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Buying a eCommerce business?

nickgraham1234

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Has anyone here bought a business in the eCommerce space? I stumbled across exchange marketplace, some are claiming 2-3k profit a month asking under 15k. That pricing doesnt really make sense to me. I feel like if it seems to good to be true, it is..right? Anyways I just was wondering if anyone has bought a business in the eCommerce space and could give me a run down on what to look out for. Thanks :)
 
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Lucky Lu

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I have pretty much the same questions. There are several fairly cheap online business for sale that supposedly have decent anounts guaranteed in revenue. Seems like a great side hustle but also feels too easy.
 

Bubbles

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I've been looking at acquiring businesses for a bit now. i've observed that alot of these ecommerce sites are doing dropshipping and buying ads off facebook. so there's not much competitive moats or product differentiation. You technically can reverse engineer their whole business in a couple days.
 
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Greg R

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There are many people on here that have bought and sold eCommerce businesses (including me).

I can tell you that all proforma numbers are going to be just that, proforma numbers. And they should be treated that way.

When I bought my current business, the final price was 62% less than the owner was asking.

What you need to do is to figure out if there is a deal there. How you evaluate and allocate the price is really the last aspect of the deal.

Here are some questions to ask yourself.
  1. Is the deal (in general) in my price range, if not can I obtain financing for it?
  2. Is the business model something that plays to my strengths and can I drastically improve the company?
  3. What resources are going to be required of me to build this business to where I need it to be?
  4. What are the seller's motivations for selling
This is just a small sample. There are plenty more.

Happy business hunting. :)
 

CareCPA

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doitman

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I mainly deal in businesses that have a recurring revenue model. Typically online or digital software and service related businesses. Currently I stay away from ecommerce because it doesn't mesh well with my skill set. But if were good at online marketing and sales, I'd get into ecommerce.

From my experience buying ecommerce businesses, which I have failed at, the issue is lack of barrier of entry. A lot of the ecommerce businesses that are for sale have a small window of success, maybe 3-12 months, and then sales start to drop because competition and copy-cat businesses spring up and sell the same products, especially in the dropship arena.

So if I had any advice, look for businesses that have a longer window of financial success. Also look for businesses that have products that differential themselves from others. Branding is important. Otherwise you will be disappointed.

If it doesn't make sense to you, it probably doesn't. Why would a business owner sell an asset that is profitable, and that they can make that money after a few months versus selling it for the same amount of dollars?
 
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