With an exponential growth of eCommerce over the last few years, it is no surprise that many entrepreneurs are interested in making their own way into the industry. For many, this starts with an in-house plan that grows into life with the help of the UK’s best eCommerce website development agencies, such as Myk Baxter Marketing.
For very little investment, anyone can start an eCommerce store today, but to have one that really makes profit, you need to invest time into more moving parts. A lot depends on the goods, the manufacturing location, logistics, marketing, website usability, promotions and brand awareness.
That’s why many entrepreneurs prefer to buy an already-active eCommerce business instead of building one from scratch, skipping the start-up phase and going straight into rebranding, restructuring or redesigning to streamline profits.
For those who have a successful eCommerce company, it can be worthwhile keeping an eye on the market, as a boom in trade could see the sale of the business as a very lucrative move. Freeing up cash to go ahead and start that other project that’s been on the back-burner for years.
For those looking to enter the market, bootstrapping can be a tough gig to get into. Especially when the need for income and profit are more important than ever right now.
Pros and Cons of Buying and eCommerce Store
There are various reasons why you may want to buy an eCommerce store rather than work your way through the start-up phase. It saves times and scaling becomes much easier as there is already systems set up and (hopefully) profits coming in. However, it takes a large up-front investment and it can take time to familiarise yourself with the business and to find that perfect deal.
For selling, the same reasons apply, but in reverse. It may be time to move on to another project or your situation has changed. Then, a large up-front cash injection can be just the thing to get that going. Also, at this time with so many entrepreneurs keen to get into the market, it can incentivise you to push profits and streamline systems to add value, or at times, increase profits to a point you decide to hold on for a time.
Valuation
But how do you value an eCommerce store? There’s often far less physical assets involved, so judging the value of a ‘virtual space’ can be challenging. At the heart of any valuation sits profit, measured over the number of months best applicable to your business operations.
Age also plays a significant part. The longer a business has been around generating consistent revenue, the likelier it is that the products are not just another trend that will die out when the next peak season comes around.
Diversity in traffic is also key. If you’re looking to sell but your website is lacking sources of traffic that help mitigate risk from sudden drops in traffic and sales, it will be a red flag for buyers.
The three most common sources of traffic for an eCommerce business include SEO, Paid traffic and traffic from social media. Also, the main marketplace that generates the most traffic should always be the brand’s main market for sales.
Myk Baxter Marketing can help upscale your eCommerce website to be sales ready, or offer advice for those contemplating whether to start their own business or buy up an existing digital store.
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