Opportunity to buy online store...

[mama2annabelle]

I have an opportunity to purchase an online baby products store and am just starting out my research on this possibility. I am not business saavy at all and have so much to learn.
This is an existing business that is less than a year old and the current owner has not put much effort into marketing it. It has a full product line of over 100 products from 40 vendors and it currently set up to drop ship everything, so no inventory to deal with.

Anyway, I'm at a loss where to start with looking into this possibility since I've never done anything like this before. Can anyone point me in a good starting direction?

Thanks!

[michelle123]

I just bought a store-it does carry inventory so a little different. I'm not an expert yet, but if you have any questions about the process, you can ask me! It's all very fresh in my mind.

[kokonutmama]

Buying a store that drop ships everything that the current owner hasn't developed to its full potential sounds ideal. Look up stuff online about "Valuation" of businesses and ask the seller how they arrived at the price. There are websites that will give you a number for the value of the domain, which can be added into the value of the business, as putting ads on is a nice way to have a little money every month you don't have to work for. Get lots of details as far as balance sheets, etc, and if it's a lot of money and you're serious about it, I'd suggest hiring a lawyer.

How are you financing this? Is it money you have or are you taking a second mortgage or getting a business loan?

I've only bought one business and sold one, and both were very casual, no lawyers involved, but I've been motivated to do some reading...

Good luck! You're already in a good position, it sounds like; I hope it works out well for you.

[SleeplessMommy]

About "domain valuation" ... I used to work with a company that used google ad words to "buy traffic" - a strategy that worked very well for them since the product sales justified it. When I looked up "valuation" of that domain - the amount appear to be skewed upwards (by thousands of dollars) by the massive google adwords spend.

* How much of the traffic is "free" (not from sponsored search marketing)
* What % repeat customers?
* Is an email customer list included?
* What would it cost to get a similar domain name? ($10 to $500 - check GoDaddy)
* You may want to test the drop shippers by making a few orders (not with your name on them) to the web site. Do the drop shippers provide fast accurate delivery.
* Is the item pricing competitive with Amazon and with local stores? What % gross margins on sales?

I am wondering what is "there" that you are buying with the web business. My shopping cart software with web design cost $125 (I had to "install" it one the servers.) You are basically buying a domain + installed shopping cart software + some customers + "relationships" with some drop shippers.

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