Mainly due to its low expenses and simple setup, dropshipping is becoming increasingly popular. But with everything that goes into building a store and bringing in traffic, is it worth buying a dropshipping business?
Buying a dropshipping store has its advantages and disadvantages. It might seem like a good idea if you have zero experience with dropshipping, but it’s really not. As a beginner you need to know what goes into creating a dropshipping business so that you can replicate your success whenever needed.
Should you buy or build your first dropshipping store?
The question of whether it's preferable to buy an existing dropshipping store or start one from scratch is still being debated by many dropshipping experts. I mean, It seems like a good idea for beginners, right?
As a beginner you need to know what goes into creating a dropshipping business so that you can replicate your success whenever needed. Let’s check out this really enlightening video to understand more.
It all comes down to the particulars of your case. So, if you're considering purchasing a dropshipping business, you should keep a few things in mind. So what are the pros and cons
With a pre-built store you don’t have to spend precious time building a store. Now you can focus on being creative with selling. If you don’t know anything about building a store but want to start away, this can already be done for you and you don’t have to break a sweat
Even if you aren’t an expert, a dropshipping store for sale can give you a complete dropshipping store when you need it. You can just do the fulfillment part.
Maybe not like ordering your favorite latte at Starbucks, but the idea of these pre-built stores is that they should be tailor-fit to what you want. Even if you are new to dropshipping, you can just describe the store you have in mind and it will be brought to life —ideally!
➡️products are pre-selected
Product selection can take a lot of your time. You need to conduct your research and it is probably the most time consuming step in dropshipping. Most pre-built dropshipping stores already have this taken care of for you and all you need to do is make sure that orders are fulfilled.
➡️you won’t learn the skills you need to run a dropshipping store
Ideally, your dropshipping business for sale everything is already set up. One of the biggest downsides would be that you don’t know what goes on in the store. If a problem comes up chances are you won’t know how to fix it.
If you have to replicate the success of the store you bought you won't be able to do it… well, because you don't know how!
➡️branding, vision, and goals are not aligned with yours
A business with a personality is something that attracts customers to your store. Businesses that stick to their branding get more loyal customers. Now this can be difficult with a pre-built store.
The branding bleeds through every part of a dropshipping business. From the art, colors, package design, and even the copy. You likely can’t modify and mold it to your vision and goals if someone conceptualized this for you.
➡️it is a legal risk
If the store works well, it might push the original creators to take it back from you. That’s why you should check permits, licenses, and any proprietary documents.
You might also have been shut out of the rest of the store creation process you won’t know of the original creators copied the store design. This could end up in a serious copyright claim.
Now the platform you bought the store from might actually be busy with all the DFY store orders. A consequence to this would be the Lack of originality. Your store is going to be like everyone else’s
Originality is a big deal in business. Your visitors are going to remember you according to your brand. And if your brand is identical to every other search result, then what’s the point.
Your dropshipping store most likely won’t earn anything because there’s nothing special about it.
When is it worth it to buy dropshipping businesses?
Again, there’s no clear cut answer if it’s better to buy a dropshipping business or not. It depends on every individual's experience and reason for buying.
Here are some of the scenarios when you should buy dropshipping businesses:
➡️You are creating a portfolio and building cash flow
What’s great with building a dropshipping store is that you can create it into an asset. Your dropshipping business is more than just a source of revenue; it's an asset that can be sold in the future.
A company's cash flow is the total amount of money it receives and expends. Businesses earn revenue from sales and spend that revenue on operating costs.
So, if you are creating a portfolio or are looking into building a cash flow, buying a dropshipping business store is a good idea. Usually people with this intention just flip the store they buy to someone else again.
➡️If you have the budget
A DFY dropshipping store would likely set you back thousands if not hundreds of dollars. It doesn’t make sense for an average person with an average budget to buy a prebuilt store. It makes more sense to put in some sweat equity.
However, if you have a lot of money and investor funds then obviously you can afford it. Most likely, you won’t have the time to spend hours building a store from the ground up.
➡️If you already have experience
Buying a dropshipping store might not be the best idea for those who have never done this before. Getting used to everything being done for you puts you at the mercy of developers, and other outsourcing companies.
This means that if you want something changed, you’ll have to go and ask an expert for help. If you already have experience you already know how dropshipping stores work. This means you can leave the fixing in-house.
➡️If an opportunity presents itself
Dropshipping stores that have already created their own income are usually sold around 30 times the monthly income it’s making. There are exemptions though.
For example, there are dropshippers who may have stores they can’t handle anymore. They might have too many stores to handle or are just thinking about going on hiatus. Some would sell their neglected store for a reasonable price.
It’s going to be a win-win for both parties.
How to buy an existing dropshipping store for sale?
You don't have to start a new business from nothing if you acquire an ecommerce business that has been properly chosen and managed by someone with experience.
1. Startup or established business?
When buying a dropshipping business, you need to decide what stage of business you want to buy. Some people don’t have the time to build everything from the ground up. Perhaps this is the reason why they think of buying a dropshipping store in the first place.
Think about your lifestyle. A startup means long hours with not a lot of pay, as you try to establish the business and find some security.
Gary Vaynerchuk, CEO and founder of VaynerMedia, advises start-up founders to put in at least 18 hours a day for the first year if they want to succeed.
On the other hand, you may want a small business with an already solid customer base. A store that’s already established can already give you profits
You might even want a company that’s already doing well and diversify your investment portfolio. Just be ready with a budget. As mentioned earlier, a store will be priced multiple times to their income.
2. Do some digging
As I mentioned earlier, sometimes an opportunity presents itself. Someone might want to sell you their store because they can’t handle it anymore. Perhaps they genuinely don’t want to waste the work they’ve put in to build it just for it to fail because they can’t maintain it.
Basically, you need to understand why the business is being sold. Others would sell a store for more obvious reasons: your money. Be careful of people who would only want to rip you off with a pretty, but clunky store.
For a variety of reasons, companies are bought and sold. There is always the possibility that the existing owners of the business you're contemplating are retiring for legitimate reasons, but it doesn't rule out the prospect of anything more sinister.
Inquire about everything from the selling owners, to your own web research and chats with consumers and staff. It doesn’t hurt to do some digging before making this business purchase.
3. Appraise the store
When you’ve done your digging, it’s time to find out the value of the business. This is important to avoid getting stuck with a business that will just set you back instead of bringing you money.
Once you've decided on a store, the next thing to do is to figure out its value in the market. It's impossible to come up with a formula that can account for all the variables that go into determining a company's worth. But here are a few things to check out:
- the seller’s discretionary earnings (SDE)
- the books, tax returns, profit/loss statements, and permits, licenses, etc.
- tangible and intangible assets
- any liabilities
- how much is the store earning every month
- how is traffic coming into the store
- How much set up is done
It definitely helps that you know what goes into the valuation of a dropshipping store.
4. How are the ads doing?
If you're interested to buy dropshipping stores, check out its Ads account. The amount of money the site spends on advertising to bring in new consumers is an indication of how successful it is in bringing in new customers.
What's the big deal? It all boils down to customer acquisition cost.
Customer Acquisition Cost indicates the amount of money a store spends on acquiring new customers. It is the total cost of sales and marketing required to persuade customers to purchase a product or service.
✔️As more people visit the site, sales growth is possible because of low customer acquisition costs.
❌There may not be enough opportunity for growth on a site that has a high customer acquisition cost.
You want customers to be able to find and buy from your store and niche effortlessly. If it takes so much to build an online presence for the store, it might not be worth it.
5. How does the store look?
“First impressions last.”
Yeah, yeah, I know. Such a cliche. But in this case it’s true. Before you buy a dropshipping store, you might want to check the technical design.
As you look into dropshipping stores, you need to pay attention to their layouts and features. This includes everything from the design of the website to the back-end processes. You already spent cash on a store, it is going to be a waste of money AND time if you would have to end up having to modify or remodel a website.
I mean isn’t convenience one of the reasons for buying a store?
Analyze the following:
- site host
- source codes
- checkout processes
Checking these aspects on a website will give you a general notion of whether or not it is worthwhile.
6. Check Reviews
When you buy a store, you are taking over its identity. Make sure you are not buying a store that is famous for all the wrong things, like crappy products and terrible customer service.
Any e-commerce store's online reputation and client relations are essential. A good internet reputation and a sufficient amount of referral traffic are important factors in determining the success of your website.
So, before you buy, check out the site from the perspective of a consumer. You can check through all of the customer reviews on Google, Facebook or the site. There is a direct correlation between what customers think of the site and how many sales it may generate.
Don’t think about writing fake reviews! Let me give you another cliche:
“Honesty is the best policy!”
7. Conduct product research
Most stores for sale already have pre-selected products. Basically since the entire store was already made, this means that the niche is already done for you too.
Research the products thoroughly before purchasing a dropshipping store. You need to determine whether or not the product is commercially viable and has room for expansion.
Consider the type of product. Is it a consumable like a dropship coffee store? Or is it more of a one-time purchase product like t-shirts? Different product categories have their advantages and disadvantages.
Your possible sales area can be determined by market size. Unless the products command higher pricing, a low inventory level could indicate limited profitability.
If it grows too large, it may face increased competition and, as a result, lose its ability to make a profit. When a product's sales growth reaches its limit, you will be forced to sell your store. This is common with trending products.
If you want to get your money back, do your homework and make sure you can expand the business within a few months first. Try using Google trends if you want to stay on top of the latest.
Where to buy dropshipping businesses?
Now that you know what to look for, it’s time to talk about where you can find stores that are ripe for buying!
1. Empire Flippers
EmpireFlippers is a huge, hands-on marketplace for the buying and selling of dropshipping stores. It is more of a personalized service, and has dedicated account managers to help you with both sides of the process.
People who are looking to buy a well-established and profitable company should use this website. Businesses on this platform are subjected to additional inspection, which means they sell for a higher price.
2. Exchange Marketplace
Exchange Marketplace by Shopify is a platform dedicated solely to e-commerce companies. There are no SaaS, affiliate marketing, or other non-product-focused businesses.
There are a lot of choices on this site, but you should proceed with caution. The listings you’ll find here are likely to be among the least established listings from other sites.
On the bright side, most of the listings include the name of the company, allowing you to make an informed decision about your purchase.
AliDropship is the number one provider of custom-made WooCommerce dropshipping stores. This is where you’ll find custom-made and established dropshipping stores which likely have existing sales and revenue.
If you want an established dropshipping store with established authority, sales, revenue, and traffic, this is also available at AliDropship. You can find established dropshipping stores that produce monthly sales of over $10,000.
Dropshipping stores may be built for less than 300 bucks. 😮
Now this already includes the following:
- Domain name
- Payment gateway integration,
- Full inventory automation
- Handpicked winning products
Are you looking for premade Shopify dropshipping stores, if your answer is “Yes,” then Brandafy is your best choice. Another great thing about it is that it’s really cheap.
In less than 24 hours you can get the following:
- professional dropshipping store
- a premium theme
- domain name
- branded logo
- responsive design with service pages
The best thing about it is that it only costs $67.
Brandafy also offers full inventory automation and direct connectivity with reputable US and worldwide suppliers. This allows you to instantly import items from a plethora of products.
MicroAcquire’s verified transactions might be the best thing about it. This provides both buyers and sellers confidence. The site is well-developed and includes a variety of categories for you to choose from when narrowing down your search results.
Unfortunately, listings on MicroAcquire do not reveal the name of the company until after you've made a deal.
Instead they’ll disclose what the company does and how it makes money. The good thing is these details are well-illustrated in the company's financial statements.
MicroAcquire even provides financing for your business through a loan. Of course, with the exception of those with poor incomes or credit ratings. If you think about it, this feature is a great way for you to get started without a lot of restrictions.
Buy Dropshipping Store: Is It Worth Buying a Dropshipping Business?
You should conduct your own study and due diligence before purchasing an existing dropshipping store.
If you don't have any web design knowledge, your next option might be to buy dropshipping stores. It is the fastest method to start an ecommerce business. You just need to know what to look for.