How to Buy an Existing eCommerce Store – December 2016 Results

January 6th, 2017

One of my goals for 2017 is to expand my sales channels beyond Amazon, and learn how to create demand for new products.  My business continues to do very well selling on Amazon (2016 was by far our best year yet), but I believe it’s time to add in some diversification and test other platforms as well.  Thus far my business has focused primarily on products that have existing demand.  I recently purchased an existing eCommerce website that I will be working to build a business around to test out creating demand for products.  I plan on sharing some initial details on the purchase, some of my plans for the site going forward, and will provide regular updates here on the blog.

I have been browsing different websites for sale over the past 6 months, and ended up purchasing an eCommerce website about 3 months ago.

I was initially thinking about investing in some additional real estate, and that got me thinking about other options that might not tie up as much capital. I already do have an owner occupied duplex, but having another property that I am not on site to manage would be a different story. This led me to thinking about “virtual real estate” and I started browsing different websites that are for sale.  A few of my favorite websites to browse for websites for sale are:

  1. www.empireflippers.com
  2. www.flippa.com
  3. exchange.shopify.com

My thought was that buying a website or an existing eCommerce store would allow for similar profit potential to actual real estate, with a much lower capital investment.  It would also come with a higher upside, as with multi-family rentals (which I am interested in) there is a cap to how much rent you can make per month.  An eCommerce site doesn’t have those same limitations.

I started off simply browsing websites that were for sale.  I did not have very specific criteria, but wanted to see what the different options out there were. I would check every few days to see if anything caught my eye.  It took a couple months of looking and then one day there was a site that caught my eye.  It was an eCommerce site, and seemed to have some good potential, had some decent sales over the past few months, had proven ad campaigns, had a good looking website, had about $5,000 in retail value of inventory included, and had suppliers in place.  The prior owner was selling to be able to focus on other projects, and that seemed reasonable to me.  We will get a little more into this later.

I purchased the website about 2 months ago.  After completing the purchase, I worked with the seller to get the website, social media, email accounts, and everything transitioned over to me.  I placed test orders with the main suppliers to verify that they were legit, and received the remaining inventory from the seller.  Everything checked out through this process and by late November I was ready to get things up and running on my own.

Let’s look at some of the number so far:

Total Purchase Price of the eCommerce Store: $6,463.28.

Total spent on inventory from suppliers: $1,883.73

Total service charges (Shopify & Shipping costs for orders):$344.30

Facebook Ads: $693.25

Adesspresso (Tool I am using to manage Facebook Ads): $294

Wages (I hired an intern to help with the marketing): $410

Total Invested from time of purchase through December 31, 2016: $10,088.56

Total Sales for December: $399.03

Here’s a screenshot of my Shopify dashboard to verify (click to enlarge):

December 2016 Sales – Shopify Store

These are the stats for this project so far.  This is obviously not anywhere close to profitable at the moment, but I have not dedicated a ton of time to the project just yet.  I only had ads running for about half of December, as I didn’t want them running for the 20th through the end of the month as I didn’t want to have to ship the items while I was out of town for Christmas.

I have learned quite a few things so far through this project.  Here are a few of the highlights so far:

  1. I didn’t do enough due diligence prior to purchasing.  I asked the buyer quite a few questions prior to purchasing, but I did not get sufficient answers to all of the questions.  I also did not properly research the competition that was out there selling similar products.  If I purchase additional websites in the future, I will make sure to get answers to all of my questions, and do some fairly extensive research on the overall market of the website I am buying prior to making the purchase.  I think I let emotions take over a little more with this purchase as I really liked the site when I first saw it, and that led to not doing quite enough research.  I’m not sure if there’s such a thing as “impulse buying” a website, but that’s not too far off from what happened here.  There’s still a good chance I would have made the purchase, and I still think I can make it a success, but it would have been good to have done some more significant research prior to making the purchase.
  2. Facebook Ads definitely have a learning curve.  I initially started off testing the same ads that the prior owner of the website was running.  I did not see the same results as they did, but I did see some slight traction on a few of the things I have tested so far.  Definitely not enough to make the ads anywhere close to profitable, but I am starting to have some good data on what types of audiences get the most engagement.  I have also figured out how to setup a retargeting ad, among some other things that I believe will pay dividends going forward.
  3. Social media followers don’t necessarily translate to sales.  This store has over 10,000 followers across a few different platforms, but so far this has not translated into significant sales.  Part of this is due to the fact that I am somewhat reviving these audiences, as the prior owner effectively took a break from posting content.  I have been testing several things with this, but early results have shown that so far there’s not a direct correlation between followers and sales.  Definitely need more testing on this, but that’s an initial observation.
  4. Shopify makes building a website extremely easy.  One of the things that I placed a fairly high value on initially when purchasing this eCommerce store was the quality of the website.  It turns out that the entire website was done via a free Shopify theme.  Shopify has a built in website builder that works almost exactly the same as wordpress.  I’m very impressed with the capabilities of Shopify so far, but if I would have known this in advance, I might not have assigned as much value to the site prior to making the purchase.  I am looking forward to being able to test out other projects in the future on the Shopify platform.
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Those are a few early takeaways. Now onto a few things that I plan on working on in the foreseeable future:

  1. I am going to get these products listed for sale on Amazon.
  2. I am going to begin using Fulfillment by Amazon for the vast majority of the fulfillment of these products.  Shopify has a direct integration with Fulfillment by Amazon that will allow any orders that come from Shopify to automatically be fulfilled by Amazon.  This should be setup by the end of the month.
  3. I plan on setting up automation for all of the social media channels that we use for this website.  There are tools out there that make this relatively painless.  Getting this in place should drive additional traffic and hopefully sales as well.
  4. Optimize Facebook ads.  I plan on continuing to run ads and figure out the best way to make these work.
  5. Collect email addresses of potential customers.  At the moment, I am testing a coupon popup that offers a discount on a customers first purchase.  I’m going to let this run for awhile before making any determinations on how this will look in the future.  I also will setup an introductory autoresponder sequence for everyone who subscribes.

Overall, I am happy with where things are at so far. I definitely would have liked to see things take off faster, but I’m up for the challenge of getting this off the ground.  My first goal for the site is to get it up to making $1,000 per month profit.  Longer term I would like to be able to grow it beyond that or potentially sell the entire eCommerce website to someone else.  Existing eCommerce sites tend to sell for around 24-30 times the average monthly profits, so even if I can get this up to $1,000 a month in profit, selling would net me a size-able profit.  If I can automate things and see a consistent income stream, then it is less likely that I will sell, and will hang out to it for the relatively passive income.  We’ll see where it leads, but at some point I do want to sell a website.

We’ll wrap it up there for today.  I plan on further documenting how this project goes, and will share updates in the future.  At the moment, I am thinking monthly or quarterly I will provide an update on the financial results.  If you have any questions for me, topics you would like me to cover in more detail, or any input on how often you would like to see updates on this, please let me know in the comments!

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16 responses to “How to Buy an Existing eCommerce Store – December 2016 Results”

  1. Kent C says:

    Awesome. Thanks for sharing. You keep diversifying into different streams of income which is smart. FBA, wholesale, now e-commerce. What’s next private label?

    • Ryan Grant says:

      Hi Kent,

      Glad you enjoyed the post. I have some plans for private label in the future too, but one thing at a time 🙂

      Best Regards,
      Ryan

  2. Greg says:

    Thank you Ryan your posts are always very informative. I read them with great interest.

  3. Prince says:

    Great job Ryan..Very very brilliant
    and informative

  4. Marie Walton says:

    Thank you Ryan. Your new avenue is very interesting. Enjoy reading your posts.

  5. Commy says:

    Congratulations and thanks for sharing, very informative.

  6. Valerie says:

    Hi Ryan!
    I’m a little late to comment here. Somehow I missed this post. Thank you for sharing. I occasionally browse empire flippers although I have found their inventory to be relatively limited. I have also checked out Flippa but the whole website seems to be sort of clunky and confusing. Did you end up actually having luck their or did you go through Empire Flippers? Thanks again for post!

    • Ryan Grant says:

      Hi Valerie,

      Thanks for the comment. I didn’t purchase this site through empire flippers, but I still browse their inventory on a regular basis.

      Best Regards,
      Ryan

  7. Trudy says:

    Thank you for information. I was looking to buy a website. But now with bit of insight I may go with Shopify. Just starting out it sooooo confusing. Please keep sharing really thankful for honest input. Again thank you!
    Trudy

  8. Jay says:

    How do you address shipping matters to Amazon after purchasing products?

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