Looking to start an ecommerce side hustle? Buying a Shopify store can be great start.

26 Mar 2019

It’s easier than ever to get into ecommerce today.

There’s countless articles, guides, gurus, and discord channels channels helping someone to get started. However, if you’re new to ecommerce, this can be an intimidating start.

A great alternative is to start with an existing store.

Lucky for you, we’ve put together both an informative and entertaining (we hope) guide to start.

First things first, why should you bother with buying instead of starting one from scratch? Because, let’s face it, even with all the tools available to you there’s still ~a lot~ of work to do.

First, you have to select what you want to sell. Then, you need to figure out how to actually manufacture it and get it over to your country to ship. Most likely, this means you’re working with overseas manufacturers, many of whom don’t speak english well. Then, you’ll need to create the actual storefront and all the associated graphics. Canva helps a ton with this, but unless you have a design background, it’s probably not going to end up looking very professional. That’s just some of the initial startup tasks. Unless you’ve got all of those skills, it’s going to take you many, many hours and thousands of dollars.

Did that dampen your passion to start your own ecommerce business? Fear not, one alternative is to simply buy a store and skip most of these steps! We’ve been around the block a few times with buying stores, and we’re more than happy to share what we’ve learned on the process.

One last gif to get you hyped again before we dive in!

Step 1: Figure out your niche and your budget.

You don’t need to know exactly what product you want to sell yet, but you should have an idea of what type of product you want to sell. Ideally, it’s something that you both have experience in and passion for. Don’t think you have any relevant experience? Be creative and you’ll be surprised! There’s often products that are only popular in your city that many other people don’t know about, or you have stumbled across an interesting item on Tiktok you’ve never seen before. What things do you buy for yourself? If you like shopping for jewelry, chances are you are a lot more knowledgeable about what a good piece of jewelry looks like and what will be popular with other people similar to yourself. Are you into a niche hobby? You probably read up on the latest trends or complaints everyone in your hobby has. Use all of that to your advantage!

Now that you know what category you want your store to be in,the next question is how much of a budget you have. If you only have $100 - $500 to start, you’ll be able to get a fully designed store but not much more. If you’re able to spend $1000 or more, you’ll be able to actually buy a fully functioning store.

Step 2: Where to look for stores.

We’ve found the top sources to be: Flippa, Microacquire, and Shopify Exchange. These three sites don’t have a minimum listing price, so you’re able to often find starter businesses within everyone’s budget. They also do a great job of showing some verified data such as traffic and revenues, so you’re able to do a lot of filtering beforehand.

Step 3: Be patient and browse frequently.

Ecommerce owners are constantly putting up new stores for sale. Just because you’re excited and want to start today doesn’t mean you should though!

Start browsing listing sites regularly in your category to start getting a sense of what stores are being put up for sale. You will notice that some are more expensive, and some are cheaper. You’ll also start seeing the reasons why people are selling. What you want to do is build up a sense of what is a good store vs a bad store for the price. There are many factors to this and it’s not easy. Generally, look for people that are selling for personal reasons (eg. they’re moving, having a kid, or retiring) and not because they’re moving onto another venture. After all, why move onto another venture if your current store is blowing it out of the water? In addition, you want to check if they’ve actually been doing any revenues and how long the store has been operating. The more data that the owner is able to show or provide the better. Of course, that’s not true for most stores that are being sold for under $1,000. In that case, look for the quality of their website and whether you think they’ve set something attractive up that you would personally want to buy from.

Feel free to send a couple of messages to the ones you’re interested in, and even set up some Zoom calls to learn more. You’re never obligated to buy, but it definitely helps to learn what the stores have been through.

Step 4: Found something you finally like? It’s time to buy!

Alright, it’s finally the time for your get the store!

The last part of this guide will go through how to actually start and close a transaction. You’ll first want to confirm with the owner what are all the included parts of the sale. At minimum, this should include: the domain, store name as associated trademarks, the Shopify store, all social media accounts, and any associated digital assets such as product photographs. Often times, you will be able to negotiate for inventory as part of the sale as well. We are putting together an asset purchase checklist, which will be helpful for anyone in this process!

The next part is deciding how much you are willing to pay for the store. At the moment, there is much subjectivity about this. If the store has historically been profitable, can you go online to check for historical prices based on a sales multiple or seller’s discretionary earnings (SDE) multiple to their last 12 months. While the bernchmark price is a good exercise to do, ultimately the price comes down to how much you are willing to pay and whether you are okay with how long it will take to make back the purchase price with the store. For example, if a store did $10,000 in annual SDE last year and is selling at $15,000, that’s implying it will take 1.5 years to make this initial investment back assuming that you run the store the same way it was run before. Of course, that might not be the case. Most likely, you are trying to make changes to increase how much you earn. But just as realistically, you might need more time running it yourself to make those changes. Therefore, we recommend that the offer you give should reflect your own confidence in how well the store will do, and not necessarily on a market benchmark. If it’s too expensive, you can always walk away and wait for the next store that catches your eye.

That covers most of the initial work when deciding to buy a store! Once you are at this stage, there will be more specialized documents and work that needs to be done before you can have the store in your hands. We’re putting together another guide on this including templates - stay tuned!

26 Mar 2019