An online store is usually worth the profit it can keep making for a new owner, adjusted for risk. For ecommerce, repeat customers, reliance on paid ads, reliance on one marketplace or supplier, stock and whether the site and accounts can transfer often move the value most. Sales alone do not set it: kept profit does.
What is the short answer?
Your online store is worth the profit it can keep making for a new owner, adjusted for the risk that the profit will not last. That rule applies to every business. What is special about ecommerce is where the profit comes from and what it depends on.
An online store can look large on sales but keep little after ads, fees, shipping and returns. It may also depend on a platform or supplier it does not control.
What pushes the value of an online store up or down?
Anything that makes the profit more reliable for a new owner tends to lift value. Anything that makes it less certain tends to lower it.
| Factor | Tends to support value | Tends to reduce value |
|---|---|---|
| Customers | Many repeat buyers and a customer email list you own | Mostly one-off buyers |
| Traffic | A mix of search, email and direct visits | Sales that stop when paid ads stop |
| Platform | Your own website, plus other channels | All sales through one marketplace account |
| Supplier | Several suppliers, or your own product | One supplier who could sell direct or stop supplying |
| Stock | Steady sellers, at sensible levels | Old stock, or stock tied up in slow lines |
| Owner's role | Systems and staff handle orders and service | The owner does everything, unpaid |
| Brand and data | Trade marks, domain and data that transfer | Assets in personal names, or not transferable |
Repeat customers. Buyers who return without more ad spend make profit more predictable.
Ad dependence. Many stores buy traffic through search or social ads. If ad costs rise, profit falls. A valuer looks at profit after a realistic ad budget.
Platform risk. Selling through a marketplace gives you shoppers, but on its terms. The Australian Government's guide to ecommerce notes that on a marketplace you cannot set your own policies and logistics. It also says marketplace fees tend to be higher than selling through your own website.
Supplier risk. If one supplier makes most of your products, a buyer may worry they could raise prices or sell direct.
What are the add-backs and traps in an online store?
Add-backs are costs added back to profit because a new owner will not have them. Traps are adjustments that look good but do not hold up. Online stores have several of each.
- Owner wages. If you run marketing, buying and customer service yourself, a fair wage for that work is deducted from profit.
- Ad spend. Ad costs are a running cost, not a one-off. Adding them back overstates profit unless sales would truly hold without them.
- Returns and refunds. Profit should allow for goods sent back. Ignoring them makes margins look better than they are.
- Stock. Stock is usually counted at the sale date and handled separately. Stock held with a fulfilment provider needs counting too.
- Transfer of assets. The domain, website, store accounts, ad accounts, social accounts and customer data need to move to a buyer. Some platforms limit account transfers, so check their terms.
- Customer data. Using a customer list after a sale can raise privacy questions. Ask your lawyer.
What documents matter for an online store valuation?
Start with two or three years of profit and loss statements, balance sheets and tax returns. For an online store, these often matter just as much:
- Store platform and marketplace sales reports, by month.
- Ad account reports showing spend and the sales linked to it.
- Website traffic reports by source.
- Repeat customer and email list figures.
- Supplier agreements and recent purchase orders.
- A recent stocktake, including stock held by a fulfilment provider.
- Records showing who owns the domain, trade marks and store accounts.
See the full list of documents needed.
How can two similar online stores be worth different amounts?
This example is made up to show the idea only. It gives no values or multiples.
Imagine two stores selling similar homewares with similar sales. Store A sells through its own website and one marketplace. Many orders come from repeat buyers and its email list. It sources from several suppliers.
Store B sells only through one marketplace account. Almost every sale follows a paid ad. One overseas supplier makes everything, and the owner does all the work unpaid.
Once Store B's profit allows for ad costs and a wage, it keeps less, with more risk. A valuer would likely find Store A worth more.
Which Valuo report fits my online store?
Choose by who will rely on the report. If it is for your own planning, the Business Value Report fits. If a buyer, lender, investor or partner will rely on it, choose the Professional Valuation Report.
| Business Value Report | Professional Valuation Report | |
|---|---|---|
| Suits | Your own planning, or deciding whether to sell | A buyer, lender, investor or partner will rely on it |
| Signed | No, but reviewed by a valuer before it is issued | Yes, by the valuer responsible |
| Fee, revenue under $1 million | $995 + GST | $1,495 + GST |
| Fee, revenue $1 million to under $2 million | $1,495 + GST | $1,995 + GST |
| Fee, revenue $2 million to under $5 million | $2,495 + GST | $2,995 + GST |
| Fee, revenue $5 million to under $10 million | $3,495 + GST | $3,995 + GST |
Fees are fixed by annual revenue and never depend on the value concluded. For revenue of $10 million or more, you receive a fixed fee quoted before any work starts. If your business is an early-stage tech company that is not yet profitable, Start-Up Valuations specialises in those. For tax on a sale, speak with your accountant.
What should I do next?
- See your fee in two taps: Get your fixed fee.
- Compare both reports and every revenue band: pricing.
- Read the general guide: how much is my business worth.
- Not sure which report? Read how much a business valuation costs.
Questions
Is my online store worth a multiple of its sales?
No. Two stores with the same sales can keep very different profits after ads, platform fees, shipping and returns. A valuer starts from the profit the store can keep making and the risk attached to it.
Does selling only on a marketplace lower the value of my store?
It can. A marketplace sets its own rules and fees, and can change them or suspend a seller. A store with its own website and customer list usually carries less of that risk, although marketplaces can still be profitable channels.
How does ad spending affect the value of my online store?
If sales stop when the ads stop, a buyer must keep paying for them. A valuer looks at profit after a realistic ad budget, not before it. Sales from repeat customers, email and search traffic you do not pay for are often seen as more reliable.
Is my stock included in what my online store is worth?
It is often handled separately, at a value set by a count at the sale date. Stock that sells steadily supports value. Old or slow stock is usually worth less than its cost.
Which Valuo report should I get for my online store?
The Business Value Report suits your own planning, such as deciding whether to sell. If a buyer, lender, investor or partner will rely on the figure, choose the Professional Valuation Report, which is signed by the valuer responsible.
General educational information, not advice. Examples are hypothetical and do not value a real business. The right treatment depends on the purpose, the evidence and the agreed scope.