Investing into eCommerce businesses today is like investing into a morden day gold rush, there is a significant arms race going on for online real-estate equity, espeically by way of holding assests such as stocks or shares, limited partnerships or share holdings in private limited eCommerce companies which operate in this complicated space. Holding such assets provides a host of advantages as a business investment vehicle. The most important aspect of such investments is balancing risks/rewards and considering tax advantages of online businesses compared with real estate or other types of investments. By far one of the most interesting and optimised for tax investments can be online ventures. But that said, startups and other unique or exotic investments into digital platforms can also be highly risky. So it makes a lot of sense to invest into established online eCommerce type retail and logistical and distribution type businesses, either b2b or retail.
Once you have made the decesion to invest in this sector there are many optimisations that can be gained by paring staff to different projects and optimising the team that you have around managing different eCommerce stores. This allows diversication of your investments and allows you to gain skills and company knowledge to maxamise your chances of success and positivily impact on your bottom line.
eCommerce is a very well devleoped space, there are millions of mililienals who prefer to shop online, who are familar with the process and enjoy the sort of features and services provided by shopping from the comfort of your own home. Once a customer locates a trusted supplier they can leave all the hassle of logistics to others and safe valuable time for more important persuits. As a result of such a fertile market place, getting ahead in this space has already become highly competitive. As such here are some insights and knowledge that will help you avoid some of the potential pitfalls.
Having an outstanding online presence in this day and age gives a significant advantage in the everflowing business race. Platforms like Amazon, eBay, Etsy, Craig’s List, and others attract entrepreneurs who aim for better online visibility and access to a target audience. On the other hand, it is possible to make a successful business without necessarily registering on any platform, and is rather recommended to test different options before diving into any of them. In the event that you are looking to create a business that can be resold in the future, you will be interested in developing your own brand, with your own eCommerce website (as well as using such marketplace platforms) as this will allow you to create a vechle that is sellable, rather than just operating a sales line within some other platforms online marketplace.
In this section we will discuss the pitfalls and due dilligence necessary before purchasing an eCommerce business.
Fake businesses come in all shapes and sizes, and knowing how to avoid investing into an online shell that has no substance is the key to a successful start in this busines. ECommerce websites that have no history may look fantastic at first glance but if they sit on a domain that has no age or history, you will be forgoing all natural forms of traffic sources from Google, this will make the road forward dificult and force you to be reliant on Facebook advertising or Google adwords, or some other form of paid for placement advertising. There is nothing wrong with paying for all your traffic but if you do so it will make creating an operating profit dificult, without any form of natural organic (free) SEO traffic.
Due Diligence takes many forms to understand the different types of challenges you will be facing, for example you will want to do a full link audit on the domain that you plan to invest in, this is to ensure that the back link profile has a clean orgainic footprint and the domain is not stuffed with unnatural paid for backlinks (SEO done badly), in the case that it would have historical issues and a low trust link profile, you can be sure that Google will not reward the domain with its orgainic positions. As well as making sure the link profile is clean, the link profile has to be substaintual enough in order to compete with historically older sites that are currently enjoying Google’s good graces and the ones typlically found at the top of Google.
As well as the SEO footprint, you will want to conduct some due diligence on the platform being used for the eCommerce CMS. If the Amazon FBA business you are investing into has its own online store, this could use any number of offtheshelf platforms such as Magento, or Shopify or Wiz commerce, Woo commerce, etc. and understanding what technical challenges the site is facing will save you months of headach in having to potentially rebuild the platform accoding to best practices.
Once you are sure the eCommerce platfom is uptodate, clean and fast loading, and the SEO footprint is natural and orgainic, with enough substance to be rewarded by Google’s organic postions, you will want to conduct a full content audit, evulating the content currently produced and published on the site, making sure it is not duplicated or copied content, to understand how to capturing organic search traffic, and to understand what quality of content is necessary.
Be careful not to invest into an eCommerce platfom that is selling any form of fake products, you will be winding up in legal battles and getting involved with illegal outfits who are selling counterfit products. This sort of company exposes you to so many legal issues its not possible to list all in this article, but you will have no protection when purchasing fake products and be bombarded with legal challenges from the rightful owners who monitor the internet for counterfit illegally sold products.
Another check you will want to do is ensure the images being used to promote the products are not under some other companies copyright, as such, these images could land you in hot water, with companies scraping the internet looking for infringers who will typicaly instigate legal proceedings in such cases asking for in excess of 1k USD per image infringment.
Another of the potential pitfalls in investing into any online eCommerce company that offers products online, is strearing clear of companies who have in anyway suffered at the hands of one of the many Google penalties, these algorythmic penalities often are compeltly hidden and the only way to expose potential issues lurking in the background. In order to discover such information you will need to engage with a professional company such as linkaudit who carry out such investigations.
The main trait of any suspicious business scheme is a "secret recipe" for making thousands per month. They involve
Selling On The Internet without needing staff, stock, or advertising
Avoid scams of fake counterfit products
Be watchful to avoid doing anything to fall foul of Amazons T&C, thus rendering your account and finances frozen.
Typically most of the issues start with sourcing the products that are to be sold on Amazon, quality issues, reliablity, delivery issues, outright scams, faulty products, anything that increases returns rate, will be a killer to any FBA business.
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