It's natural to have many questions when you're buying any product, and especially a new business. If you're unsure of what to ask, we've create this three-part series of 150 Questions to Ask When Buying an E-Commerce Business.
We've tried to make our questions for each category as comprehensive as possible, but every business will be different and we encourage you to come with your own questions specific to the business. A business drop shipping, or one selling food products will have completely different questions relating to production.
Part 1: Business Context, History, Management, Ownership Team, Legal, Business Sale, Motivation, Assets, Business Performance, General, Revenue, Expenses
Table of ContentsProducts Operations Customers
- What are your top selling products?
- When were your top selling products launched and have sales continued to climb or decrease over time?
- How often are new products launched?
- Are your products labeled with your brand name have a generic label?
- What is included in the product packaging? Do you include any extra such as custom boxes, stuffing, pamphlets, coupon codes or personal hand-written notes
Production & Suppliers
- How many suppliers do you have?
- Are your products sourced from a catalogue or dropshipped, printed on demand or exclusively manufactured
- What currency is used to pay your manufactures and which would they be open to accepting
- Do you have a transferable relationship with vendors/suppliers
- How long have you been working with your current vendors/suppliers
- For products manufactured exclusively, how many months of inventory do you stock up on?
- Would your manufacturers be open to larger price discounts if greater order sizes were placed?
- Are your products shipped from your manufacturer's to a warehouse via sea or air freight?
- If you had to rate your suppliers based on Price, Production and Quality, how would you assess them each in area on a scale of 1-5
- Have you completed an audit on your manufacturer? What were the types and outcomes? Have they made substantial progress on implementing changes?
- Are your products compliant with the Consumer Product Safety Improvement Act (CPSIA)
- Would you be open to having a 3rd party auditor visit any of your manufacturing facilities
- Does your supplier perform consistently throughout the year? Are there periods where production time lowers due to high demand?
- Is your manufacturing processes and relationships a constraint or major stress on the business?
- Who in the company manages the business’ relationship with suppliers?
What certifications have your manufactures achieved or directives do they comply with? Examples may include the following.
- Green manufacturing: GS-C1, Leadership in Energy and Environmental Design (LEED)
- Ethics: Sedex Members Ethical Trade Audit (SMETA), amfori BSCI (Business Social Compliance Initiative), Social Accountability (SA) International 8000, Worldwide Responsible Apparel Production (WRAP),
- Product Safety: Restriction of Hazardous Substances Directive (RoHS), Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), Phthalates Testing, California Proposition 65, General Product Safety Directive (GPSD), Toy Safety Directive of the European Union,
- Food & Consumables (product safety certifications may be also applicable): British Retail Consortium (BRC) Global Standard for Food Safety, Good manufacturing practises (GMP), Food and Drug Administration (FDA) standards, Hazard Analysis and Critical Control Points (HACCP),
- ISO Standards
- What are the typical steps required to fulfill an order once received?
- What is the average fulfillment time? How does this vary throughout the year?
- What is your return policy and return rate?
- What software is required for fulfillment of products?
- What are the costs associated with the software required for fulfillment?
- What equipment is required for fulfillment of products? Are these included in the sale?
- How does your business handle over-stock inventory?
- Does your business have any atypical operation or customer support policies?
- How many employees or hours per week is required for customer support?
- How many customer support tickets are received per week?
- What channels do you receive and offer customer support requests from? Facebook, Twitter, Email, Phone, Live Chat, Review sites
- What are your most common support questions?
- Do you have a help centre on your website for common support questions?
- How does your business handle a high volume of customer support requests during sales spikes or seasonal periods?
- Where are the majority of your customers? Do your customers reside in the same country or region as your products are shipped from?
- Do you have any demographic data of your customer base? Common traits include age, location, gender, interests, affinity, relationship status and familial size
- What are your average order repeat rates and time between repeat orders?
- What is your average order size per customer?
- Are you able to provide a list of leads or loyal customers?
- What efforts have you taken to ensure customer loyalty?
- Do you have a customer loyalty program with points or rewards and what is the rate of point redemption?
- What is the outstanding balance of loyalty points due to members?
Paid Marketing Performance
- Cost per Acquisition (CPA) - the cost to acquire a new order. Many merchants will measure the cost per completing a certain conversion event as well such as, add to cart or completing the entire checkout process.
- Return on Ad Spend (ROAS) or Return on Investment (ROI) - usually expressed as a percentage
- Conversion Value / Cost - this is a simple calculation to take your total value of actions from paid marketing divided by the cost. A value of 1 would be breakeven, and anything higher would be profitable.
- Higher level metrics such as Cost Per 1000 Impressions (CPM), Cost Per Click (CPC), and Click Through Rate (CTR) are less valuable the above metrics will encapsulate their results. However, these metrics are top of the funnel and more relevant for new merchants or merchants with limited ad spend history.
Search Engine Optimzation (SEO)
- What keywords does your website rank #1-3 for or drive a substantial amount of organic traffic?
- Do you have an SEO strategy in place?
- What SEO optimizations have you made?
- Has your website been negatively impacted by any Google algorithm updates?
- Has your website ever been marked as “spam,” “fraudulent” or “malicious” by Google, even temporarily or incorrectly?
- How many social media followers does your business have?
- How often does your business post on social media and what presences are actively maintained?
- Has the business done any influencer marketing and has it been a profitable form of marketing?
- Have any influences or celebrities shared your products or company on social media?
- Has your business ever bought fake followers or likes?
- What is your email list size?
- What email marketing software do you use?
- Do you regularly purge your email list for stale subscribers?
- What is the average open rate of the last 5 campaigns?
- How has email marketing performance trended over time?
- How many new subscribers does your email list grow by each month?
- How do you acquire new email subscribers
Other Marketing Channels
- Do you currently have a Facebook Pixel on your e-commerce store and what are the conversion events setup?
- Do you have a Google Ads Pixel on your e-commerce store?
- Do you use any paid marketing channels such as Adroll, Taboola, Bing Ads or Twitter Ads?
We'd love to hear your questions or what areas you think are missing! Subscribe to the Exchange blog to get notified when part 3 is published.