How to Buy a Shopify Store: The Complete Guide to Acquiring Your Own eCommerce Business (2023)
Want to buy a Shopify store? Well, you're in luck! Shopify stores offer a fantastic platform for budding entrepreneurs to showcase their products and make their mark in the digital realm.
But here's the thing: you don't always have to start from scratch. You can actually buy an existing Shopify store and kickstart your entrepreneurial journey with a head start.
In this blog post, we'll delve into the exciting world of how to buy a Shopify store and uncover the secrets to a successful acquisition. We’ll cover everything you need to know to find a suitable Shopify store to buy. We’ll also explain the due diligence you should do to make an informed purchase and acquire an asset that’ll increase your wealth, instead of tanking it.
So, no matter if you want to buy your own premade starter store, or acquire a multi-million dollar business, keep reading to find out what you need to know.
Why Would Anyone Buy a Shopify Store?
Now, you might be wondering, why buy a shopify store, when you can build one from scratch for free? Well, there are several enticing reasons.
First and foremost, buying an established Shopify store can significantly reduce your financial risk. Instead of pouring all your savings into an uncertain venture, you can leverage the track record and customer base of an existing store to boost your chances of a return on investment. It's like buying a well-decorated cake instead of starting from scratch with flour, eggs, and a whole lot of guesswork.
Secondly, if you’re new to eCommerce, creating a Shopify store from scratch can come with a steep learning curve. You’ll have a lot to consider - from product sourcing to branding, logistics, store promotion and everything in between, it could be a long time before you establish your business. Buying a prebuilt Shopify store can save you months of trial and error.
But hold on a second! Buying an online business, especially in the vast realm of the internet, can be a bit trickier than acquiring a physical brick-and-mortar establishment, right?
This is a good point. While purchasing a traditional business often follows a well-established process with professional support readily available, the online world can sometimes feel uncertain, filled with young, untamed and semi-regulated businesses. So, it's essential to navigate the virtual landscape with caution and a savvy mindset.
But, fear not! With proper planning and diligent execution, you can successfully buy a Shopify store and embark on your entrepreneurial adventure.
So, let’s walk you through the steps involved in how to buy a Shopify store and help you navigate the twists and turns of the online marketplace with ease.
Buy a Shopify Store Step 1: Figure out what you're looking for
Before you start your search for the perfect Shopify store, take a moment to define your requirements. It's essential to have a clear picture of what you want before diving into the vast sea of online opportunities.
What type of Shopify store do you want to buy?
The very first step is to determine the type of Shopify store you're interested in purchasing and the level of commitment you can offer, both in terms of finances and time.
Are you eyeing a trendy clothing store, a thriving electronics emporium, or a successful dropshipping store? Understanding your preferences will help you narrow down your search and find a store that aligns with your passions.
This is a good time to reflect on the types of products you're comfortable selling and any expertise or ethical concerns you may have.
Maybe you're passionate about eco-friendly products, or perhaps you have a knack for handmade crafts. Having a clear vision of the product type you prefer will make it easier to identify suitable opportunities when scouring the market for a Shopify store to call your own.
Next, think about your budget
Next, establish a budget for your investment. Now, keep in mind that the online marketplace offers a wide range of options.
You can find functional but unprofitable stores for a couple of hundred dollars, or you can set your sights on highly profitable established stores that may require a more substantial financial commitment. So, put on your accountant hat and crunch those numbers to determine how much you're willing to invest.
Speaking of investment, consider the amount of time you're willing to dedicate to the day-to-day operations of the purchased store too. Some online businesses require minimal effort, while others demand your attention in areas like product manufacturing, marketing, public relations, or operations.
If you're strapped for time, it might be wise to steer clear of businesses that require extensive work, even if they fit within your budget. After all, time is a precious commodity, and you want to ensure you're investing it wisely.
So, before you dive headfirst into buying a Shopify store, take a moment to determine your goals and preferences.
Once you've done that, you'll be ready to ride into the next step of the process, where we'll explore where to buy a Shopify store that matches your aspirations. Let’s keep going.
Buy a Shopify Store Step 2: Where to Buy a Shopify Store?
Once you've determined your available time, budget, and the type of Shopify store you want to buy, it's time to put on your detective hat and dive into the world of research.
Detailed research is crucial when evaluating potential Shopify stores for purchase, ensuring you make an informed decision and avoid any unpleasant surprises down the road. So, let's sharpen our magnifying glasses and get started!
Explore Shopify Store Brokerage Services
The easiest and safest way to find and buy a Shopify store is to work with a brokerage service that specializes in website purchases and sales.
These services act as matchmakers, connecting buyers like you with sellers who are looking to part ways with their digital ventures. Some well-known brokerage services in the industry include:
These platforms provide a treasure trove of opportunities, allowing you to browse and filter websites for sale based on various criteria.
Create a Shortlist of Stores to Investigate
Once you've compiled a list of potential stores that catch your eye, it's time to roll up your sleeves and dig deeper.
Take a close look at the provided data for each store and evaluate their viability as safe purchases. It's important to consider whether the data has been vetted by anyone.
This is where working with a reputable broker comes in handy. A trusted broker can provide you with more confidence in the reliability of the data presented, minimizing the risk of unpleasant surprises after the purchase.
Gather as much information as possible. Research the person selling the store and try to gauge their trustworthiness and motivation for selling.
- Are they forthcoming with information?
- Does the seller have a track record of successful business ventures?
- What credentials do they have that make them qualified to sell a store?
Don't hesitate to ask questions and engage in conversations to ensure you're dealing with someone who is reliable and genuinely motivated to sell.
If you feel that you can trust the seller and the store appears to be genuinely profitable, it's time to roll up your sleeves and conduct due diligence.
This is where you need to deeper into the performance figures, analyzing revenue streams, profit margins, customer retention, and growth potential. A thorough examination will help you assess the true value of the store and make an informed decision.
Remember, Sherlock Holmes didn't solve mysteries with a single glance, and neither should you when it comes to acquiring a Shopify store.
Take your time, gather all the necessary clues, and let the data guide you toward the most promising opportunities. The more thorough your research, the higher the chances of uncovering a hidden gem in the vast marketplace of Shopify stores.
So, grab your detective kit, channel your inner sleuth, and let the investigation begin!
Buy a Shopify Store Step 3: Due Diligence when Buying a Shopify Store
When it comes to buying a Shopify store, due diligence is your best friend.
Due diligence is the process of thoroughly investigating the store to ensure that what you see is what you get. So, let’s study the store you want to buy through the following lenses:
1. Examine the traffic sources
First and foremost, you need to determine the source of site traffic. Is it primarily generated through paid advertising or organic means?
Assess the value of the traffic and obtain clear information on advertising budgets and mechanisms if paid traffic is involved. You want to understand the effectiveness and sustainability of the marketing strategies employed.
To verify organic traffic claims, rely on trustworthy tools like Google Analytics and Shopify dashboard reports. These will provide insights into website visitors, referral sources, and user behavior.
Additionally, it's crucial to check the backlink profile of the store using tools like Ahrefs or Semrush. This helps you assess the store's online reputation and the quality of inbound links.
As a general rule, a Shopify store with more than one traffic source is more valuable. For example, if the store is completely reliant on Meta ads, there’s no guarantee that Meta won’t make changes to their algorithm, or advertising policies, that restrict your ability to drive traffic to the store.
Whereas if the store has multiple traffic sources such as organic search, paid ads and organic social channels - if one of these sources becomes compromised, your revenue won’t be turned off like a tap. So consider the number of sources, as well as the quality of the traffic, and what investment is required to maintain or increase the traffic to the store in question.
2. Verify the store’s financial performance & expenses
Understanding the finances of the Shopify store is essential. Dive into the numbers and examine costs related to inventory, marketing, software, staff, and other expenses. Ensure that the financials align with the stated revenue and profitability.
When buying a Shopify store, pay particular attention to the following:
- Revenue & Profitability: Review the store's revenue and profit figures over a significant period, such as the past 12 months or more. Verify the consistency and growth trajectory of the business. Analyze the sources of revenue, including product sales, subscriptions, or other income streams, to understand their stability & potential for growth.
- Expenses & Cost Structure: Examine the store's expenses, including costs for inventory, marketing, software subscriptions, staff, and other operational overheads. Ensure that the expenses are reasonable and aligned with industry standards. Identify any potential cost-saving opportunities or areas for improvement
- Financial Statements: Request access to the store's financial statements, including profit and loss (P&L) statements and balance sheets. Scrutinize these statements to ensure accurate reporting and consistency. Look for any significant fluctuations or irregularities that may require further investigation.
- Payment Processors and Transaction Data: Verify the integrity and accuracy of transaction data by reviewing payment processor reports and associated documentation. Ensure that there are no discrepancies or irregularities in recording and reporting sales transactions.
We get it - doing a full financial analysis can be tedious and time consuming. However, it’s absolutely essential to ensure you don’t end up getting scammed. Remember, paper never refused ink - so do everything within your power to authenticate the claims made by the store’s seller.
3. Appraise the store’s assets
With the store’s finances reviewed, it’s time to consider the business assets included in the sale.
You should confirm what exactly is being transferred, such as the domain, mailing list, social media accounts, inventory, process overviews, brand assets, and more. Understanding what assets you'll be receiving as part of the deal is vital for making an informed decision.
Pay particular attention to the following:
- Inventory: If the store sells physical products, evaluate its inventory management and eCommerce warehousing practices. Determine the value of the existing inventory and its turnover rate. Assess the accuracy of inventory tracking systems to avoid any discrepancies or potential stockouts.
- Marketing Assets: Study the marketing assets such as social media accounts (look for real, engaged followers), email lists (study the size and open rates), influencer relationships, content marketing assets (blog posts, photography etc), and brand assets (logos, fonts, trademarks etc) are included in the sale.
- Customer Data and Retention: Request access to customer data, including the number of active customers, customer acquisition costs, and retention rates. Evaluate the store's customer relationship management (CRM) system to understand how customer data is managed and leveraged for marketing and sales initiatives.
You want to ensure that the store’s assets are as valuable as they appear, that they’re compliant with regulations, and offer a real benefit to the business.
4. Investigate the seller
We’ve mentioned this above, but it’s something so important it needs to be reiterated.
Consider the character and trustworthiness of the person selling the store. Look for indications of their reputation and integrity within the online business community. It's important to establish trust before proceeding with the purchase.
Request full access to behind-the-scenes information. Ask for screenshares and read-only access to analytics and apps used by the store. This will provide a more in-depth understanding of the store's operations and help you assess its overall health.
Also, discuss seller support and after-sale assistance. Assess the seller's willingness to provide support and guidance during the transition period. Clarify the terms and duration of after-sale assistance, such as answering questions, providing training, or assisting with technical aspects of the business.
After sale support can prove to be invaluable in helping you get a handle on your new store. Sellers typically have a wealth of knowledge and experience that you can leverage for your own benefit.
5. Check in with the suppliers
Talking to the store’s suppliers can give you a better insight into the trustworthiness of the seller. Not only that, but once you buy the store, you’ll need to develop a working relationship with the supplier.
There’s several reasons why reaching out to suppliers can benefit your new venture:
- Ensure Awareness: Personally connect with suppliers to inform them of the ownership change and establish transparency. They’re not always aware of this.
- Uncover the Full Picture: Engage in direct conversations to understand suppliers' expectations, requirements, and ongoing agreements.
- Price Negotiation: Discuss pricing structures and terms. Use competitive research and negotiation skills to optimize profitability.
- Evaluate Alternatives: Consider alternative suppliers if negotiations fail or terms are unfavorable.
- Understand Supplier Dynamics: Recognize their power in the relationship and tailor your approach accordingly.
- Conduct Thorough Analysis: Assess reliability, product quality, delivery times, and customer service.
By engaging suppliers, negotiating prices, and understanding their dynamics, you can enhance your chances of success. Thorough analysis and relationship building can optimize profitability and efficiency.
Remember, due diligence is your safeguard against hidden surprises and potential pitfalls. By conducting a thorough investigation, you'll gain confidence in your decision-making and increase the chances of a successful acquisition.
So, put on your detective hat, gather the evidence, and make an informed choice before taking the plunge into the world of Shopify store ownership.
Buy a Shopify Store Step 4: Initiate the Buying Process
Congratulations! After conducting thorough research and due diligence, you've decided to take the leap and purchase a Shopify store. Now, let's dive into the next steps and kickstart the transaction process.
1. Involve professional assistance
If you're buying a relatively cheap Shopify store, you can skip this step. However, for more expensive acquisitions, consider involving financial and legal professionals experienced in business transactions. They can help review financial documents, identify any red flags, and provide valuable guidance throughout the due diligence process.
Financial professionals, such as accountants or financial advisors, can review the store's financial statements, assess the accuracy of financial data, and analyze the profitability and financial health of the business. They can identify any irregularities or discrepancies that may require further investigation, ensuring that you have a comprehensive understanding of the store's financial performance.
Legal professionals, such as business lawyers or transactional attorneys, can play a critical role in spotting potential legal issues or risks associated with the purchase. They can review the legal documents and contracts related to the store, ensuring that everything is in order and that there are no hidden liabilities or legal complications. They can also provide guidance on structuring the transaction and assist in negotiating the purchase agreement to protect your interests.
These professionals bring specialized knowledge and expertise to the due diligence process, providing an objective perspective and helping you make informed decisions. They can offer valuable advice on risk mitigation strategies, negotiate terms with the seller, and ensure that the transaction complies with legal requirements.
It is important to engage professionals who have experience specifically in business transactions and e-commerce to ensure that they understand the unique aspects of purchasing a Shopify store. Look for professionals with a track record in mergers and acquisitions, business valuations, or e-commerce law.
While involving professionals adds an additional cost, their expertise can potentially save you from making costly mistakes or overlooking critical issues. Their guidance can give you peace of mind and increase your confidence in the purchase, knowing that you have thoroughly assessed the financial aspects of the Shopify store.
2. Use escrow to minimize risks
To ensure a safe and secure transaction, it is highly recommended to use the "Escrow" method. This method involves a trusted third party that holds the funds until the conditions of the deal are met, protecting both the buyer and the seller. It provides an added layer of security and builds trust in the transaction.
Thankfully, most of the online business brokerages have an in-built escrow service to offset a large chunk of the risk and ensure you get what you’re paying for.
3. Establish conditions of the sale
Before initiating the purchase, establish clear conditions for the sale. Create a comprehensive checklist outlining everything you expect to receive as part of the deal, such as the domain, mailing list, social media accounts, and after-sales support. This will help ensure that all parties are on the same page and minimize the chances of misunderstandings or disputes.
Once the conditions are established, transfer the purchase funds to the escrow account. This step ensures that the funds are secure and only released when the agreed-upon conditions are met. At this point, you should also negotiate an agreed inspection period, during which you will have access to the purchased store for a thorough review.
4. Run a Final inspection of the store
During the inspection period, dive deep into the business. Review all relevant data, including past and current orders, customer information, and financial records. Take the time to assess the assets and ensure that everything is as represented. This is your opportunity to verify that the store aligns with your expectations and meets the criteria you established during your research and due diligence.
If you are satisfied with the inspection and everything checks out, it's time to finalize the transaction. The funds held in escrow will be released to the seller, completing the purchase of the Shopify store. Congratulations, you are now the proud owner of a new online venture!
5. Buying a Shopify store privately is possible, but not recommended.
While using the Escrow method and a broker is the recommended approach, it's worth mentioning that buying a Shopify store privately is also an option. You can save a small amount of money that the brokerages charge for their service.
However, this route requires an increased emphasis on business vetting, thorough due diligence, and the involvement of professional financial and legal advice. Additionally, utilizing the Escrow method can still be beneficial to provide an extra layer of security and peace of mind.
So, whether you choose to go through a brokerage service or pursue a private transaction, ensure that you follow a diligent and secure process to protect your investment and set yourself up for success in your new Shopify store venture.
Go Forth & Buy a Shopify Store!
Acquiring a Shopify store is an exciting endeavor that can lead to great opportunities. Throughout this blog post, we explored the essential steps involved in buying a Shopify store. From narrowing down your requirements and conducting thorough research to initiating secure transactions using the Escrow method, we covered the key considerations for a successful purchase.
Buying a Shopify store requires careful planning, research, and diligent execution. By following the steps outlined in this post, you can navigate the purchasing process with confidence and increase your chances of finding a valuable asset. Remember to prioritize due diligence, assess the seller's trustworthiness, and verify the store's performance and assets.
Whether you choose to work with a brokerage service or pursue a private transaction, ensure that you prioritize security and seek professional advice when necessary. With the right approach and dedication, buying a Shopify store can set you on the path to entrepreneurial success.
So, put on your entrepreneurial hat, dive into the Shopify marketplace, and embrace the exciting journey of owning a successful online business. Good luck on your venture!