What You'll Learn
Analysing the profile of the traffic (website visitors) that comes to an ecommerce property is a crucial part of any ecommerce due diligence, and we recommend this be part of all due diligence engagements.
Important factors to look out for include the sources and quality of traffic.
SEO & Organic Search
Organically ranking for high quality search terms is obviously very valuable. Essentially, this is "free" traffic, and although a business can run very successfully on paid advertising alone, having a substantial portion of traffic come from organic searches or direct traffic is usually a sign of a healthy business.
Paid Search Advertising
Paid search advertising, such as Google Adwords, is the main way in which a lot of ecommerce businesses acquire customers.
It is therefore crucial to understand in detail how the target company is performing in this arena, whether handled in-house or by a third party.
Social Network Presence
A robust social network presence can be a powerful driver of traffic and customer loyalty.
It is very often poorly utilized by even pretty large ecommerce companies, and can often be a great source of post-close opportunities.
An effective content strategy can amplify both organic and paid advertising efforts, decrease the cost of customer acquisition as well as increase customer loyalty, brand awareness and repeat purchases.
It is crucial however, that the content strategy goes beyond simply blogging occasionally.
Analytics & Business Intelligence
To be effective, executives need to have visibility into the key metrics underlying their ecommerce funnel from brand awareness through repeat purchasing and retention.
It is often an important step post-close to mitigate any lacking tooling in this regard.
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Einar Vollset is a seasoned technology operator specializing in due diligence of, and strategic advisory services for, middle market and private equity owned companies with significant eCommerce channels. Dr Vollset is the co-founder of a YCombinator backed company acquired by Google, holds a PhD in Computer Science and used to be a professor of computer science at Cornell University.