Know-How To Buy And Sell E-Commerce Business: A Guide
The ecommerce explosion has been beneficial for all involved. Shoppers get the convenience of browsing through a vast array of products from the comfort of their own home while getting terrific deals and discounts to enhance their shopping experience. Sellers are thriving while running their business and also cashing in on their success by handsomely selling it off. Buyers, too, are excited to buy successful businesses and take it to the next level with a fresh impetus of cash and ideas. The whole ecosystem is ripe with win-win arrangements for all involved.
If you are looking to put your ecommerce business for sale or looking to buy one, there are certain factors and steps that you must consider. Here’s a guide to help you understand these better in order to get the best value while selling or buying.
Understand The Business Metrics
The underlying factors that affect the performance of a business are several, and need to be understood individually as well as cumulatively. Fortunately, in ecommerce businesses, these are easy to gather and analyze. Some of the prominent ones include:
- Online store traffic
- Revenue earned per visitor
- Cost per acquisition
- Cost of good sold
- Average customer rating
- Rate of returns
As a seller, these metrics act as your business health report. Any gaps or downswings noticed here need to be plugged urgently. Not only does it help in maintaining a healthy revenue stream, it is also imperative for the subsequent step of business valuation that will help determine the price you can expect for your ecommerce business for sale.
As a buyer, too, these metrics become the fundamental while trying to understand the risks associated in buying and running this business on your own. While all these metrics may not be shared by the seller upfront, during the negotiation stages a lot of would be visible on the table.
Keep Financial Data Organized
Needless to say, it all comes down to the money. As a successful business owner you must already be doing this, which is, maintaining sound bookkeeping. All your inflows and outflows, P&L statements, tax filings, creditor outstandings, ledgers for receivables and payables, utility expenses, assets and liabilities, opex and capex and so on. This is usually the first thing a buyer will ask for. Not only does it help in determining the cost of operations, it also helps in ascertaining the future projections of growth and revenue.
Other Factors To Consider
While considering an ecommerce business for sale there are other tangible and intangible factors that need to be taken into account as well. How you look at them might change from a buyer or a seller’s perspective but the hard data remains the same. These factors include (but not limited to):
- Social Media Presence – After all, ecommerce is a technology driven sector and social buzz has a big say as a marketing channel and leading to higher traffic.
- Multichannel stores – Business with multiple channels for attracting traffic and sales with various modes of payments are more likely to be valued higher.
- Age – Businesses that have reached the threshold of 2 years of operations are considered a safer bet as they have proven their resilience.
- Diversified Inventory – Over reliance on a single product is deemed risky. Disruptions to the supply chain of the product or a shift in consumer demand can have a direct negative impact on the revenues of the ecommerce business for sale. Businesses that deal with a variety of products are looked upon more favorably.
- Scalability – This is probably more from the buyer’s perspective, but if your business has the scalability from business and technology perspectives then the buyer can see a potential for growth with lower investments. This is definitely more attractive than taking over a business and having to invest a lot more into it.
In Summation
The journey from listing an ecommerce business for sale to actually selling it can be a long and cumbersome one. It requires you to be mindful of a lot of factors while ensuring you get the best value for your toil and efforts. Any help along the way is much appreciated. This is where professional acquirers can be a great relief. By selling to them directly you can free yourself up from a lot of anxiety and stress while ensuring the best deal in the process. This can also help you get a proper valuation done and have mutually agreeable transfer of ownership terms and conditions.
Click here to know the e-commerce business evaluation process and how to complete the selling process with minimum amount of fuss while getting the best return.
