How to Buy an E-commerce Business

• By : Staff Writer
• Business Development
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Nowadays, most people want to know how to buy an e-commerce business. In a world where different transactions are being performed by people on the internet, there’s more to owning an e-commerce store. However, where do we begin?

The Ecommerce business model is gradually increasing in popularity. As an entrepreneur, you could start your own eCommerce store from the scratch, but that doesn’t guarantee you will ever make any money. This is why many investors and entrepreneurs prefer to buy an already successful business, thus skipping the business-building stage.

Purchasing an E-commerce business or any business is never an easy task. While things may appear to be fine on the surface, every business face challenges, especially small ones. But first, let’s find out the meaning of an eCommerce business.

Table of Contents

• What is an E-commerce Business?
• How does an E-commerce Business Work?
• How to Make Money from an Ecommerce Business
• What to look for when buying an eCommerce business
• How to Buy an Existing Ecommerce Business
• Conclusion

What is an E-commerce Business?

Ecommerce business is the process of purchasing and selling goods or services, transferring money, and transferring data via an electronic medium (Internet). This network enables people to conduct business without regard to distance or time constraints.

When most people think of eCommerce, they envision an online commercial transaction between a supplier and a customer. However, while this idea is correct, we can be more specific and divide Ecommerce into several types.

Business to Business

A business-to-business eCommerce transaction occurs when one company sells to another. This could be a physical product such as raw construction materials. It could also exist as a digital product or service.

Business to Consumer

The establishment of electronic business relationships between businesses and final consumers distinguishes business-to-consumer eCommerce. It corresponds to the retail section of eCommerce, where traditional retail trade usually takes place. These kinds of relationships can be easier and more dynamic, but they can also be sporadic or terminated. This is because of the advent of the web, this type of commerce has grown significantly, and there are now many virtual stores and malls on the Internet that sell a wide range of consumer goods, including computers, software, books, shoes, cars, food, financial products, digital publications and so on.

Consumer to Consumer

The C2C model, also known as an online marketplace, allows people to sell their goods and services to one another. The marketplace is hosted by the company, which charges a small fee for each transaction between consumers. This model is unique.

Consumer to Business

This is a type of eCommerce whereby consumers make their goods and services available online for bids and purchases by businesses. This is the opposite of the traditional B2C commerce model.

A popular example of a C2B platform is stock which sells royalty-free photographs, images, media, and design elements. A job board is another example.

Business to Administration

This category of Ecommerce includes all online transactions between businesses and government agencies. This is a large and diverse range of services, employment, legal documents and registers, and so on. With government investments, these types of services have grown significantly in recent years.

Consumer to Administration

This refers to online transactions between individuals and public administration or government bodies. Although the government rarely purchases goods or services from citizens, people frequently use electronic means in the following areas.

Disseminating information

Distance learning online lectures and so on are all examples of education.

Social safety net.

Making payments, distributing information, and so on.

Taxes.

Making payments, submitting tax returns, and so forth.

How does an E-commerce Business Work?

Ecommerce is powered by the internet and customers can use their own devices to browse through an online store and place orders for products or services.

As the order is placed, the customer’s web browser will communicate with the server hosting the eCommerce website. Data from the order will then be routed to a central computer known as the order manager, which will then route it to databases that manage inventory levels. Merchant system that manages payment information (via applications such as PayPal), and a bank computer before returning to the order manager. This is done to ensure that the store’s inventory and customer funds are sufficient to process the order. The order manager will be notified once the order has been validated.

Although there are significant differences between starting an eCommerce business and starting a brick-and-mortar business, there are also several similarities. As we’ll see below, many of the planning and legal steps you’ll need to take will be similar( more or less) to those of any other business. However, once you get started you’ll realize how different starting an eCommerce business can be.

Choosing a Product

Knowing what products you want to sell directly to consumers is the first step in creating an eCommerce store. This is typically the most challenging aspect of starting a new online business.

Find a Good Name and a Legal Structure

After you’ve decided on a name for your eCommerce venture, the next step is to come up with one. As with any other business, you’ll want to choose a name that is distinct while also clearly indicating what your company is or does.

Next, decide on a legal structure for your company. The type of business entity you choose will have significant legal and financial implications for your eCommerce operation. In most cases, you’ll establish a sole proprietorship, general partnership, limited liability company (LLC), or corporation. Each of these entity types has advantages and disadvantages, so you may want to consult an attorney or another legal professional for advice on the best option for your business.

Choose an E-commerce Platform and Create Your Website

You’ve finished the paperwork needed to register and legally launch your eCommerce business. As a result, the majority of our steps thus far have mirrored the process of launching a traditional brick-and-mortar business. Instead of looking for a location and preparing to open your physical store, you’ll now start working on your website and online store.

This website, like a physical storefront, will serve as your company’s public face. It will be the first thing your customers see and will be used to browse and purchase your products or services. Keeping this in mind, developing your website will be one of the most important aspects of launching your eCommerce venture. As you plan your online presence, you should keep a few things in mind.

Apply for an EIN

Following that, you’ll need to apply for an EIN or employer identification number, for your eCommerce venture. Even though not all business entities are required to have an EIN, this nine-digit number can assist you in keeping your personal and business finances separate. Furthermore, you can obtain an EIN from the IRS for free if you apply online, by mail, fax, or phone. It is because you’re learning how to start an eCommerce business, you’ll most likely want to apply for this business tax ID online and you’ll receive your number immediately.

How to Make Money from an Ecommerce Business

Opportunities continue to abound in the online market. There are still billions of dollars to be made in eCommerce, so it’s no surprise that new businesses are springing up daily. If you’re struggling to make a goal of your eCommerce business or want to see massive growth this year, here are proven ways to make more money online.

Optimize for mobile

E-marketers report that mobile devices account for 59% of all eCommerce sales. Furthermore, small retailers outperform larger corporations in terms of mobile conversion rate, making mobile optimization critical. Consider optimizing your website for mobile devices if you want to make money through eCommerce. When mobile users have a positive experience on your website, they become repeat customers.

Start Your Blog

Getting enough traffic to your website is one of the most difficult aspects of growing an eCommerce business. Most eCommerce businesses rely on paid advertisements to generate sales, but this is costly and reduces profit margins. I recommend focusing on an inbound marketing strategy to improve your store’s organic search results rankings. It takes more time than purchasing advertisements, but the payoff is greater.

An active blog is the foundation of an effective inbound marketing campaign. An overview of the customer research journey should be included in every content marketing plan. Defining the customer’s research journey entails considering what your prospective customers are looking for the questions and problems they are experiencing and tailoring your blog content to address their main points.

Invest in PIM

Getting your products online, according to the motley fool, is an effective eCommerce strategy for increasing sales. Search engines love eCommerce companies that have an easy-to-use user interface and share products regularly. Consider purchasing product information management systems to gain a competitive advantage and ensure long-term eCommerce success.

Africans can bulk update content with enhanced data so that customers see the most up-to-date information. PIM software facilitates product upload and allows internal teams to collaborate. In addition, the system optimizes meta descriptions and titles for page ranking in order to increase sales.

Invest in the right software 

Choosing the best platform for your eCommerce business is an important decision. Before you make a commitment, take the time to do your homework. Consider not only the company you have now and the sales you will have in the first few years but also the growth and sales you will have as you grow. Before investing to accelerate growth and earn a desirable income, research your potential options growth, and sales history.

Use Shopping Advertisement

According to big commerce, starting with shopping ads is the best way to earn money with eCommerce, if you want to generate sales right away for your eCommerce business, use shopping ads. Product-specific paid ads combined with effective marketing strategies should be considered by African eCommerce companies and marketers seeking growth.

Another way for Africans to make money with eCommerce is through Google shopping ads. If your product description matches the needs of a customer searching for products on Google, the product will appear on the screen. Africans can earn money by creating ads that target customers from the start, with no restrictions or national barriers.

What to look for when buying an eCommerce business

Starting a business in the eCommerce sector is difficult due to market saturation, which is why many astute business owners choose to purchase an already established eCommerce store. There are many things you can do to increase sales and grow your eCommerce business, but first, here are some steps to buying the eCommerce website store you want while minimizing risk and maximizing your chance of success.

The store’s traffic

An online business cannot survive without traffic when considering purchasing an eCommerce business, one of the first things you should consider is traffic. You’ll want to look into traffic trends and where that traffic is coming to your website. Examine each source of traffic for different trends and then examine them on a weekly, monthly, and yearly basis. 

What are the current trends doing? Is there a decrease in traffic? Has it recently risen? Are there any spikes that need to be explained? Check to see if the website has been penalized by any of the major search engines. Once you’ve got a sense of how the traffic is performing, you should begin focusing on each individual traffic source. Examine the most popular traffic sources which are typically searched, social, and referral. If the company is performing well in the search results, dig deeper to determine which keywords it is ranking for and how those keywords account for the total amount of traffic coming into the store. It. is also critical that you consider the number and quality of links coming into the site.

Suppliers & deals

It is critical to understand the relationship that the previous owner established with their supplier. When you’re considering purchasing the business, you’ll be entering into these supplier agreements, so you’ll need to understand how they were formed, what the terms of the deal are, and whether or not those suppliers can be replaced. You should also determine how reliant the previous owner was on a single supplier, how long those relationships have been in place, and whether or not you could potentially negotiate better deals. If you want to buy a business with a low reliance on a single supplier, long-standing beneficial connections with the suppliers, and additional suppliers you may utilize in the future, you’ve found an ideal situation.

Accounting

When considering purchasing a business, you should spend a significant amount of time reviewing the accounting verifying the revenues and other accounting figures provided by the previous owner is critical to successfully acquiring a business and avoiding problems down the road. As an investor, it is your responsibility to request all monthly reports, from finances to the shopping cart, and to ensure that you receive at least 12 months of data. Check this information against the information provided by the payment processor and bank statements to ensure that nothing is hidden or undeclared. You will also need to investigate the company expenses.

Request every expense report you can think of, from inventory purchases to hosting software subscription, employee wages, advertising costs, and reports detailing the fees charged by their payment processor.

Customers

When you own an eCommerce business, keeping your customers engaged and providing excellent service is critical to your long-term success. When considering purchasing an eCommerce business, go through the customer list and determine how engaged they are with the company and how well they are being taken care of. You could look at how many visitors return to the store more than once, how many repeat customers the store has, and how many positive reviews the store has received. You are looking for indicators of positive customer engagement and satisfied customers.

Spend time digging through the customer support logs and support ticket requests when it comes to servicing those customers. Examine the number of requests made, the time it looks to respond to them, and the feedback left by the customers after the ticket was resolved. If there are a large number of chargebacks or refunds, you can assume that there will be significant customer service issues that must be addressed as well.

Digital Intelligence

Is your prospective new business a success on the internet? Again, you must research the current outlook for your digital presence investment, as this will have a significant impact. How effective is their content strategy? Is it true that they are active on social media? What networks appear to be working for them right now and where are they falling short? Again, you should look for successes as well as opportunities to grow and develop the business. Don’t forget to look at their conversion rates- are they converting site visitors into customers.

Examine their traffic sources carefully: do they rely solely or excessively on paid advertising? Where are they currently investing in advertisements? On social media or through search engines? Examine the return on investment.

Most eCommerce store marketplaces provide verified traffic data and even revenues, giving you a clear picture of the store’s current position. Investigate their SEO and website analytics, you might be pleasantly surprised. If their SEO is poor, you have a great opportunity to improve things. If their SEO is good, you’ll have more time to focus on other ways to grow the business.

How to Buy an Existing Ecommerce Business

Purchasing an eCommerce business, or any business, is never an easy task (or cheap). While things may appear to be fine on the surface, every business has a few “minor issues,” especially small ones. In this post, I’d like to discuss the advice I give to friends and acquaintances who tell me about their big plans. Here are a few steps we can look at.

Stick to facts and remove Aspirational pitches

It’s easy to get caught up in business owners’ aspirational sales pitches. You know the type “I haven’t put much effort into but you could easily triple your income if you did” oh, for real? If that’s the case, why hasn’t the seller already tripled the income? They’d be able to line their pockets and sell the company for a lot more money if they did this. Make no mistake, if tripling turnover was as simple as they would have you believe, they would have done it themselves.

When you find an eCommerce business for sale, go straight to the numbers- net income profit margin, and operating costs. Don’t get caught up in the glitz and glam of a sales pitch. It has no meaning whatsoever.

Are Sales Sustainable to be Determined?

Every few years, there is a yo-yo craze in the United Kingdom. For a month or two, kids go absolutely crazy for yoyos and yo-yo sellers must make a fortune. According to David Strang, managing director of Wicked Vision, the distributor of Duncan yo-yos has enjoyed a surge in popularity every 7 to 8 years in the United Kingdom for the past 80 years.

Then the craze fades and yo-yos become the epitome of  “uncool”. This I’d just one example of a market segment where sales aren’t sustainable or consistent. Would I invest in a yo-yo business? No, I don’t think so when purchasing an eCommerce business, it is critical to ensure that there is consistent demand for the products you intend to sell. You’d pay top dollar if you bought a yo-yo business after a month of high demand. When demand fades, you’ll be left with a business that generates very little revenue.

For most eCommerce businesses, certain seasons such as Christmas can be more profitable than others. But you want to buy an eCommerce business whose sales are fairly consistent year after year, not one whose sales are spread out over years or even decades.

Know why it’s for Sale

You don’t just sell a profitable business without giving it some thought. For many people, it’s a desire to retire early and live a carefree life. Others find it necessary to divest one business in order to focus entirely on another. Investigate the reasons for the sale of the business you’re interested in. Numerous salesmen sell worthless online businesses for exorbitant sums of money.

If a person does not appear to have a genuine reason for selling a business ( as far as you can tell). Red flags should go up, and you should conduct additional due diligence before parting with a dime.

Talk to Suppliers

Many suppliers have selected distribution agreements in place. Many of those suppliers are still hesitant to distribute to online retailers or, in their minds, to unknown parts (or people) just because a company currently sells x, y, or z products does not guarantee that their supplier will continue to supply you after you purchase the company.

Keeping this in mind, obtain written confirmation from suppliers that they will continue to support you if you purchase the website or business from the seller. If not, it may be time to exist or seriously consider alternative suppliers if you’ve determined that the business can still function without the current supplier.

Conclusion

Since it’s time to find your new online business, knowing what to look for before buying is important. Start checking for available Ecommerce businesses. Check out the asking prices. Doing so will teach you a lot that will assist you in making your own deal.

Also, before you make an offer, and especially before you buy something, make sure you do your homework and run the numbers to ensure that the financials, traffic, and other important aspects of the business are correct.