Questions to ask a seller

Hopefully, by now, you’ve spotted an eCommerce store that has piqued your interest. If not, see here for a list of places to find eCommerce stores for sale.

Now is the time to start asking sellers for more details.

The first thing I ask for is a summary P&L. I want to know if the store has a chance of being profitable before I invest more time in researching it.

I’ve had the information come back in varied forms; one was a screenshot of an excel spreadsheet! So don’t expect a full export of their Xero file.

Here you’re looking for how much profit you’ll make per sale, also known as unit economics. I’m always looking for products that sell for over $100 and have a gross margin of $50. This gives me some buffer to pay for ads, as it’s hard to make a sale on Facebook for under $25.

Gross margin is the money left after GST/VAT/Sales tax, the cost to buy the product and get it to the place I ship it to customers from (i.e. warehouse).

If those numbers stack up I then send a word doc with more detailed questions, depending on what I want to know.