How to Sell an eCommerce Store
By: Katie Melissa
Today, 63% of shopping takes place online. Ecommerce now not only has a meaningful impact on the world’s economy but has also grown to become a consistent part of everyday life. With global online sales reaching $4.8 trillion by 2021, the massive growth of online shopping shows no signs of slowing down any time soon. Which is good news for you, the online seller. One of the biggest shifts in shopping behavior this year has undoubtedly come from the impact of Covid-19. With countries across the globe imposing strict lockdown, the number of consumers shopping online, especially for groceries, has skyrocketed. However, as the U.S. begins to see the light at the end of the tunnel with the vaccine rollout, it doesn’t mean online shopping is losing momentum. There’s been a shift in consumer mindset.
If you have your own online store (on Amazon, Shopify, Etsy, eBay, Walmart, etc.), it would be natural to take interest in its value. If you own an ecommerce store on any of the above platforms, perhaps you’re building it up with the thought of selling it one day or just want to know what it’s worth. Either way, it won’t hurt to position your store so that if you want to sell it you can get top dollar.
How to Set Your Business Up for Sale
Thinking about selling your ecommerce or dropshipping business? Whether you’ve intended to sell from day one or you have finished an expansion phase of the business, selling your business can be a viable and profitable option. How much do you think your ecommerce store will sell for? Well, the range is very wide and can be anywhere from a few thousand dollars to millions of dollars depending on a number of factors.
- One of the most important things to get right is the Profit and Loss (P&L) statement.
- Whether you do it yourself or use a bookkeeping software, you want to make sure your P&L is absolutely clean. An erroneous P&L is something we see that often kills a deal in late-stage due diligence. Match expenses to revenue meticulously and pay attention to the details. If a buyer sees sloppy books they will immediately lower the multiple they apply to your business.
- Make sure the valuation is right! A good formula to follow is: [6-24 Months’ Average Monthly Operating Profit] x Multiple (Typically 20–60+). Operating profit is determined by taking the revenue from a period of 6 to 12 months and subtracting any operating costs (cost of goods sold, marketing, hosting, employees, etc.)
- When making your valuation, be sure to not just focus on the operating profit, but consider the age of the store or business, and any assets that come along with the sale of the business (blog, email list, phone numbers), and finally the lifetime value of your customers.
- Make sure your supplier contracts and other key current arrangements will remain in place in the event of a sale. Buyers don’t want to be caught short and find that the supplier ups the rates and affects the profit margin once they’ve taken over. If you have a good working relationship with your supplier, make sure you advertise this fact as part of the sale. It makes the business a lot more attractive to potential buyers!
- Don’t forget, while your business is for sale, continue to run it as if you were going to keep it so there’s no drop-off in sales.
- List your store for sale on marketplaces including most notably Empire Flippers, Flippa, Exchange, Digital Exits, or you can sell privately.
- Typical Amazon FBA business multiplier: Refer to Empire Flippers business marketplace for comps/list of current Amazon FBA businesses for sale right now! The multiplier the FBA store receives depends on but is not limited to the age of the store, size of the store, assets, and margins. Typical multipliers: 20x-60x monthly operating profit for ecommerce businesses.
At my company Elite Automation, we help our clients build resellable Amazon FBA businesses. We help you to purchase an automated Amazon Wholesale FBA or Walmart Automation business of your own and operate it for you to scale it from the ground up. I, along with my partners, and management team are seasoned e-commerce sellers with decades of experience and millions in sales collectively. Contact our team today and we can discuss your options.