The first step to buying an eCommerce store isn’t searching listings.
Like going to the supermarket, buying a business involves setting out a list of requirements so you don’t end up coming away with just doughnuts and Nutella. Which makes you feel good in the short term, but doesn’t last long term!
It’s time to write an investment thesis.
They don’t have to be complicated, just a basic set of guidelines to keep you from making an emotional decision.
Here is a basic version I used to buy an eCommerce store…
- Established business at least 12 months
- Could have bumpy sales due to lack of stock control
- Inventory no drop shipping
- No fad-products
- Ideally in Australia (I live there)
- Could also be the UK (I’m from there)
- $X,XXX – $XX,XXX AUD cash down plus earn-out.
- Decent conversion rate
- Perennial product
- No extensive sizes i.e. clothing
- Average order value over $100
This is just what suited me and my position. You can buy them for as little as $500 and you might have other areas of expertise.
Also, I didn’t expect to (and didn’t) get each one of these, but the majority with a few non-negotiables.
The main limiting factor in my investment thesis was Australian based, but as I wanted an inventory holding business this was key for me, but might not be for you.
Time to write yours.