The Unique Opportunities E-commerce Buyers and Investors Should Consider During Marketing Due Diligence

When acquiring an e-commerce company, marketing due diligence goes far beyond examining basic metrics like Customer Acquisition Cost (CAC) or Return on Ad Spend (ROAS). While those are essential, there are unique opportunities buyers and investors often overlook that can unlock untapped growth potential and provide strategic advantages post-acquisition.

In this blog post, we will walk through five unique opportunities buyers should consider during their marketing due diligence for e-commerce M&A. These insights will help you see beyond the standard metrics and recognize hidden growth potential.

1. Room for Improvement in Inefficient Marketing Efforts

Sometimes, inefficient or poorly executed marketing can be a hidden gem. When a company is still performing well despite sloppy or disjointed marketing efforts, it signals a significant opportunity for growth through optimization.

If the company has strong revenue growth despite weak marketing strategies, imagine the upside potential once effective marketing tactics are implemented. This is a common scenario in fast-growing businesses that haven't had the time or resources to fully optimize their marketing channels. With a few adjustments—such as improved customer segmentation, targeting, or retargeting strategies—the business could experience even faster growth and greater profitability.

Key opportunity:

Poorly optimized marketing strategies aren’t necessarily a red flag; they represent an opportunity for easy wins post-acquisition. Improving even basic marketing elements can lead to immediate performance enhancements.

2. Leveraging Over-Allocation to a Single Advertising Channel

Many investors see heavy reliance on one advertising channel—whether it's Meta (Facebook/Instagram), Google Ads, or another platform—as a potential risk. However, it’s important to view this over-allocation through a more strategic lens.

If the company is performing well on Meta, for example, this is a sign of product-market fit. It indicates that the product resonates well with the audience on that platform, validating the demand. Instead of viewing this as a limitation, think of it as a proven entry point into additional channels. Other ad platforms—such as TikTok, Pinterest, or even Snap—can be tested and scaled, knowing that the core offering works.

That said, success on a new channel won’t happen overnight. It often requires a significant investment of resources and time to achieve the same level of profitability on these channels. Be prepared for an initial period of testing and iteration before scaling.

Key opportunity:

Rather than worrying about over-reliance on one ad platform, focus on how this success can be replicated in other channels. Know that diversification is possible but will require careful investment.

3. The Challenge of Replicating Success Across Different Ad Platforms

One common assumption is that if a company is successful on one ad platform, it can easily replicate that success across others. However, each advertising platform is highly specialized, with unique audience behaviors, ad creative formats, and targeting capabilities.

For example, a company may perform well on Meta Ads due to its sophisticated audience targeting capabilities, but this success doesn’t guarantee similar results on YouTube, TikTok, or Pinterest. Each platform requires different strategies—what works on one may fall flat on another.

Buyers and investors should recognize that simply "turning on" new ad platforms won’t automatically lead to profitable campaigns. It’s crucial to analyze how the company approaches each platform and whether it has the expertise to navigate the complexities of various ad networks.

Key opportunity:

Don’t assume success can be easily transferred across platforms. Instead, evaluate the company’s expertise in each channel and whether it has a clear strategy to scale effectively across different ad networks.

4. Opportunity in Repeat Purchase Rate (RPR) as a Predictor of Growth

Many investors focus primarily on top-line revenue and acquisition costs, but one of the best indicators of long-term growth is the Repeat Purchase Rate (RPR). The RPR reflects the percentage of customers who return to make a second purchase, and it is one of the strongest predictors of Lifetime Value (LTV) growth.

A high RPR signals that customers are satisfied with the product and willing to come back for more. This is critical for building customer loyalty and reducing reliance on acquisition marketing. On the other hand, a low RPR (under 20%) can indicate deeper issues with product quality, customer satisfaction, or brand perception—factors that may limit the company’s ability to grow organically.

Key opportunity:

Analyze the RPR closely. If it’s high, you have a clear path to growing LTV and scaling profitably. If it’s low, take a deeper dive into product quality and customer satisfaction before proceeding with the acquisition.

5. Identifying Dependency on Intent-Based Search Ads

Search ads on platforms like Google are excellent at capturing high-intent traffic—customers who are actively searching for a product or solution. While this is effective for capturing demand, relying too heavily on search ads without a strong social media ad presence could signal that the company is missing out on demand creation.

Social media ads on platforms like Meta, TikTok, and Snap are geared toward creating demand, meaning they introduce products to customers who may not yet be aware they need them. Companies that fail to build demand through these discovery-based platforms are often limited in their scalability.

If a company is over-allocated to Google Ads and hasn’t seen success on social platforms, this could be a red flag. Successful e-commerce companies can both capture demand with intent-based ads and create demand with discovery-based ads.

Key opportunity:

Evaluate the balance between search ads and social media ads. Companies that can both capture and create demand will have a greater ability to scale profitably.

Conclusion: Unlocking Growth Potential Through a Comprehensive Marketing Due Diligence

When evaluating an e-commerce business for acquisition, the standard metrics like ROAS and CAC are important, but they don’t tell the whole story. To truly understand the growth potential of a business, you must dig deeper into its marketing strategies and performance.

By considering unique opportunities like inefficient marketing, over-reliance on a single platform, and RPR, you can uncover valuable insights that may not be immediately apparent in surface-level data. This deeper understanding of the company’s marketing capabilities will position you to make smarter, more profitable investment decisions.

The Unique Opportunities E-commerce Buyers and Investors Should Consider During Marketing Due Diligence

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