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To get a free business valuation on your e-commerce business, go to http://www.SellMyBusinessWA.com. Available to business owners in Washington State only.
In this video, Aaron Muller, President of Advantage Commercial Brokers, explains how much e-commerce businesses are worth. E-commerce and online businesses are a very popular industry when business buyers are looking to purchase a good business. Case in point, Advantage Commercial Brokers just sold two e-commerce businesses recently. One business had 115 interested buyers, and the other had 169 interested parties. One reason for the large number of potential buyers is that many e-commerce businesses are relocatable, so e-commerce businesses attract buyers from all across the country.
As the seller of an e-commerce business, you have to be aware of the consequences of having a large pool of potential buyers. Just because you have a lot of interested parties looking at your business does not mean they will pay through the roof for your business. In fact, it takes a massive amount of time to sort through the buyers, figure out who is qualified, who is serious, and answer people’s questions while maintaining confidentiality of the sale. Having an experienced business broker on your side can make this process much easier.
There are a number of factors that e-commerce business buyers care about, including:
* What is the competitive environment like for your products?
* What is your competitive advantage? How easy is it to copy? Do you have patents or trademarks on your products?
* How do you handle fulfillment? Do you store products in your garage? Do you have a warehouse? Do you use Amazon FBA? Or do you use a third-party logistics company?
* How much are you selling from your own web site vs. marketplaces such as Amazon, eBay, and Walmart? A company that derives most of its sales from its own web site is more valuable to buyers because you can collect the customers’ information and promote more products to them directly.
* How much inventory do you carry? Is it a few thousand dollars or a few million dollars? How old is the inventory? How much of it is unsalable?
* How niche is your product? What kind of margins do you get?
E-commerce businesses tend to sell for a multiple of their Owner’s Discretionary Income (ODI). The exact multiple to use depends on the factors discussed earlier. If you are thinking about selling your e-commerce business in Washington State and want to know how much your business is worth, go to http://SellMyBusinessWA.com for a FREE and confidential market valuation.
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