In this article, we will explore the nuances of selling Shopify dropshipping stores.
We will discuss:
Reasons to sell your Shopify dropshipping store
Tips to succeed in selling your store
Things to prepare when selling your dropshipping store
The two best places to sell your dropshipping store
Use trusted marketplaces like Empire Flippers and Flippa to list your store, ensuring a higher likelihood of attracting serious buyers and maximizing sale value
Accurately value your store using profit multipliers and choose between auction/bidding or lump sum pricing
Prepare detailed financial reports and highlight store advantages like apps, email lists, and social media presence
Ensure payment is completed before transferring ownership and associated assets to the buyer
It is important to understand the role of business brokers in the selling process, as they can help determine the value of your store, find potential buyers, and manage the selling process.
Understanding the value of your ecommerce business is crucial when preparing to sell.
In the end, I hope that this article prepares you well before you start listing your online store in a marketplace. This way, you will have a higher likelihood of attracting a buyer. Let us get started!
Whether you want a good business exit or you just want a change of career, there are many reasons to sell your Shopify dropshipping store. In this section, we will take a look at some of the most common reasons why people do this.
There comes a point in most individual’s life when we are short on funds. Waiting for a business to produce profits equal to this cash that we need can take some time, sometimes even years. As such, it can be a good idea to just sell your business now.
Why would you need cash? Here are some good reasons:
You need to pay for expenses like weddings, college, etc.
You want to buy a property, like a house or a new car
You need money for an emergency
There is really no right or wrong reason to need immediate cash. You only have to ensure that you are selling your business for the right price, which can be determined by evaluating the monthly net profit. This metric is crucial in valuing your Shopify store, as it helps in setting a competitive selling price and attracting potential buyers.
Many people want to dropship but do not really know how to start. Then, there are those people who fail and want to buy a thriving dropshipping store instead of going through another failure. These people are your target market.
If you built a successful dropshipping store, you essentially created something of value. In this case, you can sell your store at a premium. Experienced buyers are often looking for valuable businesses and can negotiate for a fair price.
As a business owner, you know when your dropshipping store may lose potential in terms of sales. Take a look at this example:
The interest in fidget spinners peaked from August to September of 2022. If you were a discerning dropshipper, you would have sold this business around that time and made a killing. If you held back, no one would be interested in buying your store anymore since the fidget spinner craze was over.
In addition, you may want to sell your business while it is good because you have reached your maximum potential. As far as you are concerned, you may be in a state where you think you have reached your maximum skills.
It means that you are no longer in a position where you are qualified to scale your business. In this case, you should pass the torch to someone who can take your business to new heights.
Business is hard. Some of us may only realize this only after we have managed a business of our own. So, while your business is doing well, it is possible that you no longer want to concentrate on dropshipping, and what you want is to move on to another venture.
Some people will eventually lose interest in dropshipping. It is also possible to lose motivation. Life can give us different cards that we want to deal with, and it is a good reason to transition to another business.
If this is the case, it is a good idea to sell your business, provided that there is a lot of money to be made. You can use this money to start a new venture, or simply enjoy the fruits of your labor.
This is not a good reason to sell, but still a valid reason. It is not a good reason because you may have a hard time finding buyers for your business. It is a good reason because you no longer have to spend money on a losing business.
Will it work? It will, but only if you have previous sales to show, and this sales data must prove that the price you are asking for is reasonable enough. You can tell the potential buyer that you stopped marketing and advertising, and it is the reason there was no sale in the last few months.
You can also say that you did not advertise anymore as you were focused on other things. Whatever it is, you must do a convincing job of it.
This reason is not at all unusual. Some actors begin hating their careers. The same thing happens with people in sports. It is not uncommon for people to take on jobs and careers, and succeed in them, only to realize that it was not what they wanted in life.
So, if you are feeling this way, it is best to sell your business now before you lose motivation. If you don’t, your business will fail, and it will be more difficult to sell it later.
There are two ways by which you can sell your store online. You can charge a lump sum for it, or you can set a bidding war among interested buyers. Another option is a private sale, where you directly sell your business to a specific buyer or through online groups and communities, which can offer potential benefits like higher sale prices but also come with risks such as the need for trust and legal considerations. Additionally, using online business marketplaces can be a more effective way to promote your business to a larger audience of potential buyers interested in acquiring apps, websites, and ecommerce businesses. In this section, let’s take a look at both of these two options and weigh in on their pros and cons.
The best place where you can sell your website by auction is Flippa. Here, you can post your Shopify dropshipping store for sale, and potential buyers will place bids. Auctions can attract potential buyers by creating a competitive environment where interested buyers will place bids. The one who has the highest bid wins.
Here are the benefits of selling your Shopify store via auction:
You get at least 15% more than your asking price
You have the option, as the seller, to accept or reject the bid
The system has an automatic rejection within 72 hours
If you accept an offer from a bidder, the listing shall be closed, and you now have to complete the business deal.
As far as pricing goes, the 15% is a default minimum. If you want to sell your store for $10,000 (this is your asking price), only bidders with offers of at least $11,500 can place an offer.
One downside to this strategy is that you can only attract people who are seriously interested in your store. Those who are merely surfing will not make an offer because they would think that bidding makes them pay more than what they have to.
The good news is that buyers can place a maximum bid, yet other bidders will not see this maximum bid. It is the system that will increase the bids in increments. Because of this automated increase in increments, there is a huge possibility that you can make more money.
The most common way to sell a website is via a lump sum, which means you have an asking price. In the context of selling online businesses, lump sum offers are a common method. Platforms like Flippa and Shopify Exchange Marketplace facilitate the sale of companies, including Shopify stores, by allowing sellers to list their businesses with a clear asking price. A buyer, however, can make an offer that is lower than your asking price, similar to how homeowners make offers.
Here are the pros of selling via lump sum:
There is clarity in the price
You can easily calculate your business valuation and use that as a selling price
You do not have to rely on marketplaces
As far as selling goes, you can post your store on social media channels. The only downside to this is that you will get a lot of nuisance inquiries; these are inquiries from people who do not have a strong intention to buy—they are merely curious.
Lump sum offers also have a fixed fee (if you sell via Flippa or similar websites). The fee is commonly between 0% to 14%.
There is no right and wrong choice between these two selling options. Overall, we can say that an auction is a better choice if you think that your store has a huge demand. It is only wise to sell anything at an auction if you know that a lot of people want whatever it is you are offering. If not, the lump sum is the best approach to use.
Your store’s fair market value is a complicated thing to calculate. All people who sell their businesses will naturally charge money for their effort and time. However, buyers do not think along the same lines. An online business, especially a Shopify store, is easy to build.
Since it is easy to build, you cannot compare an online store with a physical asset like a building. The hours you spent building your store may not justify your price.
So, how do you price your store? The best way to do it is by a process called business valuation. How? There are many ways to calculate the price of a business.
Here are some methods:
Market Valuation – only applies to publicly traded companies
Times Revenue Method – your revenue over some time is applied to a multiplier; the multiplier depends on the industry
Earnings Multiplier – the value is based on the profit, not just the revenue
Discounted Cash Flow Method – this method depends on the future projections of cash flow
Book Value – this value depends on the assets and liabilities of the company
These methods are too complicated, and you may need an accountant to do the calculation for you. The easiest method is the Book Value because you only need to subtract the liabilities from your assets.
However, it is not the best, and we do not recommend it, because online store assets are not that big. After all, a Shopify store alone is only worth the money the theme was worth.
Our recommended way of valuing your Shopify store for sale is to multiply your average monthly profit by 15 to 30 times. This is the bare minimum.
So, here is an example (the dollar is profit)
Jan – $1,942
Feb – $1,657
Mar – $2,345
Apr – $1,224
May – $3,213
Jun – $1,456
Jul – $4,316
Aug – $3,123
Sep – $1,578
Oct – $1,842
Nov – $1,883
Dec – $2,953
The average monthly profit for this year is $2,294. If we multiply that by 15, we get the value of $34,415, so we will sell the store for that amount.
It is up to you to decide if you want to use a 15x multiplier or greater than that. Of course, you also have to factor in the goodwill or the prominence of your brand.
However, goodwill has no pricing standard. If you think about it, you really cannot put a price tag on Nike, Coca-Cola, or Disney. These names are household names that cost billions, not just in assets, but in goodwill or brand popularity.
Another method is to sell the business for 3x the amount of the annual profit. So, in this case, the total monthly profit for a year is $27,532. If we sell it for 3x that amount, we can sell the store for $82,596. Of course, she can also expect the buyers to haggle, so be prepared for that.
Important note: sell the Shopify dropshipping store based on the profit, not the revenue.
Once the buyer has completed the payment, it is time to transfer the asset. How do you do it? Essentially, you have to give the buyer an owner status or owner account access.
First, you have to add their email address to the Shopify admin panel and mark them as Staff Members. From here, they must complete the staff account setup from their end.
Once that is completed, you can now change their status to owner. Once you do this, you will no longer have admin access to the store. You can still be a collaborator or a staff member, but the admin privileges and rights now belong to the buyer.
To do this, you have to go to Stores > Actions > Transfer Ownership > Transfer Store. Once done, the new owner will receive an email, and they have to follow the instructions. These instructions include adding a credit card and either maintaining the Shopify plan or upgrading.
If the buyer does not complete this process, the entire transfer will be put on hold.
One thing you should never do is to transfer the ownership BEFORE you are paid for the store. It is best to give the buyer a staff member account only, but never ownership.
Once the transfer is complete, you can now give the buyer other information, such as the credentials for the admin log-in page. In addition, you also need to transfer the ownership of the following:
Domain name
Apps you bought for your Shopify store
Point-of-sale or POS credentials (if applicable)
Facebook account credentials or other social media credentials
The more complicated your store is, the longer it will take you to complete the transfer of ownership. Please take note that the process of transferring other assets is different from Shopify. Just because you transferred the Shopify store does not mean that every app associated with it will also get transferred automatically.
Currently, the only two trusted and reliable places where you can sell your Shopify business are Empire Flippers and Flippa. Choosing the right marketplace is crucial for maximizing the value and efficiency of the sale process. Selling a Shopify online store through these platforms is often more efficient compared to others. Let us take a look at both:
Empire Flippers has been around since 2011. Today, the platform has sold over $100 million worth of online businesses, including Shopify dropshipping stores. Overall, the success rate when selling a website here is 94%.
Empire Flippers Features
Valuation Tool – you no longer need to beat your head to calculate how much your business is worth. The company offers many calculators for different types of business. For example, they have separate valuation calculators for affiliate websites, Amazon FBA stores, dropshipping stores, dropshipping, etc.
Filtering Buyers – they have a system that handles the communication between you and the buyer. You will not have any worries dealing with scammers and non-serious buyers.
Broker Service – if you are not a savvy seller, you can work with their business broker to “massage” the buyer and get you a better business deal.
Finally, Empire Flippers has a migration service. You do not even have to transfer the property to your buyer if you find it too complicated. They have a team that will take care of this for you, or a fee.
It is important to note that your business must at least have a net profit of $2,000 per month to even qualify to be listed on the platform. Your business must also have Google Analytics attached to it for at least the last three months.
You cannot worm your way in here. Empire Flippers has a team of people who will check your business data—not only based on what you said but based on actual records.
Flippa is not just a marketplace for websites but also apps and other digital businesses. It has been around since 2009, and the company has since sold over $140 million in websites, domains, and apps.
Flippa Features
Ease of Use – unlike Empire Flippers, Flippa does not require a specific amount of profitability before you can sell your website. It means that you can build a dropshipping store and sell it immediately on the platform for a profit.
Verification – you have the option as a seller to go through a verification process, which makes your listing more credible.
Auction – you have the option to sell your business auction-style. In this regard, there is a potential to sell your business at a higher price than what you asked for.
Escrow – all payments to you can be made through an escrow service. It means that you can enjoy a type of protection where the money sites on Flippa’s escrow partner—the buyer cannot scam you.
Flippa only asks that you have the right to sell your property. It means that you must be able to prove that you own the website. In addition, should you choose to use an auction, you must not list your website or dropshipping store anywhere else.
So, should you use Empire Flippers or Flippa? If your store is making over $2,000 monthly in net profits, use Empire Flippers as this is where you can find buyers who are willing to spend some cash on profitable businesses. Otherwise, your only option is Flippa.
Shopify store owners need to prepare several things before they can start selling their store, and it is all a matter of presentation. Like anything else, the store has to be “inviting.” The thing is that Shopify store selling has more nuances than selling a product. Proper preparation is crucial, including understanding the profitability, value, and process of selling a Shopify store. Allow me to provide you with tips on how to sell your Shopify dropshipping store.
The first thing you need to think about is your buyer. People who buy businesses are different from your typical consumer. Your target here is a person who is looking to be profitable.
Here is a sample list of your buyer’s characteristics:
The buyer wants to make a profit
The buyer does not want to go through building a store
The buyer wants to buy a business at the last possible cost
Given this information, you want to position your store in a way that attracts this kind of buyer. We are not saying that you have to sell yourself short. It’s just that you have to sell your store at a price in a way that the buyer sees potential profits in it.
A financial report may sound scary, but it is easy to do. One of the best things you can do is to post a screenshot of your monthly revenue, which you can take from your Shopify dashboard.
In addition, you can create a PDF report for your financial report. Do not offer this immediately—make it a point that buyers must ask you for this information.
At the very least, your PDF financial report must contain these things:
Income statement – this is a report that has your revenue, net income, business expenses, and other financial details of the business.
Balance sheet – this tells the reader the status of the business. It has data on the assets, liabilities, and equity of the business.
Cash flow statement – this report is the summary of how much money came in and out of the business over a period.
You can also add a financial dashboard to your report. The dashboard is comprised of graphs and charts that showcase the income statement of performance of your business.
To succeed in selling your business, you have to present to target buyers why your business is worth their money.
Here are some things that can inspire you:
Applications – make it a point to show the buyer that your store already has apps that will help them continue the success of the dropshipping store, like shipping apps, email subscription apps, etc.
Email List – if you have an email list of either subscribers or customers, you can use it as a selling point. Anyone who has operated a website/store before knows that it is difficult to build an email list.
YouTube Channel – if you have invested in building or social media presence, you can use this to your advantage. Show the number of YouTube subscribers, Facebook or Instagram followers, etc. There is value in social media clout, and you have to leverage this to sell your store at a higher price.
Social Media Accounts – ensure that all social media accounts related to the site have been transferred over to the new owner. These accounts are valuable assets that can help maintain and grow the store’s customer base.
You can add more to this list. What matters is that you emphasize the fact that the buyer is not just buying a store—that they are buying more assets than a website.
There is no single price point by which you can sell your Shopify store. If your Shopify dropshipping store already has sales, you need to use the principles of valuation.
Yes, you can sell your Shopify store either by using an auction or lump sum pricing strategy. There are three marketplaces we recommend where you can post your Shopify store for sale.
Yes, they are profitable, but only if your store has a proven brand strength or if your store is selling. It is rare for people to buy Shopify stores that have no sales. They would rather build their store.
Yes, of course, it is worth it to sell products on Shopify. For only $25 a month, you can build a fully functional Shopify store and make profits from retail.
The next step now is to visit the three sites mentioned in this article. Look for Shopify stores that belong to the same niche as yours. Explore those stores, take the time to understand their revenue and traffic, and then decide if you can compete against them.
The post How To Sell A Shopify Store: A Guide To Selling Your Dropshipping Business appeared first on Tradelle.
