You might have asked this question when you were in the planning stages of your e-commerce idea. Should you buy an already set-up e-commerce business or build one from scratch? Well, the answer is both ways have their own fair share of pros and cons and give you a different experience.
If you are faced with this dilemma, read on to find the best option for you:
Why buying an e-commerce business would be a good idea
If you are starting out and don't have much an experience in the field, buying an already established e-commerce business will be a great choice.
The first benefit is that you are no longer in the start-up phase. The brand is already famous among its potential customers; all you have to do is scale up. That's already done by the founding members who owned the business.
The second benefit is that you can start earning profits at an early acquisition stage. Since the brand is already established, it would already have a steady income from all its existing customers. But you have to ensure that the change in power doesn't affect the business's operations.
The third benefit is that the business already has its own skill set. You don't have to hire new employees or invest a fortune in finding the right talents. Those spaces are already filled.
Let's talk about why it might not be a good idea.
If the e-commerce business has already made some profit, it will be costly to acquire. You need to have a sizable amount upfront to acquire the business.
When you buy a business, you are entirely new to the business model that the founding members have implemented to scale up the business to the position it is in now. If you are entirely unaware of it, you are starting on a blank slate, but your business requires some complex decisions to be made to move forward. This gap in knowledge and strategic planning might cost you a fortune if you don't take the following steps carefully.
Why building an e-commerce business would be a good idea, and who is it for
If you have the passion and some investment in hand, then building an e-commerce business will be your cup of tea.
You will learn many new things when you build a business from scratch. You haven't spoon-fed everything. Instead, you work for something to get it started up, and you have to work even harder to make it a well-fuelled engine.
You will also have an excellent knowledge of the products you know. You become the expert and, therefore, can devise much better plans that perfectly cater to your business while bringing in significant profit margins.
Getting the first round of customers will take a lot of work. Talking about the challenges, it might fail when it's a start-up. As the brand is new, people will always avoid trying it out. But once the reviews start to pour in, you can better position and market your brands to increase the customer count.
Another challenge is the profit margins. The initial days will be challenging; you might earn a penny later. This might demotivate you, but building a business would seem fun if you are determined to move forward, and the whole experience would empower you in many ways.