the debt service–making this a high-reward, high-risk financing strategy.

Before taking this approach, we recommend carefully evaluating the business’s projected net profit margins and cash flow. This method can remove the pressure of taking out a massive loan or purchasing a business in cash. Moreover, it can help prevent complicated valuation discussions and simplify price negotiations.

Looking for early-stage venture capital? Take a look at our list of top 30 options now!

14. Discover the Dealflow of the Online Business for Sale

It goes without saying that making a great investment is all but a numbers game. You make your selection based on the risk profile and your area of expertise and budget. All of this comes after sifting through countless deals.

The quantity and quality of investment opportunities that you come across as an investor is referred to as dealflow. Finding a good dealflow is crucial to avoid getting stuck on a single business opportunity and to ensure you’re keeping an objective opinion on matters.

It’s important to note you’ll need to build meaningful connections with business owners looking to sell their online business as well as with investors and brokers to achieve dealflow. Doing this will enable you to learn about all the new acquisition opportunities in the e-commerce landscape through your professional network.

At this point, you should have a clear picture and a solid understanding of what to look for when buying an e-commerce business for sale. Now, it’s time to convert your thoughts into actions. Start by looking for the right e-commerce store for you. Contacting suppliers comes next followed by developing a supply chain, coordinating with third-party providers, and more.

Ready to buy your first-ever e-commerce business? Click here to find out where to buy one!

Key Takeaways

Managed to get to the end of our comprehensive guide? This tells us you’re legitimately serious about buying an e-commerce website! As we’ve established throughout this guide, purchasing an already-established store comes with its own set of perks—especially in the beginning. For example, you’re already aware of the business’s ability to generate profit and scale up. Moreover, the company likely already has an extensive list of prospective customers and an email list.

You can find and acquire a business with the right opportunities to grow your skill set through adequate, thorough research. You’ll eliminate all the growing pains of building a new e-commerce business by finding one that’s already successful. These are the businesses that have already covered their legal, financial, marketing, supply chain, and niche issues.

Remember to take your personal goals and interests into consideration and look beyond revenues and costs. If you have already bought or are looking to buy an online business for sale, perhaps our team of expert e-commerce managers can help. Get in touch with us now to find out how.

Frequently Asked Questions

Is buying a website a good idea?

When done right, buying an e-commerce business can prove extremely advantageous—even more so than building one from scratch. With an already-established business, you can enjoy perks like high returns, location independence, and intellectual stimulation. However, you must also take its disadvantages into consideration. These can include several legal and operational risks, the absence of a learning curve, and a fast-paced work environment.

How much money can a website make?

Websites have the ability to make a residual monthly income of six or even seven figures. However, this revenue significantly depends on the way you choose to monetise your website and the traffic that it’s able to generate. According to recent stats, you can expect a CTR (click-through rate) of about 3% on your website.

How can I monetise a website?

There are several ways to monetise your website, including sponsored content, website flipping, selling products and services, requesting donations, charging for your premium content, affiliate marketing, direct advertising, and Google AdSense.

How much does it cost to buy an e-commerce store?

The cost to buy an e-commerce store varies based on a number of different factors, including the stage of the business as well as the annual profits it’s able to generate. When considering costs, you’ll need to consider a variety of charges for things like web hosting, e-commerce platform, creative, payment processing, total setup, and more. In addition to the obvious costs, you must also consider the cost of time that you’ll be spending building and scaling the business.

Should I buy an e-commerce business instead of building one?

Buying an online business for sale comes with many perks—especially for new businesses that prefer to invest their resources in growth instead of development and those that prioritise a reliable foundation and a quick launch. In the end, the final decision will depend on your personal preferences, interests, and business goals and ideas.

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