[Exchange Marketplace Review] 5 Steps to buy a Shopify store
You have an entrepreneurial streak.
You’ve decided to break into the wonderful world of ecommerce but you’d rather not spend masses of time and effort working on a name, concept, store design, or product development.
You don’t even have to get your hands dirty.
This marketplace features only Shopify stores for sale. It enables existing or wannabe merchants to buy or sell a store online – just as you would buy or sell any other commodity.
You have an entrepreneurial streak. You’ve decided to break into the wonderful world of ecommerce but you’d rather not spend masses of time and effort working on a name, concept, store design, or product development. Exchange Marketplace, powered by Shopify, makes it simple to do this by buying a ready-made business. You don’t even have to get your hands dirty. This marketplace features only Shopify stores for sale. It enables existing or wannabe merchants to buy or sell a Shopify store online – just as you would buy or sell any other commodity.
In fact, there are over 3000 stores there already and more are added daily. That’s just a fraction of the 500,000 plus Shopify businesses around the world, but it’s enough to start sinking your teeth into.
Whether it’s an established brand worth a million dollars or a new drop shipping business available for a few thousand, store owners place listings on Exchange to get their businesses in the shop window for potential buyers.
If you’re interested in creating a new revenue stream through ecommerce but you’d rather not build from the ground up, the following steps will help you get clear on how to buy an existing Shopify store on the Exchange Marketplace…
Step 1 to find Shopify stores for sale: Have a good browse
A quick review of the Exchange Marketplace will reveal a wide array of listings of Shopify stores for sale.
You can search using a variety of different filters, including:
Simply have a good browse. Take a look at what’s available and the type of information available about businesses listed in the marketplace. Get a feel for how the site works and what’s out there.
Step 2: Decide the business/industry you want to be involved in & draw up a shortlist
Most people buy businesses in areas of particular interest. If they love fashion, they might by a clothing business.
Once you’ve got a feel for the listings available, decide on the industry you’re targeting. Then consider your budget, as well as the time and resources you’re willing to put into growing the business.
If you have plenty of time on your hands and are willing to put energy into steadily growing your store, you might opt for a startup. That may seem like a gamble but, if you have a strong entrepreneurial spirit and are prepared to work at marketing your store, it may be an attractive option.
If you want to keep costs down, you might want to consider a dropshipping business. This is where the manufacturer or another retailer/wholesaler ships the goods to customers. You basically just have a website and some marketing resources that act as a “front” for the products or services.
Decide how hands-on you want to be with your Shopify store. If you’re looking at the purchase as an investment (much like an investment in property or shares) you probably want it to grow without taking up much of your own time. In this case, an established store with a good revenue stream may be the best option.
All types and sizes of Shopify business are available on the Exchange Marketplace:
- Established, high-revenue and high-growth stores.
- Shopify starter stores that have sold less than $100.
- Dropshipping businesses that carry no inventory (as mentioned, these are popular but are not without risks: ask what you’re actually getting for your investment).
- Print-on-demand businesses – ideal for t-shirts, mugs, posters etc. where products are only created when the orders are placed (low risk and therefore very popular again)
Draw up a shortlist of businesses that you can consider in more detail.
Step 3: Do your homework on your shortlisted businesses
Once you’ve found a few likely candidates for your list, it’s time to get into the nitty-gritty: the numbers that really matter to a buyer.
As well as providing general information about the business itself, each listing includes key data you’ll want to know, such as:
- Asking price (which is negotiable)
- Average monthly revenue
- Inventory value
- Average sessions per month (traffic)
- Total revenue
- Expenses per month
- Social media follower numbers, etc.
This information is pulled directly from Shopify’s own statistics.
Most of the data cannot be edited by the merchants themselves so you can consider it trustworthy. However, note that the following is input by sellers themselves and cannot be verified by Exchange:
- Average profit/month
- Average overall profit margin
- Average number of sales/month
If you’re considering buying, you’ll want to view the client account for your own peace of mind and hammer out the precise details with the seller.
You’ll also want to go a little deeper with your due diligence. Find out the following, for starters:
- Why are they selling? Is the marketplace saturated and is there still a demand for these products?
- How many months of revenue can the store show? Is one or two months of revenue really enough to pin your future on? Better if the store can show established revenue over a period of 12 months.
- What are the monthly expenses driving the revenue? Is there good net profit or is all the demonstrated revenue eaten up by expenses?
- Will the traffic source continue after you buy the store? Or is it tied specifically to the present owner (e.g. an Instagram account outside of the business)?
- Is their social media following an active and engaged audience? Or is it just raw numbers of “fans”?
- Can the owner provide access to verified Google Analytics data – to demonstrate traffic sources and the most popular products and store pages?
- How much will you need to invest in marketing the business after buying? Do you have the budget for this?
These are just a few of the key questions you’ll want to ask. The Exchange Marketplace has also compiled this list of questions you may want to consider asking the seller.
You’ll also need to check with the merchant exactly what the asking price covers. Some examples of what you’ll want to check are highlighted here:
Based on the key numbers and what’s included in the sale, you’ll be able to assess whether to take things further with each of the stores on your shortlist.
Step 4: Negotiate an offer with the business owner
You’ve narrowed your choice down to the store you really want. It’s for sale and you’re interested in buying.
Just like with any deal, once you’ve done your due diligence, it’s time to contact the owner using the secure messaging platform provided and start negotiating.
If you don’t yet have an account, you’ll need to create one.
Then, if you’re looking at a business valued at less than $5000, you can start communicating with the owner directly through the Exchange Marketplace (using an anonymous email address if you prefer).
If the asking price of the business is over $5,000, you’ll be asked to verify your account before contacting the seller. This is a relatively simple process whereby you just need to provide some information about who you are and the type of business you’re interested in buying.
Note that if the asking price of the business is $20,000 or more, you’ll need to connect your LinkedIn profile to your Exchange account. It’s just a condition that you need to follow.
Once you’ve done this, you can request additional information about the store from the owner and begin the negotiation process.
The bottom line here – if there’s something you’ve seen that’s not included in the asking price but will help you run the store more effectively, negotiate to include it in the deal.
If the asking price itself proves difficult to negotiate, try convincing the seller to include more resources in the final deal… perhaps marketing assets or more inventory.
Once you’re happy, it’s time to make your offer by completing the form and clicking SUBMIT OFFER.
Step 5: Finalise the deal and arrange transfer of the business
Once your offer has been accepted by the seller, Exchange Marketplace walks you through the buying process.
You’ll receive instructions for making the transaction to the seller for the purchase of the business. As a buyer, you can use your credit card for small transactions and bank wire for larger transactions.
The seller needs to detail the terms of precisely what’s included in the sale, as per previous negotiations.
Exchange Marketplace manages the transaction through Escrow.com. This provides third-party protection through an established “middleman” (Escrow). It means that no money will exchange hands before both parties are satisfied with the conditions of the deal.
Escrow.com has a good reputation, having processed over $3.5 billion in payments. This provides both you, the buyer, and the seller, with extra peace of mind.
Once the conditions of the deal are met to the satisfaction of both parties, the seller transfers the store’s assets and provides account information to the buyer. Once you’re satisfied that you have what you need, the funds can be released to the seller by Escrow.com.
The actual process of transferring the business (including all assets such as domain names, social media accounts, etc.) generally takes around 3-5 days.
Some of your first actions as the new owner of the business include:
- Contacting suppliers to assess reliability
- Replacing the original owner’s details with yours and changing passwords for all key accounts
In most cases, the seller will help you make it a smooth transition process and may even provide some ongoing support as part of the final deal. This will help you to start hitting some home runs from day one.
Flippa vs. Exchange Marketplace
Exchange Marketplace, powered by Shopify, is not the only place where you can pick up an ecommerce store for sale.
There are other marketplaces for small and medium-sized businesses out there. You already know eBay. Another is Empire Flipper. One of the most popular dedicated business marketplaces is Flippa, based in Melbourne (Australia) and San Francisco.
The main downside of Flippa is that the marketplace is less “regulated” than Exchange. So vendor claims are not fully verified and some of the smarter ones know how to manipulate analytics to provide fake stats for their stores.
On a more positive note, Flippa generally provides detailed information about the business for sale. Exchange Marketplace is sometimes criticised for not providing enough detail.
The data on business revenues featured on Exchange is, however, straight from the horse’s mouth and very transparent. It comes from whitelisted sources and all stores on the marketplace remain “live” and “active”.
While you should still do your homework before making an offer, the data you see on Exchange is reliable: it’s the same as what the seller sees.
And when you decide to buy, Exchange Marketplace acts as a broker, helping the transition process go through reliably and quickly.
The platform has a vested interest in the success of the transition process and will provide all the documentation necessary, encouraging a comprehensive and smooth handover process.
This makes it simple to buy and sell.
Exchange Marketplace: Your gateway into ecommerce?
If you’re looking to take the first plunge into ecommerce and buy a store, Exchange may be the gateway you need.
Whether you’re looking to add an extra revenue stream with a small Shopify starter store while holding down a full-time job or you’re planning to purchase an established business to grow over the coming years, you’ll find excellent options on the Exchange Marketplace.
While the opportunities are there, identifying a store that’s suitable for your budget and your available time and resources is not to be rushed.
Whatever you buy, it won’t be set and forget. There will be demands on your money, your energies, and your time.
As with buying any business, do your homework and choose well.