Investing in an Online Store

I do more and more of our shopping online to save time and money and easily compare prices.  I recently discussed the possibility of buying a an existing online store as a way to generate additional passive income with a friend.

I had no idea that it’s possible to make tens of thousands of extra dollars a month as an e-commerce website owner!  Amazing! I’ve heard e-commerce is probably going to continue to grow in Australia so it’s a good idea to investigate the idea of buying an existing and already profitable website.

Customers could shop at my store website 24 hours a day from all parts of the world. They wouldn’t need to head to the mall, fight the crowds on holidays, or look for a parking space.  Unlike the mall kiosk I was considering last time, I wouldn’t need to pay rent or hire employees.

My friend mentioned Flippa, a website where you can buy and sell sites. Instead of starting my own website and building it from scratch, I could look for an existing successful online store there.  Visiting Flippa really opened my mind to the idea of owning a virtual store. There are thousands of different sites and, unlike my kiosk owner friend’s business, the cash flows of each site are listed.

Pros of an Online Store

Let’s look at the many pros of owning an online business:

  • The cost is relatively low in comparison to the mall jewelry and art kiosk I considered.
  • I wouldn’t need to deal with the headache of hiring or managing employees.
  • I can choose an already built and profitable website business. I wouldn’t need to pick the domain, or hire a site developer or develop supplier relationships.
  • The idea of renting a warehouse and managing inventory is daunting!  But with a drop shipped store, there’s no need to store my wares.  In other words, when an order comes to my site, the supplier fulfills the order directly to the customer.  I don’t need to touch the order past sending the shipping information to supplier and collecting and remitting payment.

The website I’m considering has been around since 2010. There’s an existing customer base and what seems to be good organic traffic already.  That’s fantastic!

Cons of an Online Store

Now, let’s kick the tires:

  • I’m not a technically savvy person. I have no idea about how to do my own site maintenance. This fact means I’d need to learn and spend precious free time to maintain the site or hire a webmaster.
  • I don’t have a clue about website metrics. What about traffic and site rankings? How do I attract new traffic to the site to grow sales?
  • What happens if the site is hacked? Website security is so important! My customers’ financial information could be stolen or visitors could be redirected. At minimum, I’d need to work with a site security professional.
  • Considering customer care, I’d need someone to handle incoming customer service calls while I’m at my day job. A virtual assistant (VA) is an added cost.
  • The business is currently net fairly profitable but earnings have been volatile in the past.  Many orders come in around the Xmas holidays so if my sales aren’t good in that season, it could be this a bad investment.
  • There’s nothing to prevent the current owner from putting up an almost identical site.
  • Flippa charges 10% success fee which increase my total costs as a buyer.
  • I know it’s important to use search engine optimization (SEO) but I’m not sure I know enough about it. Another friend said, “Just write about your site and you’ll identify keywords.” In some fashion, choosing the right keywords is required to attract and increase traffic.

Oh my! I feel a little overwhelmed by all this.

Conclusion

It seems that running and operating an online store requires knowledge I don’t have. What’s more, when do I learn these new skills?  Without these essential skills, I’m not ready to buy and operate an online business. Although my friend laughed, “It’s plug-and-play,” I don’t agree. Technology is evolving. I’d need time and energy to evolve with it!

For these reasons, I’m not going forward with the idea of buying an online e-commerce website. There are just too many uncertainties and I’m unfamiliar with too many aspects of the business model.  The idea of owning an online store is so intriguing, I wish I could get past my concerns.

Are you considering an online business or do you already own an Internet store? Do you manage and maintain the site yourself? How do you attract and grow traffic? What do you think?

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