Table Of Contents
Why E-commerce Feels Risky
Starting any business carries risk. Online stores face even more. And it’s easy to see why:
First, the market moves fast. Trends shift every now and then, and new competitors appear every week. You might launch with a hot product, only to find it out of favor a few months later.
Second, this requires mastery of many skills at once. These include website design, marketing, product sourcing, shipping, and customer service. Missing just one link can easily break your sales chain.
Third, the cost of getting customers can get quite high. Running ads on Google or social media can eat into your budget before you make a sale.
Fourth, fraud and chargebacks can eat into your profits. Online payments carry risk from stolen cards or unhappy buyers.
And finally, returns can erode your margins. E-commerce buyers expect easy returns, and shipping costs can add up.
All these factors can gang up to make success hard to reach for you! It gets even worse if you’re an absolute beginner who doesn’t know the ropes of the industry.
We Help You Buy / Build, Manage and Scale E-commerce Brands for an EXIT
E-commerce Simplified for Busy Individuals – We handle the buying, building, and scaling, so you can focus on what matters.
Growth-Focused Strategies – From sourcing to marketing, we drive growth and prepare you for a profitable exit.
Expertly Managed Exits – We build a high-value brand designed for a Lucrative exit.
What Data Shows on E-commerce Failure Rates
Numbers don’t lie, they say…
And going by the available statistics on e-commerce failure rates, you can easily understand the kind of risk associated with an e-commerce business.
New business failure rates hover around 20% in the first year, according to the U.S. Small Business Administration.
The numbers for e-commerce look worse. A 2019 Statista report found that about 90% of online shops fail within their first year.
In the United Kingdom alone, 70% of new e-commerce firms close in year one, more than double the average for all businesses. (Source).
These stats show the steep odds that online startups face.
Key Risks In Running A New E-commerce Store
A key risk associated with running a new e-commerce business is that market shifts can hit hard. A fad product can fall out of favor overnight!
Shipping delays and supply chain hiccups can also stop you from fulfilling orders.
Digital marketing costs keep rising, so ads that worked last month may cost twice as much today.
Another risk involves payment fraud and chargebacks, which can quickly drain your margins without warning.
Not to forget, return rates in some sectors can reach 30%, cutting deeply into profit.
As a new e-commerce owner trying to enter this space, you must be prepared to handle all these risks on top of your daily operations.
How Buying An Established Business Lowers Risk
We promised to share the secret smart investors use to make it easier to break into the e-commerce world, right?
Here it is:
Buy an established e-commerce business; one that already has steady cash flow, loyal customers, and a proven business model.
Acquiring an existing online store can help you easily cut most of the risks associated with starting your e-commerce business from zero.
Here are the KEY reasons why you should acquire an established e-commerce business:
Established e-commerce brands show you real sales history. You get to see actual revenue, profit margins, and customer trends. That cuts guesswork in half.
Another reason is that these businesses often have repeat buyers. This means you inherit a list of loyal customers who already trust the brand. This slashes your marketing spend.
According to Forbes, acquiring a business with recurring revenue reduces how many new customers you must win, easing cash flow pressure.
When you buy an e-commerce business, you gain tested supply chains and vetted suppliers. As such, you avoid months of trial and error in sourcing products.
Since established online stores usually have proven tech setups, their websites, inventory systems, and shipping partners are already in place. You skip costly tech fixes and robberies from weak security.
Making Data-Driven Decisions on Acquiring E-commerce Brands
Smart buyers dig into the numbers before paying.
They look at crucial areas like three years of sales, traffic sources, and cost per order for an e-commerce brand.
They also check customer reviews for service issues. They vet supplier contracts and shipping rates. They run site audits to spot tech debt or security gaps.
A clear view of the past performance of an e-commerce brand you plan to acquire cuts the risk of hidden problems.
Acquisition experts agree that buyers who do deep due diligence usually see 20 to 30% fewer surprises post-close.
We Help You Buy / Build, Manage and Scale E-commerce Brands for an EXIT
E-commerce Simplified for Busy Individuals – We handle the buying, building, and scaling, so you can focus on what matters.
Growth-Focused Strategies – From sourcing to marketing, we drive growth and prepare you for a profitable exit.
Expertly Managed Exits – We build a high-value brand designed for a Lucrative exit.
Financing and Cash Flow Benefits of Buying An E-commerce Brand
Banks and investors often prefer established assets, and this applies to e-commerce brand acquisitions as well.
With a proven business with steady cash flow, your chances of getting approved are faster than a new venture.
Some lenders will even accept acquisition plans based on historical revenue data. This can lead to lower interest rates and better terms.
Overall, the beauty of owning an established online shop is that you start with cash in the bank and orders coming in.
This is much better than burning through savings on marketing tests and tech fixes.
Easier Marketing and Brand Power
New brands take time to gain trust. Consumers often stick with names they know.
When you buy a store with solid reviews and a recognizable name, you step into a ready audience.
You can expand reach with fresh campaigns, rather than building awareness from zero.
This drives faster growth and higher return on ad spend.
Reduced Learning Curve
Building systems for order handling, customer service, and returns can take months.
Established online stores already have these workflows in place. You learn from existing staff or processes.
This focus frees you to refine products, test new markets, or boost margins.
You skip the steep learning curve that trips up many founders.
Common Risks to Watch When Buying An Existing E-commerce Store
Just like starting from scratch, buying an existing online shop is not risk-free.
You must take your time to ensure the store you’re eyeing has no hidden issues that may cost you big post-acquisition.
Paying attention to these key areas can help you avoid common mistakes beginner buyers make:
You should check for outdated tech or high debt.
You also need to confirm that customer loyalty holds under new ownership.
You should examine supplier agreements for hidden price increases.
And you must factor in any site security issues.
Proper legal and financial due diligence is key.
Bringing in accountants and lawyers with e-commerce know-how can save you from costly oversights.
When Buying An Existing Online Store Might Not Make Sense
One thing you should keep in mind is that this path needs enough cash for the purchase price.
If sales of the store you want to acquire are small or erratic, lenders may shy away.
Also, if the store faces rapid market decline, you could inherit a sinking ship.
You should avoid shops with outdated platforms that need full rebuilds.
In some cases, starting fresh may prove cheaper if you have deep tech skills or a unique product idea.
Conclusion
E-commerce carries a high risk for new founders.
Fast market shifts, rising ad costs, fraud, and returns can erode your profits.
Failure rates for online shops reach 70 to 90% in year one.
Buying an established business helps you cut many of these risks. You gain real cash flow data, a loyal customer base, tested systems, and better financing options. Proper due diligence and advice can help you spot red flags.
For entrepreneurs with capital and a clear plan, acquisition offers you a faster path to success than starting from zero.
Imagine starting your e-commerce journey with someone by your side. We help you find the perfect business to buy, vet every detail, and handle negotiations for you.
After acquisition, we take care of day-to-day operations and grow your store 2–4×, so you can relax and reap the rewards when you choose to exit.
Ready to begin? Check out our Acquisition Program for full details.
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