Last updated - July 8, 2021
I know what you’re already thinking… revenue is the only thing that matters when it comes to running an eCommerce store through WooCommerce or otherwise!
Well, if that is what you think, then you are in for a delight as we run through 5 items beyond revenue (or profit, for that matter) that can create real value for your business.
But, to get things going, we need to understand what it means to have a valuable WooCommerce store.
When talking about the value of your business, this doesn’t just mean the dollars and cents that are coming in each week. Sure, to your day to day existence as an entrepreneur, what might matter the most is how many sales you are making. How much money is flowing into your store on a daily or monthly basis and how much money you’re spending to keep things running and bring in new customers is what keeps you afloat. But is your goal to run this business forever or would you think about selling it to another entrepreneur at some point in the future?
It’s crucial to have an exit strategy when you get into business, but perhaps more importantly, it’s important to build a business with a huge amount of potential value when the day comes that you finally sell.
Whether you’re already considering selling your WooCommerce store on one of the leading marketplaces to sell an online business like Flippa, or if you just want to be prepared when the time comes, this article will be sure that you can make the most for your hard work.
The Value of Organic Traffic
This is where WooCommerce and the WordPress platform really wins.
When evaluating eCommerce stores that are selling on a site like Flippa, organic traffic is very often the most critical factor, even more than revenue or profit. The reason for this is that organic traffic is one of the toughest aspects of a website to grow.
How much of the traffic above, from a listing live on Flippa, is coming organically and how much is paid for?
Bringing in paid traffic is relatively easy, it just takes money and a bit of marketing prowess. Driving traffic through organic search is hard. But, lucky for you, WordPress is one of the most SEO friendly platforms on the market, allowing you to build an attractive blog, keyword rich product listings, and an overall beautiful website that the Google algorithms appreciate.
There is provable ROI for organic traffic and while the calculations can become quite convoluted, you can simply think of it this way:
You can pay $5 to bring a customer in with Facebook advertising and make a $20 sale or
you can drive free search traffic with optimized SEO and make the same $20 sale.
Let’s say it takes you 40 hours of time to develop some exceptional content over the course of a few months. If you make an extra $5 for each sale from that organic traffic, after 1,000 sales you’ve netted $5,000 for that time spent and over the course of a couple of years and let’s say, 10,000 sales, you’ve netted $50,000 extra dollars from those 40 hours of work.
An entrepreneur who is seeking to acquire an eCommerce website knows how valuable that organic traffic is and is willing to pay a premium for it. They can make tweaks on the paid traffic or the onsite conversions relatively quickly, but organic traffic takes time and an eager investor will pay to skip the line and own a website that is already ranking well on Google.
When you’re building an eCommerce site using WooCommerce, keep this in mind. You’ll add an incredible amount of value to your business down the road, when you’re looking to make an exit, if you spend time developing your blog content and using SEO best practices all around in order to increase your organic traffic.
Age – Time Equals Money
A business that has stood the test of time has far more value than an upstart business that may simply be a flash in the pan.
There are a number of entrepreneurs who find quick success with their eCommerce business and decide that rather than put in the time and effort to keep things running, they’d rather exit quickly.
This is fine, but it is not going to give you the best valuation for your business be it a WooCommerce store, a SaaS product, or a simple content site.
Acquisition entrepreneurs will pay a real premium for an online business that has proven it can function at a high level over a long period of time.
In fact, during Q4 of 2020, Flippa noted that the eCommerce businesses that sold on their platform for over $50,000 were well over 6 years old on average, whereas the businesses selling for less than $50,000 were less than 4 years old on average.
There is no real trick about this aspect of generating value for your WooCommerce store. It’s just about timing your exit properly. Everybody has their own needs and sometimes it’s simply impossible to continue running a business for long enough to generate maximum returns. But, if you can, holding on to your business while continuing to operate successfully for at least 4 years, if not more, will make it worth a whole lot more.
As mentioned above, traffic is an incredibly important factor when it comes to optimizing the valuation of your WooCommerce site. However, traffic doesn’t mean much if those visitors aren’t making purchases.
It can seem backwards, but often times a website with 100,000 unique visitors and 500 sales isn’t worth as much as a website with 50,000 unique visitors and 400 sales.
A potential buyer for your website most likely has a keen understanding of advertising and how to bring more traffic to your site. Or perhaps they just have deep pocketbooks and are willing to throw a bit more cash at your ad spend in order to draw in a crowd.
If you can show, with data, that you have a high converting store, they will be likely to value your business higher than one that has a low conversion rate.
There are some great ways to increase conversion on WooCommerce and it is worth your time to play around with these. Be sure your image are high quality, that your copy is well written, and that you’re doing whatever it takes to turn visitors into customers in order to achieve maximum valuation for your site.
Screenshot from Flippa.com of a WooCommerce Store’s sales integration.
Return Customers & Subscription Programs
The cost of doing eCommerce business can be quite high if you are dependent on running Google or Facebook ads. One of the first questions you might get from a prospective buyer or investor is about your return on ad spend. How much are you paying to make a sale?
If you can show that your ads are producing more than a single sale, the value of your eCommerce business will instantly grow.
There are a number of plugins for WooCommerce that can help you build out a membership program. Consider using these and get people subscribing to a new version of your product every month or quarter.
Be sure you have email campaigns automated to bring old customers back after a certain period of time.
Run retargeting campaigns for those who have already purchased from your site as you might find you get a better ROAS from those who already trust and enjoy your product.
Whatever you can do to turn a $20 customer into a $40 or a $400 customer will greatly increase the value of your site.
Grow Your Email List
The final tip that I’ll give today for optimizing the value of your WooCommerce site is growing your email list.
Email can sometimes seem outdated, but we’re still all using it day in and day out. You should 100% be using your email list to help you make sales, but even if you aren’t, simply having a large list will increase your valuation.
Not only can email addresses be used for astute email marketing, but they can be uploaded into Facebook and other platforms in order to create lookalike audiences and beyond. Investors love to see this opportunity.
Take a look at some of these email subscription plugins for WordPress and choose one that makes the most sense for your business. Even if you aren’t using email marketing for yourself, it will pay out at the end if you have an email list to go along with the sale of your online business.
For the day to day operations of your WooCommerce business, revenue and profit is likely the most important part of your valuation. Cash flow means pretty much everything when you’re just trying to keep the doors open and the business running smoothly.
However, when the time comes that you are looking to sell your WooCommerce site, if you can showcase organic traffic, high conversion rates, return customers, a solid email list, and a well aged business, the valuation will be higher than you ever imagined.