Dropshipping stores make up over 33% of all eCommerce stores globally. Dropshipping is a popular business model that is simple to set up and has low overheads.
It takes a lot of work before you can launch your business and make sales. This is something that most people don’t have the time or expertise to do. Instead, they can shop at already-established stores.
Dropshipping shops can be purchased and sold through a variety of platforms. To avoid being cheated, however, you need to be aware of what to look out for in order to find the best deals.
This article will discuss what you should consider when searching for a dropshipping shop to purchase.
Is it wise to purchase a dropshipping business?
Dropshipping experts disagree on whether it is better for a dropshipper to purchase an existing store or start one from scratch.
Well, it depends on your unique situation. These are some of the factors to consider if you’re thinking about buying a dropshipping business.
Dropshipping/eCommerce knowledge
Make sure you are knowledgeable about the subject before investing in an online business. Dropshipping isn’t a quick way to make a fortune. You need to have a working knowledge of marketing and sales funnels.
Different stores also operate in different ways. Some stores hold inventory while others sell directly to manufacturers.
Once you understand the model, you can then leverage the assets of the store to increase sales and profitability.
Traffic and Profit Streams
You take over the operations of a dropshipping shop when you purchase it. It makes sense to learn how to run a dropshipping store. It is important to know how to keep the traffic going and attract more.
These strategies will ensure that you don’t run the shop until you are ready to take over.
It is a smart decision to purchase a site from a source you are familiar with. This gives you a great start for maintaining the sales and profits.
If the previous owner relied heavily on social media to drive traffic, it is possible that you won’t be able to make a profit if you take control and focus on Search engine marketing.
Industry knowledge
If you have a deep understanding of the industry, it is a good idea not to purchase an established dropshipping shop. Even if you don’t have any prior experience, it is possible to do market and product research to learn how it works.
It is important to understand the industry so that you can develop better strategies for expanding your business. It will only take a few more years before your store closes.
In no time, a fully functional store
Dropshipping allows you to launch a fully functioning business quicker by purchasing a store. A fully-designed website is available with all the products, suppliers, customers, and other information.
Dropshippers who don’t have technical knowledge often find it difficult to set up a store. This is where an already-built store can save you the hassle.
The main challenge is to create the right marketing strategy for your new business. However, you can customize the site as needed. It is still cheaper than starting from scratch.
Low acquisition costs
Dropshipping is an affordable way to start an eCommerce business. Dropshipping is a business model that does not require you to purchase and store products.
Dropshipping allows you to only purchase from your supplier once the customer places an order. The supplier then ships directly to the customer.
Dropshipping stores often come pre-set up with suppliers, marketing strategies, and an order system. You save all the additional costs associated with setting up a store and getting customers by paying a one-time fee.
A functional store can be purchased for as low $80,000 with a domain and all the technicalities. To build a store at this level, it will take you more time and money.
It eliminates the technical difficulties
Dropshipping is a great option if you don’t have the technical skills to create a website.
Technical knowledge is required if you don’t need a website that looks like the one you get from site builders. You could also hire someone who is able to code and knows WordPress security, WordPress, and other topics.
However, if you purchase a store already built, you can skip all of this and just get to the selling part.
The Cons of Dropshipping
Reputation
The biggest problem with purchasing a dropshipping shop is not knowing the past owners’ dealings. It is difficult to know what their relationship was with customers. You may not even know their reputation. They may be well-known in the industry as a fraudster.
Your website would give you all the information about your store. This is not possible for a stranger. You might end up paying for a website in serious trouble.
Branding
Dropshipping websites can be expensive and you won’t have the chance to create your brand. This is something you might want to do if you are serious about. This could be a major inconvenience.
It might not be the best site for you if it doesn’t stand out from its competitors. Turnkey websites are often a good example of this because the owners don’t put much effort and only aim to resell the stores.
Background information/product research
Dropshipping stores that are already established will not allow you to do the necessary product research. This research is what will determine the product’s profitability.
You can use product research data to help you create efficient strategies for your new company.
Dropshipping sites are often sold because they no longer have a demand or offer growth opportunities. It is possible to purchase a website that makes you loses without this information.
The profit number could be exaggerated
Dropshipping store sellers often overstate or undervalue their sales. Without digging deep, you can’t be certain if the website is as lucrative as it appears.
You might be able to buy a store that’s not making money. They may be selling the store because they have not monetized it.
Do your own research before you buy a dropshipping store
If you don’t know what to do, buying a dropshipping shop can be difficult. It is easy to overpay for a website. What are the most important criteria to consider when buying a dropshipping site?
Check out Ads Account
Before you buy dropshipping websites, it is important to check the Ads account. How well the website is doing in customer acquisition will be shown by how much they spend on advertising. This is why it is important.
Low customer acquisition costs would indicate the potential for site growth, which could translate into sales.
Sites with high customer acquisition costs may not have enough scale. Customers should be able to find the store or niche they are looking for and then buy from it.
Take a look at the Technical Design
Dropshipping stores are worth considering. This includes the website design and back-end processes. You don’t want to spend a lot on a website that you need to redesign or reconfigure.
Analyze the web host, themes, source codes, checkout procedures, and other details. These will give you a rough idea of the site’s worthiness.
Review the Reviews
An eCommerce store’s online reputation and customer relationships is critical. It is important that your site has a good online reputation and receives decent referral traffic.
Before you make a purchase, ensure that you thoroughly research the site from a consumer’s perspective. Seek out all reviews, both on Google and on the site. The site’s potential to bring in more customers will be determined by customer perceptions.
Fake reviews can be dangerous. To entice customers, some unscrupulous online sellers will pay for fake reviews. These reviews can be found easily in several ways.
- You can see if they have posted multiple reviews in the same day.
- RosX1235. If there are many reviews from robot-like people.
- The majority of reviews agree with each other. It is unlikely that 10 customers would say the same thing about the product or service.
Do you research the seller and products?
You should do extensive product research before you purchase a dropshipping shop. It is important to determine if the product is profitable and has potential for growth.
Market size: How large is the market. The market size is a measure of your sales potential. If the market size is not large enough, it can indicate low profitability.
It could be too large, which can lead to higher competition that often makes it unprofitable.
The nature of the products. Often products reach their sales growth limit, and they cease to be financially viable, leading website owners to sell their shops. This happens with seasonal or trendy products. You should do your homework to ensure that you can grow your business in a matter of months and get your money back.
These are some common tools that you can use for product research:
- Google Trends: This tool helps you identify which terms/products customers are most interested in.
- Sell the Trend: This tool helps you identify trendy products on different websites and estimates their sales prices.
- Niche Scrapper: Discovers and sells top-selling products in your store
Keep this in mind Transparency is key!
You must carefully consider transparency of the seller before you buy a dropshipping shop.
What are the benefits you can get from them? Here are some essential points to consider:
- Email lists
- Supplier lists
- Social media accounts
- Physical inventory
- Logos and branding assets
- Domain name
- Photos of the product
These elements are crucial for starting a dropshipping business, even if it is not your own.
Sometimes sellers might refuse to give them to your. This is perfectly legal. However, it should be flagged as a red flag. This would basically mean you’d be starting over with marketing, the most important part of dropshipping.
This is a wasteful practice as it can take months to scale up and eventually make a profit.
What Dropshipping Stores Are Worth?
Multiple tools are available to help sellers determine the value of their website before they put it up for sale. There are many factors that can influence the value of a website.
- Website industry: The industry determines the website’s value. Niches with high market shares and high selling prices are more valuable than those that have lower sales.
- Website age: The more expensive a website is, the older it is. Sites that are older have a steady revenue stream. It is easy to assess their value. However, websites that are newer often have poor sales records. This increases risk and lowers purchase costs.
- Sites can also be valued on the basis of their net profits for the past 12 months. The value can be calculated by using a predetermined multiple.
Valuation = List Price x Multiple + Inventory
To provide accurate valuations of inventory and expenses, most valuation tools require additional information.
Are there Dropshipping Shops that are currently open?
There are generally two ways to buy a dropshipping business.
Private Deals
Private deals allow you to reach out directly or vice versa to the store owner. You can meet and discuss the price and then transfer the site to your bank account.
Although many buyers choose this route, it might not be the best. Selling directly to a seller can cause many problems such as communication, valuation, and website transfer. It is easy to be cheated by unscrupulous sellers.
Services for the marketplace/brokerage
Dropshipping sites can be purchased through professional brokers and marketplaces. Shopify Exchange, Flippa.com and BuySellEmpire.com are all great options for getting the best deals.
Many of them offer payment protection, communication platforms, valuation services and communication platforms. They receive commissions on every transaction. It is worthwhile considering all the risks involved in buying and selling websites.
Are you ready to buy your Drop Ship Store?
Dropshipping can be a profitable business venture. However, you need the right information and tools to make it happen. You will be a successful eCommerce entrepreneur if you get the best deals. However, if you make mistakes it can lead to huge losses.
