How to Buy a Dropshipping Business in 2024

Of all ecommerce businesses, dropshipping has one of the lowest barriers for entry. With little more than a website, you are good to go.

And yet starting a business is one thing – making it grow and thrive is another. If you have a sizable amount of startup capital to spare, you might be better off buying a going concern.

That way, you get to leap frog all the baby steps that can make establishing a successful drop shipping business difficult. 90 percent of ecommerce businesses fail within the first four months.

As always, buying a business is not without risk. You want to be sure you are taking over a company with a strong track record and great future growth potential.

Over the long term, buying the wrong business or a failing one can be a costly mistake – it’s often considerably more expensive than setting up a new one from scratch.

So how do you go about buying a drop shipping business?

Let’s find out.

Understand the Ins and Outs of Dropshipping and Ecommerce

Buying a drop shipping store does spare you from the chaos and obstacles that come with building an ecommerce business from zero.

But once you buy a successful business, you must have the wherewithal to keep it running. You still have to put in the work. Else there is always the real possibility of running it into the ground. No company, irrespective of size, is ever completely immune from collapse.

Your best shot at running the company successfully begins by arming yourself with requisite knowledge of the industry.

Be ready to take over the reins and oversee day-to-day activity. Dropshipping in particular demands a high degree of coordination and attention to detail.

While you do not have to be a tech expert, a foundational understanding of how the Internet, ecommerce and ecommerce platforms is fundamental.

Define Your Goals for Your Dropshipping Business

Once you take over the business, where would you like it to go? There are many paths you could potentially take. For example, your primary may be a particularly successful product line that you’d want to refocus the entire business on.

Or perhaps you want to ride on the business established brand to launch a new set of products – in which case, the existing business serves as a buffer in case your new products fail to gain traction.

Defining your goals ensures you narrow down your search to the kind of business that’s best suited for you.

Your goals should be in line with your bandwidth. Some dropshipping businesses will need more work to run.

Define a Budget

Once you set out to look for a dropshipping business to buy, you quickly discover there are a lot of good companies out there you would want to buy. But chances are you will not afford to buy every business that’s up for sale.

To avoid spending too much time studying dropshipping stores that are beyond your reach, set a budget. Of course, a lot of the best businesses to buy are also going to be among the most expensive.

It’s important to note that when budgeting for the purchase, you should set aside considerably more money than is required to buy it.

You will be taking over operating costs, advertising spend and inventory management – and you need money for that.

Lastly, do not restrict yourself to your own money. Seek out partners or investors that may be interested in financing the purchase. Also, some businesses may be open to seller financing which implies you can make the payments over time.

Search Dropshipping Business Buy-Sell Platforms

So where do you look?

There are a number of generic and specialized platforms you could buy an existing dropshipping business from.

• Flippa – A large global marketplace where the buying and selling of all kinds of online businesses occurs. At any given moment, roughly a third of these businesses are dropshipping stores. For a company to change hands, you might spend as little as $400 but could pay in excess of $5 million. Flippa has some useful features that can support due diligence. For example, the platform has partnered with SEMrush to show a dropshipping store’s current traffic analysis. It also integrates with Google Ads to determine how much the store makes from search advertising.
• Empire Flippers – Empire Flippers is a much smaller version of Flippa. Expect to see little more than dozens of sites for sale. The lack of variety is a major drawback but you could still stumble on some gems. On the other hand, Empire Flippers deals exclusively with large, profitable and well established businesses. There is personalized support through the transaction. Dropshipping stores sold here could cost from $100,000 to more than $3 million.
• Acquire – Acquire is a marketplace that facilitates a verifiable process of buying and selling of businesses including dropshipping. Unlike most such platforms, you do not get to see the identity of a business you are interested in except further on in the process. In the interim though, you get a detailed description of what the company is about, when it was established, its operations, sales volume, revenue and profit. The median asking price is about $70,000.
• SideProjectors – SideProjectors is a platform where people can offer up or take over a side hustle. Dropshipping stores are popular side projects so it’s not surprising there are hundreds of listings on this site. With median prices at approximately $500, SidProjectors is one of the most affordable marketplaces for buying an existing business. On the flip side, the stores on offer are small and have relatively low revenue.

Perform Due Diligence

Due diligence is about confirming the business is viable and verifying that its owner’s/management’s claims are true. This is especially important for Internet-based companies as they can be sold by anyone from anywhere without any physical meeting between the buyer and seller.

Due diligence is the most important part of the transaction. It can be complex and the involvement of professionals that can see beyond the headlines is crucial. At the minimum, you will need an accountant and an attorney.

The bigger and more complex the dropshipping business, the more the expert hands that may be required to deliver the transaction.

There are a lot of things you could check on. These can mostly be divided into operational, financial and legal.

Operational:

• Products – What products does the store sell. Is there significant market demand for the foreseeable future?
• Optimized website – Optimized for speed, user navigation and search engine ranking.
• Website traffic – Check the site’s traffic numbers, growth and sources. If a site relies on just one traffic source (e.g. Meta Ads), that’s potentially a single point of failure. On a side note, businesses that are growing without ads present a lucrative opportunity for acceleration.
• Social media and email lists – Does the business have an active social media presence across multiple platforms?
• Customer base size and demographics – How big is it? Is it loyal and growing?
• Inventory management – Does the business have a strong handle on supplier inventory to seamlessly keep up with orders? Weak inventory management leads to fulfillment failure, angry customers, lost sales and a tarnished reputation.
• Automation – How automated are the business’ processes? The more automation the better. It speeds up and streamline operations while making it easier to scale quickly.
• Customer reviews – What do customers have to say about their experience buying from the store? How many customer ratings are there? Are ratings mostly positive or negative?

Financial:

• Order history – Order history and growth trajectory.
• Revenue/Sales – What is the company’s revenue and growth trajectory?
• Profit – Is the business making money? If it isn’t, are the losses consistently narrowing and is there a strong prospect it could turn a profit in the short term? Your best is always a business that is profitable and has been so for some time.
• Marketing spend – How much money does the business spend on advertising and customer acquisition. Low acquisition costs point to an opportunity to scale. On the other hand, high costs are a pointer to limited room for growth.

Legal:

• Business information – When was the business founded and has it been in continuous operation since then? Does it have all the required documents to operate as a business in the jurisdiction it was registered in.
• Supplier agreements – What suppliers does the business have agreements with? Are they reliable? Strong and diverse supplier relationships are an asset. Steer clear of businesses that depend on one supplier. If that supplier unexpectedly hikes prices, goes out of business or stops carrying the product, the dropshipping store could suffer a catastrophic crisis.
• Are there current or upcoming legal or regulatory requirements that could impair your ability to operate the business.

Wrapping Up

Buying any business is always a big decision. There’s a lot to take into consideration. We have covered the most important details you should think about.

Do your research and have certainty about what you are getting into before you invest your money. Pore through the data to your satisfaction.

But do not ignore your gut feeling. If everything seems to check out but you have a bad sense about the business’ prospects, do not buy it.