How do I find out whether a craft store’s online shop is worth keeping?
Look at the online shop as its own small business inside the store. Get its sales, returns, shipping costs and time spent, then see whether it sells stock the shop would otherwise struggle to move or just takes work away from the counter. Keep it if it earns its effort.
Ask for the online shop’s figures separately from the store’s. You want sales, refunds, shipping costs, platform fees and the staff time it takes to pack and post orders. If the owner cannot separate these, treat that as a finding. A shop that looks busy online may be paying for that traffic in fees and labour.
Next, look at what it sells and to whom. Does it reach customers outside the neighbourhood, or does it mostly sell to people who already shop in person? Check whether online listings share stock with the store, because that can cause oversells and mismatched counts. Ask who writes the listings and takes the photos.
Finally, see what you would be buying: the domain, customer list, listings and accounts. Ask the seller to confirm these will transfer, and ask your lawyer how. A shop that depends on one person’s personal login is easy to lose after closing. Ask also for a few examples of orders that came from customers who had never visited the store. Think about whether you would run it yourself, or have the time to, since an unmanaged online shop slowly loses its listings.
Key takeaways
- Ask for online sales, fees, shipping and labour separately from the store.
- Check whether online and in-store stock are counted together.
- Confirm domain, accounts and customer list will transfer to you.
- Look for online customers who never visited the store.
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Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentWhat is inventory
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