E-commerce is a fast-growing industry that Canadians have really started to embrace over the last decade, with shoppers becoming more receptive to new and innovative payment methods, making this a great time to buy a website business.
With the COVID-19 lockdown restricting consumers to stay indoors and non-essential shops forced to close, e-commerce businesses have still been able to operate with Canadians having no other option but to shop online.
Market predictions show significant growth in the online sector over the next few years; this article outlines how to buy a website, what key characteristics to look out for and the due diligence process involved in buying an online business.
Marketing will be vital in driving traffic and trade to your business. If you don’t have any online marketing skills, consider taking a course to gain knowledge on how to improve your site’s web presence and traffic figures.
Before you start looking to buy a website business, ask yourself, are you suited to a home-based venture? What niche service or product are you keen to sell? How are your current skills and interests suited to running an online business and what areas need improvement?
A buyer’s profile
Buying a website can be a very affordable investment, suiting entrepreneurs who have minimal capital. Due to the lack of a physical premise the risk of buying a website is also considerably lower, encouraging younger entrepreneurs to break onto the business scene.
Tech skills will be greatly beneficial when running an online business. Build up your knowledge in custom-designing templates for your site. Learn how to code and develop a proprietary web application or develop skills on how to install a script in your database.
SEO knowledge is valuable when boosting the number of visitors to your site. Learn how to carry out keyword research, create optimised content and understand Google’s search algorithms. Failing this, your website will not remain competitive in an online marketplace.
These are all skills, however, that can be outsourced. So, if you are lacking in tech or SEO know-how, find outside experts who can do it for you on a freelance basis.
Finance and statistics
Website business opportunities will vary in price, you can buy a camping supply dropship website for as little as CA$799, or a medical marketing and digital media company for a whopping CA$3.95 million. It helps, though, if you are passionate about the service or product that you’ll be selling.
Retail sales from worldwide e-commerce are forecast to grow from US$3.53 trillion in 2019 to over US$6.54 trillion in 2023. In late 2019, Canada’s e-commerce retail trade sales amounted to almost CA$1.85 billion, with roughly 28.1 million Canadians making purchases online.
Around 17% of internet shoppers spent over CA$2,000 on online goods and services. In 2019, e-commerce retail revenue in Canada amounted to US$25.4 billion, with mobile phone transactions making up US$15 billion of retail revenue.
What to look for in a business
The key attributes for an online business opportunity differ to that of a bricks-and-mortar business, you will be valuing the business by the site’s functionality, visual appeal, and proven marketing methods to generate leads.
What is the company’s social media presence like? Are there ongoing ad campaigns or effective email lists? Does the business have employees and/or virtual assistants? How much money is invested in marketing their website, and what methods are most effective?
A successful website will have multiple income streams and harness traffic from a variety of sources. A good online venture should have systems in place for marketing, offer a niche product or service with growth potential and record growing monthly sale figures and traffic.
Licences and permissions
Another benefit of operating online is that you won’t have to worry about rent payments, negotiating lease terms or applying for zoning and signage permits. If you plan to sell goods online you will need a sales tax permit, commonly referred to as a seller’s permit.
E-retailers must fill out a customs coding form to import goods into Canada for commercial use, as well as export declarations and customs invoices to export and import goods. Some councils will require certain home-based businesses to acquire a home occupation permit.
Contact your local branch at the Canada Business Network for area-specific information. Find out whether you need a government-issued business license, which will permit you to operate within the province or municipality that the license was issued.
Review the website’s track record of sales and profits, and consider assets like a good domain name; a recognisable brand; a large volume of quality web traffic; great social media presence; an extensive email list of responsive names: these will influence the asking price.
Ask the seller to grant you access to their Google Analytics account so you can see how long visitors stay on the site, how many pages they view and what the conversion rate is. This will give you a deeper understanding of how clients currently interact with the website.
All existing tax laws that apply to Canadian businesses also apply to online ventures. If you earn an income from one or more websites, you will need to report the URL and the income each site earns. Reporting requirements will differ depending on the business structure.
Is it right for you?
To run a successful web business, you will need to be an expert in your specific niche, whether this is selling sporting equipment or hosting a travel website, you should be passionate and knowledgeable about trends and new developments within the sector.
If you’re keen to buy an online business but concerned about the risk involved, buying an internet franchise may be a good route. Many App development franchises boast simple, easy-to-use platforms to appeal to entrepreneurs that have no technology or coding skills.
However, be prepared for fierce competition: in 2018, Amazon was the most popular online platform in Canada, with an estimated e-commerce revenue of US$3.5 billion. If you want to be able to complete with the e-commerce giants, you need to be personable when replying to customer enquiries and develop a brand your consumers can identify with.