E-commerce is only going to grow more and most people are now accustomed to shop online. So, you might dream of starting your online store as well, but with so much to do, you are now not interested in all that hard work. So, why not buy an existing Shopify store that is already running? Yes, you can do that. This is the only guide you need on how to buy a Shopify store.
Why Buying an Existing Shopify Store is a Good Idea?
Taking over a Shopify store is a smart way to jump into e-commerce with a ready-made business that’s already bringing in cash. You’ll skip the headaches of building a store from the ground up. Your job now is to manage the existing operations and find ideas to grow your business. You are skipping the early stages where many businesses fail.
And since you are buying an online business, you can just start the work from the comfort of your home.
Another plus is that you’ll have an established customer base. This is invaluable as it means you can generate your first sale almost instantly. You’ll also benefit from existing data and customer loyalty.
Buying an existing store also helps you avoid procrastination. The hard part of starting an online store is already done for you. You won’t get stuck on small details like choosing a logo or colour scheme, which can often delay new entrepreneurs.
If you are good at marketing, you can just buy an existing Shopify store, improve its revenue and sell it to someone else. It is called website flipping and many people do it to generate a good income.
While there are many benefits, there is one major downside. While ideally, you’d buy a solid business from an owner who’s simply retiring, you might find many issues later. So you need proper due diligence before the purchase. We will also teach you how to do that in this article.
Is it profitable to buy a Shopify store?
It is recommended to buy a Shopify Store that is already generating profits. The profitability of Shopify stores can vary. According to Shopify, about 81% of Shopify merchants see profitability after two years, with the average annual revenue hitting around $155,000.
To maximize profitability, focus on businesses with high-profit margin products and stay abreast of consumer trends. It is also important to buy the store at the right valuation. If you more than what the business is worth and without proper planning, it will be difficult to even recover the cost you paid to buy the store.
Can I transfer my Shopify store to a new owner?
Yes, you can transfer a Shopify store to a new owner. The process involves transferring ownership in the Shopify Dashboard. From your Dashboard, go to Stores > click Settings > Users and permissions. In the Store Owner section, click Transfer ownership. Fill in the new store owner’s information and select Transfer store ownership.
Is it legal to sell the Shopify store?
Yes, it is legal to sell a Shopify store. Shopify allows it but there are other important legal considerations to keep in mind. When selling or buying a Shopify store, you need to ensure the business is legitimate and compliant with relevant laws and regulations.
This includes having the necessary licenses and permits. It’s also crucial to comply with consumer protection laws, data protection regulations like GDPR and CCPA, product regulations, and shipping and transportation regulations.
Remember, when you sell globally, you need to comply with both the laws of your store’s location and the laws of the places where you ship. Always provide accurate contact information, a clear refund policy, and transparent order fulfilment timelines in your store.
6 Steps To Buy A Shopify Store for Sale
To simplify the following, here is a simple 6-step checklist you can follow to start the process of buying an existing Shopify Store:
- Setting Your Budget and Niche: The first thing to do is to decide your budget to narrow down the choices. Then, consider the type of eCommerce business you want to acquire: which niche (clothing, electronics etc.) what audience base, dropshipping or not.
- Where to Find the Right Shopify Store: It’s difficult to find businesses on sale on your own, so it’s better to try online marketplaces like Ecomswap to explore various online businesses. We will also help you with the whole due diligence and transfer process.
- Evaluating Shopify Stores: We will talk about it after when you want to shortlist from so many stores, here are some key areas to focus on Revenue, SEO, Content Marketing, and Assets.
- Due Diligence: Now you have a Shopify store in mind, do the proper due diligence: Verify the financial statements, business licenses, regulatory documents, and tax returns. Also if possible, try to do a meeting with the seller and ask these important questions.
- Negotiations: Identify key terms for the purchase agreement, including asset transfer and non-compete clauses. Negotiate the price based not just on current financial performance, but also on the future growth potential.
- Transfer of Ownership: Draft a Letter of Intent (LOI) outlining your intention to buy, proposed price, and terms. Agree on payment terms, including initial deposit, instalments, and final payment. Use an escrow service for secure fund transfers. If you are already finding it too complex, we at Ecomswap with help you with all that.
One pro tip is to ask the seller if he is ready to provide support for the upcoming month or two after the sale. This will help you in learning more about the store and any missing information that you can get from the past owner.
By following these steps, you’ll be well-prepared to find and acquire a Shopify store that aligns with your goals and has the potential for growth and profitability.
How to Do Complete Evaluation of Shopify Store?
When you’re looking to buy any type of E-commerce store, conducting a thorough evaluation is crucial. We already have a guide on website due diligence but the following metrics are important when buying a Shopify store This process helps you understand the store’s potential and make an informed decision.
Assessing Store Performance
Start by examining the store’s overall performance. Look at key metrics such as conversion rate, average order value (AOV), and customer lifetime value (CLV). High-converting stores typically monitor these metrics closely. A low conversion rate might indicate issues with product pages or the checkout process.
Use Shopify’s analytics tools to track these metrics and identify areas for improvement.
Also, look out for the Quality of the website design and user experience. A good design and amazing UI/UX will save you time by working on the whole redesign process later.
Analyzing Traffic Sources
Understanding where the store’s traffic comes from is vital. Shopify analytics lets you track traffic sources and see which drives the most conversions. This data can inform budget allocation for advertising and identify the most effective marketing channels. Pay attention to:
- Organic search traffic
- Paid advertising performance
- Social media engagement
- Email marketing effectiveness
- The store’s brand reputation
- Backlink profile
It’s better to choose a Shopify store which has more than one traffic source. For example, if the store is too dependent on Instagram Ads, then one simple change in their Ad policy will significantly decrease your traffic. But this also suggests you growth opportunities where you can identify new traffic sources like SEO or Influencer marketing.
Reviewing Financials
Examine the store’s financial health by looking at:
- Revenue and profit over the last 1-3 years
- Operating costs and Profit margins
- Inventory and Assets
- Cash Flow & Debt
- Payment Processors and Transactions Data
Use Shopify’s financial reports to get a clear picture of the store’s economic performance.
Supplier Relationships
Evaluate the store’s relationships with suppliers. Strong supplier relationships can impact the entire procurement process, reduce costs, and improve supply chain management. Consider:
- The reliability of current suppliers
- Terms of existing agreements
- Potential for negotiating better deals
Remember, good supplier relationships can help prevent stockouts, which cost retailers billions in missed sales annually.
Customer Base
Analyze the store’s customer demographics and behavior. Shopify provides tools to segment customers based on factors like:
- Age
- Gender
- Location
- Purchase history
- Average order value
Understanding these aspects helps in tailoring marketing strategies and product offerings to your target audience.
Identifying Growth Opportunities
Look for potential areas of expansion or improvement. This might include:
- Optimizing the marketing
- Reducing Operating Costs
- Untapped market segments
- New product lines
- Opportunities for cross-selling or upselling
- Potential for international expansion
Remember, a complete evaluation goes beyond just the numbers. It involves understanding the store’s position in the market, its potential for growth, and any challenges it might face.
Conclusion
Buying a Shopify store can be a smart shortcut to e-commerce success, skipping the initial setup hurdles and jumping straight into a ready-made business. Remember, thorough due diligence is crucial when investing in an existing online business. With the right approach and a bit of savvy, this can put you on the fast track to running a thriving online business.