E-Commerce Business Valuation Guide
E-commerce valuations have matured beyond simple revenue multiples. Today, traffic quality matters as much as quantity, brand defensibility determines your ceiling, and platform dependency is the risk buyers fear most.
Average Multiple
3.0x
Seller's Discretionary Earnings
Range
Traffic Source Portfolio Analysis
Traffic diversification is to e-commerce what location is to restaurants. Businesses dependent on a single traffic source carry concentrated risk that'll compress valuations.
Ideal Traffic Mix for Maximum Valuation
Most valuable: free, sustainable, hard to replicate
Owned audience: you control the relationship
Brand awareness driver, but algorithm-dependent
Scalable but expensive, rising CAC erodes margins
Traffic Risk Score
Businesses dependent on a single traffic source carry higher risk. Here's how concentration affects valuation.
Low Risk
No single source > 40% of traffic
Medium Risk
One source at 50-70% of traffic
High Risk
One source at 70%+ of traffic
Brand Defensibility Scoring
Brand defensibility is what separates a 2x business from a 4x business. Each layer of defensibility makes your business harder to replicate and more valuable to buyers.
Trademark
High ImpactA registered trademark prevents competitors from copying your brand name, logo, and product identifiers. Without one, a buyer is purchasing a business with no legal brand protection.
Proprietary Products
High ImpactProducts that are exclusive to your brand, whether manufactured in-house, custom-formulated, or protected by patents, create a moat competitors cannot easily cross.
Email List Size
Medium ImpactA large, engaged email list is one of the most transferable assets in e-commerce. Lists of 50,000+ with 20%+ open rates signal an owned audience the buyer can monetize immediately.
Repeat Purchase Rate
High ImpactA repeat purchase rate above 30% proves customers return without being re-acquired through paid ads. This reduces CAC over time and creates compounding revenue growth.
Social Following
Low-MediumSocial followers matter less than engagement. A 50K following with 3-5% engagement rate is more valuable than 500K with 0.5% engagement. Buyers care about influence, not vanity metrics.
Content / SEO Moat
Medium ImpactA blog or content library that ranks for hundreds of commercial keywords creates an organic traffic engine. This content takes years to build and provides a sustainable competitive advantage.
Platform Risk: Where You Sell Matters
Amazon-only businesses sell at 20-30% lower multiples than brands with their own website. Platform dependency is a risk buyers quantify and discount.
Own Website
Full control over customer data, pricing, branding, and marketing. No platform fees or algorithm changes to worry about. You own the customer relationship.
3.0x to 4.0x
SDE Multiple Range
Shopify Store
Semi-owned platform. You control design and customer data, but depend on Shopify infrastructure. Lower risk than marketplaces, with easy transferability during sale.
2.5x to 3.5x
SDE Multiple Range
Amazon FBA
Platform handles logistics but controls the customer. Subject to fee increases, policy changes, and listing suspensions. Buyers discount for dependency risk.
2.0x to 3.0x
SDE Multiple Range
Multi-Channel
Own website + marketplace presence. Diversified revenue streams across platforms reduce concentration risk and maximize buyer confidence.
3.0x to 4.0x
SDE Multiple Range
What Acquirers Actually Look At
The aggregator wave (Thrasio model) has cooled, but well-run brands with $500K+ SDE still attract serious interest. Here's what sophisticated e-commerce buyers, whether aggregators or PE firms, evaluate behind the scenes.
| Metric | What It Tells the Buyer | Target Range |
|---|---|---|
| Trailing 12-Mo SDE Trend | Growth trajectory and business health | 10-30% YoY growth |
| Customer Acquisition Cost | Unit economics and marketing efficiency | < 30% of first-order AOV |
| Repeat Purchase Rate | Brand loyalty and product-market fit | 30%+ of customers |
| Gross Margin | Pricing power and cost structure | 40%+ (physical) / 60%+ (digital) |
| Customer LTV:CAC Ratio | Long-term profitability per customer | 3:1 or higher |
| Return Rate | Product quality and customer satisfaction | < 5% (non-apparel) |
| Inventory Turnover | Cash flow efficiency and demand accuracy | 6-12x per year |
| Supplier Concentration | Supply chain risk and negotiating power | No single supplier > 40% |
The Digital Due Diligence Checklist
Start preparing 12-18 months before you plan to sell. Buyers will ask for every item on this list. Having it ready signals professionalism and accelerates the deal timeline.
Clean Financial Records
24 months of P&L, balance sheet, and documented add-backs. Separate personal from business expenses completely.
Google Analytics Access
Full GA4 property with 24+ months of data. Traffic sources, conversion rates, and user behavior trends.
Customer Database Export
Email list with engagement metrics, customer segmentation, and purchase history. Prove your audience is real and active.
Supplier Agreements
Documented supplier relationships, MOQs, lead times, and exclusivity agreements. Transferability of supplier terms.
SOPs for All Operations
Step-by-step procedures for order fulfillment, customer service, marketing campaigns, and inventory management.
IP Documentation
Registered trademarks, patents, domain ownership records, and any licensing agreements. Resolve disputes before listing.
Ad Account Performance
Historical ROAS by channel, CAC trends over time, and current campaign structure. Show ad spend efficiency.
Platform Account Health
Amazon seller health metrics, Shopify store status, payment processor standing. No pending violations or suspensions.
Frequently Asked Questions About E-Commerce Valuations
Get a Professional E-Commerce Business Valuation
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