eCommerce Live Case Study - From £0 to £1 Million in 12 Months or Less
We’re going to be running a live eCommerce case study over the next 12 months on how to build an eCommerce business from £0 to £1 million in annual run rate. Join us as we take you behind the scenes and show you everything from back-end infrastructure all the way to marketing - sharing real data and real results.
We’re going to start by explaining what we’ve done so far and the key things (good and bad) that we’ve learnt during the set-up process.
But first, here’s a quick backstory: we acquired the IP of a liquidated eCommerce company that was once family-run, and it’s taken us 10 months from the winning offer to signing on the dotted line.
So lesson number one, acquiring an asset or a business takes a lot longer than you think when liquidators are involved, let alone adding solicitors into the mix. What was supposed to be a simple acquisition became much more complex.
So let’s go into some of those complexities and our solutions to them.
Firstly, there’s less protection with a liquidated asset sale.
Because it was a liquidated sale and not a Ltd company purchase, it’s not possible to put any securities or warranties in place. Basically there’s no comeback, which makes it more risky.
The issue we had was that we were buying the intellectual property, which included the URL and, in effect, the website, but it later transpired that it didn’t include the code the website was written in. So we had to negotiate a separate agreement that would grant us a license to use the code.
Ultimately we weren’t even going to use the website. We were going to set up a new website from scratch, but we wanted to push the old website live to ensure Google re-indexed it - which would allow for a smooth transition when we changed to the new website.
But if we hadn’t have secured that licence, it might have thrown up some complications down the line regarding ownership. So it was better to tie up those loose ends and have confirmation that we owned and had access to everything.
Secondly, visibility takes time to claw back when your hosting goes offline.
Hosting fees are taken by direct debit or from a live bank card as long as there are available funds in the bank account. So when things go into liquidation, either the bank account no longer has money in it or the cards have expired, which means the payments don’t go through and the hosting eventually goes offline.
This happened to us 2 months into the process. We started in November 2019 and the hosting went offline in January until September 2020, which massively devalued the business from an asset point of view.
We were losing traffic, visibility and backlinks - which had a pretty big impact:
November 2019: we had 100% visibility.
January - September 2020: hosting went offline.
September 2020: hosting is back online but we’re down to 20-30% visibility.
Of course we can reclaim that visibility over time, but if you can keep the website online it makes things a lot easier. Similarly, if the data is clean and on a modern tech stack, your life is going to be a breeze. This is something you can check ahead of time when you’re going into the buying process.
The biggest lesson we learnt from this would be to make your offer conditional that the hosting server stays online and this bill is paid.
Thirdly, migrating the website was more cost-effective and less hassle than continuing on the existing custom-built platform.
When we bought the IP, we knew we were going to have to migrate the website at some point. And because it was on a .NET custom application, if we were to continue using it we would’ve had to hire a full time .NET developer, which would throw up two problems:
It’s costly - .NET is an older Microsoft programming language, so the talent pool is more restricting which increases the salaries of developers.
It’s limiting - we’d have to pay a developer to make every little change on this custom-built site, and even then we wouldn’t be 100% happy with it.
So the plan was to move to a SaaS cloud-based solution (BigCommerce), which gives us the ability to pass off part of this problem. We no longer had to deal with things like security, updates, website hosting and general maintenance. All of the functionality was there from the beginning - the only thing we might want to customise is the aesthetics, but we can contract that work out at a reasonable rate than have to hire a full time dev.
Another reason to migrate the website was to maintain a smaller, more agile eCommerce operation.
For argument’s sake, say we were going to continue selling on the old website. There’s no way we could’ve done stock feed integrations without having to contract the work out. So if we’re going to pay to get that all done, we might as well just pay to migrate the website from day one.
Yes, we’ll have lost sales during the time we’re not operating, but we’d rather use that time to build a solid foundation that we can move forward with and easily scale with time. You can’t build a solid company on quicksand and hope it somehow stays upright.
For us, BigCommerce was an easy solution that we’re happy to stick with. We know we’re going to have monthly costs that’ll increase with time over sales - that’s natural. But as a smaller team (doing trade up to £20 million), we don’t want to be building a completely custom-made website. It’s not necessary, and it’s more of a headache in terms of development work.
The original plan was to go live with Brightpearl from day one, which would mean we’d have a bit more functionality in the backend from an operations perspective. However, we didn’t because of cost and time.
It was going to cost us a sizable amount upfront to do that, as well as an ongoing fee every month. And it was going to take an extra 3 months to do it, so we would’ve missed the beginning of the season and that wasn’t an option.
At that point we didn’t know exactly how things would pan out, so we’d rather trade for 6 months, get everything ready for a migration and then integrate with Brightpearl later on. We were also having to add lots of new products and update most existing ones, so we might as well get them all correct before importing this data into Brightpearl.
By trading and having money coming in, we could do things from an act of strength, rather than losing sales and just seeing what happened.
Finally, not only have we got a website live, we then needed to make sure stock levels were up to date, which meant using stock feeds integrations with the manufacturers. We had to re-establish the relationships with the old supplies and manufacturers to get them on board. We also still had to update all the prices on the website, as well as help or redirect customers who had any outstanding issues with the liquidated company.
So on top of the migration, we also had to deal with these extra problems that came with a liquidated company.
Fourthly, when you think you’ve got access to everything, you probably haven’t.
Once everything’s been agreed and signed off, it’s a case of gaining control of everything. But a handover is never simple.
There’s always passwords you’re going to be missing or accounts you never knew existed. You have to try to retrieve them all - and at this point you become a bit of a detective.
So we had access to a lot of the main things you need permissions for: the database, server to the website, Google Analytics, Google Search Console and Google AdWords.
But we didn’t have access to things like the merchant account, social media accounts, the email newsletter and Amazon. So we created a catch-all email account (wildcard) to try and recover the majority of accounts.
This is incredibly time-consuming.
Just when you think you’ve got everything, you haven’t. We even discovered a local server in the old office. They were caching the Google AdWords feeds in it, and it also stored information like product weight, product dimensions etc. - so all the extra bits of information we would’ve put in the website, we now don’t have. We’ll be able to upload that information with a stock feed, but it’s a hassle to do it and something that could’ve been avoided if we’d known about this server from the beginning.
Another issue was we weren’t able to get two of the social media accounts back, so we lost over 2,000 followers on Twitter and almost 800 followers on Instagram. We’ve been able to retrieve the account handles, but those followers have gone.
So instead of being given access to everything all at once, it came in dribs and drabs. And the time we should’ve spent migrating the website was spent chasing passwords and discovering new accounts, which extended the timeline more than we’d have liked.
But as with any business, no plan is ever water-tight. There’s always going to be things that crop up and prolong the process. It’s also always beneficial to stay on good terms with the previous seller, because in our particular situation they were extremely helpful when we needed them. Don’t just cut all ties and go, keep the relationship going.
So plan for the unexpected and if you think something is going to take time to make happen - and you’re relying on other people outside of your control - then double or treble it. Then keep your fingers crossed.
Now for the seasons ahead, we’re facing stock shortages due to such high demand during the pandemic. For some products, manufacturers don’t have an ETA on their next shipment date, which makes it difficult to keep customers informed and restock popular products. But we’ll document how this affects us in month one.
To be updated soon.