Overview
E-commerce & retail has seen exceptional growth over the years and there are no signs to suggest that the industry is slowing down. In addition to this, building niche brands across various regions globally has meant it has become an attractive proposition for investor an entrepreneur.
However, before looking at businesses for sale, consider researching into some key areas to what the business is selling as well as some key metric data so you can make a quantitative decision. Here are 6 key headers you may want to consider before further before buying a uk company.
SECTOR SPECIFIC CATEGORIES
Data
Reviewing statistical data for any e-commerce & retail brand, is a key driver for understanding a companies product line up and overall performance. There are multiple tools that help tracking the right metrics but the most common would be Adobe Web Analytics and Google analytics.
These services should be collating website traffic data on a weekly, monthly, and yearly basis, which can then used to calculate various equations. Before buying a UK company, in order to establish a websites performance, you may want to consider:
- What is the average order value?
- What is the shopping cart abandoned rate?
- What is the customer lifetime value?
- What is the CTR, Click through rate, per month?
- How many repeat purchases occur as a percentage?
Customer Feedback
As with all e-commerce & retail, feedback is key for growing reputation and customer support. So when it comes to buying a UK company it is important to carry out the relevant research and ensure you are fully aware of current customer sentiment. Make sure you consider questions like:
- If feedback is low, can you turn it around?
- if there is a lack of feedback, can you improve engagement?
- What has been the recent trend of customer feedback?
- What feedback shows a way to change the service or products?
Suppliers
Any successful e-commerce & retail brands will have built substantial relationships throughout the supply chain, especially with their preferred manufactures. When looking at businesses for sale, it will be vital you clearly understand all contracts that are in place with these suppliers and what commitments the current owner has agreed to. Separately, ensure that you understand if the business has any fulfilment processes and or commitments in place as well.
With this in mind, when buying a UK company consider the below questions :
- Length of contract and what are break clause terms, if any?
- Where is the manufacture located?
- Is the agreement DFP (duty and freight paid) or EXW (ExWorks) ?
- What is the agreed MLQ (minimum quantity)?
Inventory
Following on from looking at the financials of a company, when looking at businesses for sale you will want to also consider the inventory. Many companies within the e-commerce & retail sector will have various machinery, equipment and stock in order to make the products.
Reviewing what is listed will be another is another factor when looking to value a company and how beneficial these assets will be once you purchase the company.
- What is powering the business? (Shopify, Wix etc.)
- Does the business own any physical property?
- When buying a UK company do you own the trademarks?
- What are the stock levels?
- Can the cost per item manufactured be improved?
Socials
Social media engagement is vital to the success of an e-commerce & retail brand, making sure it remains current and in line with the target audience. Depending on what social media platforms are being used, the current owners should have a full breakdown on account statistics. When buying a UK company make sure you consider analysing this data with the below questions:
- How regularly are accounts updated, posts and engagement?
- What is average impression the accounts are getting per page?
- Do they target the right demographic and audience?
- How are these accounts being managed?
- How many followers do they have vs. any competitors?