How to sell an ecommerce business
Selling an e-commerce business isn’t too different from selling any other type of business, but there are some unique aspects that can surprise online sellers. Instead of physical stock, you’re dealing with digital products or drop shipping. Your lease could just be a subscription to Shopify, and instead of counting customers coming through a door, you focus on metrics like website sessions and conversion rates.
The basics still apply: get your financials in order, know your business’s value, find a qualified buyer, and close the deal so you don’t miss out financially. In Australia, most e-commerce businesses tend to sell for about 2 to 4 times their seller’s discretionary earnings, but well-managed stores with strong growth and varied traffic sources can sell for even more. If you’re considering selling your online shop and want to estimate its value, feel free to reach out for a free ecommerce business appraisal from our team.
What your ecommerce business is actually worth
The worth of an ecommerce business mainly depends on its profitability, the likelihood of maintaining that profit after a new owner takes over, the risks involved for the buyer, and how easily the business operations can be transferred. Buyers often look more closely at online businesses compared to brick-and-mortar shops. This is because it’s easier to enter the online market, competition changes more quickly, and performance data is readily accessible. If your numbers are good, this transparency is great. If not, it can be a disadvantage.
How seller’s discretionary earnings (SDE) determines your asking price
If you run an e-commerce business that makes less than $5 million, a common way to figure out its value is by looking at seller’s discretionary earnings (SDE). This includes your net profit plus your salary, any personal expenses that you might have charged to the business, one-time costs, and things like depreciation that don’t involve cash. Essentially, it shows how much cash flow the business generates for whoever is running it.
For example, if your e-commerce store has an SDE of $180,000 and similar businesses typically sell for three times that amount, you could list it for about $540,000. However, this multiple can differ a lot depending on the business type. A basic dropshipping store with low profit margins might only sell for 1.5 to 2 times its earnings, while a well-established brand with a loyal customer base could get a multiple of 4 times or even more.
Calculating the value of your business might seem simple, but the details can complicate things. Buyers tend to examine everything closely. If you’ve been using the business for personal subscriptions, paying family members more than the usual rate, or mixing personal and business expenses, be prepared for some tough questions. Having clear and justifiable add-backs will boost your credibility, while shaky ones may lower your sale price. For more insights on this topic, check out our guide on how to value an ecommerce business.
Why growth trajectory matters more than current revenue
When someone buys a business, they’re really looking at its future earnings, not just what it makes right now. So, it’s important to show a growth trend alongside your current earnings. For example, an ecommerce business earning $200,000 with a 25% growth each year will likely attract more interest and a better price than one pulling in $250,000 but barely growing or even losing revenue.
Buyers mainly pay attention to the last 12 months of earnings, but they also consider how those numbers trend each month. If a business sees steady monthly income, it feels less risky than one that only makes a profit during one busy season. Likewise, businesses with rising growth in recent months can signal to buyers that there’s potential for even more profit ahead, making them willing to invest more.
If your sales are stagnant or decreasing, it doesn’t mean you’re unable to sell. It just means you need to be clear about the value you’ll get. Taking six to twelve months to stabilise your numbers before selling could be a smart move. An honest look at these trends is key to knowing what buyers will pay.
What drives multiples higher for ecommerce businesses
When buyers are looking to pay a premium for a business, several key factors come into play. First, businesses with gross margins over 50% tend to attract higher valuations. This is because such margins give the new owners more flexibility to handle rising costs or invest in growth without hurting their profits. Having unique products or exclusive agreements with suppliers also helps, as it lowers the risk that a competitor could easily copy the business.
Furthermore, businesses with recurring revenue, like subscription models, often see significantly higher valuations. For instance, subscription-based ecommerce companies can command multiples between 4x to 6x their seller’s discretionary earnings because of their predictable income. This stands in contrast to businesses that rely solely on one-time sales, where revenue starts fresh each month.
Lastly, if a business can operate smoothly without the owner’s direct involvement in areas like customer service or marketing, it’s more appealing. Buyers want to see a business that can run independently; if removing the owner causes everything to slow down, that signals it’s more like a job than a true asset, which affects its value.
Preparing your ecommerce business for sale
The initial bid from the seller begins long before the bargaining tables are sat around. The buyer is a pattern matcher; they look for reasons to lower their bid, and those will be found easily in any company that has not been adequately prepared.
Get 12 months of clean financial statements in order
At minimum, you would have at least 12 months’ profit and loss statements and a balance sheet, together with supporting documents such as bank accounts statements and credit card accounts statements, tax returns, and BAS returns. Most buyers will usually require you to provide 24 to 36 months’ worth of financials to check the trend.
Your accounting system must follow the accrual accounting concept rather than a cash accounting system. You recognise income as soon as the order has been delivered, not after money has been received in your bank account. Expense records must also reflect the correct period of those expenses. If you are still using an archaic accounting system based on a shoebox full of paper and Excel spreadsheets, it is imperative that you convert your accounting system to a reliable one like Xero and MYOB.
Personal and business expenditures should be separated clearly. Each and every penny spent personally but processed through the business must be accounted for and included in SDE. Otherwise, the buyer’s accountant will just walk out, or alternatively reduce their bid to offset the risk. Knowing the valuation techniques using the net profit approach would enable you to understand precisely how buyers view your data.
Document your operations so the business runs without you
The buyer wants proof that the ecommerce business is run by a system rather than the owner’s brain. This implies having written procedures for handling your orders, customer services, inventory management, vendor relations, marketing campaigns, or whatever processes you have within your business.
There are two advantages of having your operations manual properly documented. Firstly, it gives the buyer confidence that they can easily take over without having to spend six months learning the business. Secondly, it multiplies your business value since it shows that the business is independent. For instance, if the buyer cannot log into your Facebook ads account, talk directly to your supplier, process returns, or access your photography folder, they would be very cautious about buying your business.
Post-settlement transition time will take 30 to 90 days. One buyer will pay higher because they are sure that they will manage your business after 30 to 90 days without assistance from you, while another buyer will think that they might call you in case they have problems managing the business six months from now.
Clean up your inventory and product pages
Dead stock will reduce your valuation. It’s important to conduct an inventory check before selling. Dispose of items not sold within a year. Do clearance sales if necessary. Inventory that moves quickly and efficiently will appeal much more to the buyer than a storage facility filled with unsold stock.
In terms of online presence, check the status of your product pages to see if there are any broken links, outdated information, bad quality photos, or discontinued items. The ecommerce website is the store’s front, and the buyer would look through the products in a similar way to a customer. If the site looks rundown, the buyer will think that the business is not well-maintained. Correcting the product pages and updating the SEO meta tags is easy but effective in changing the buyer’s perception of the business. If your business carries significant physical stock, our guide to selling a business with stock covers the valuation and tax considerations in detail.
The ecommerce valuation factors buyers care about most
Your profit and loss statement informs the purchaser of your business’s income. The metrics listed below let them know if you’ll continue to make it. These are the figures that can cause multiples to rise or fall by an entire multiple, and most vendors aren’t aware of them.
Traffic source diversification and customer acquisition cost
Many ecommerce sellers know how much total revenue they generate but do not know where it comes from. The buyers know that, and they will let you know as well. If your business is relying on a single channel for acquiring 70% or more of your traffic and consequently 70% or more of your revenue, it is subject to concentration risk. Your traffic can go down dramatically due to algorithm updates, ad price hikes, policy changes, or another company outbidding you.
The best ecommerce businesses distribute their traffic among four to five different channels, such as organic search, paid search, email, social media networks, and direct traffic. A good email list is especially important because email is a channel you own. Instead of buying traffic through Google Ads or Meta’s platforms, you own the relationship and don’t pay for traffic.
The reason customer acquisition cost (CAC) is important is that it gives an understanding of how effectively the company uses its spending to generate sales. If you are spending $40 in order to bring in a customer who then makes his first purchase for $60 with a gross margin of 30%, the economics does not add up based on one purchase alone. This can only be done if there is a high level of repeat purchasing.
Repeat purchase rates and customer lifetime value
The repeat purchase rate provides a purchaser with more insight into the well-being of an online business venture than any other statistic. It is the best way to know that the customer loves the product enough to return to buy again.
An ecommerce shop with a 40% repurchase rate within 12 months is a whole different ball game from a shop with 95% of its users not coming back for repeat business. In the former case, there exists a compounding revenue stream of customers. In the latter, the company starts fresh every month, relying on its ad spend budget to fuel the engine.
This brings us to customer lifetime value (CLV). If a customer spends $400 during his entire period with your business and costs you $35 to attract him to the business, then the numbers make sense. Your buyers will scrutinise these figures, so be sure that you are ready with your CLV calculations when you hit the road. If you are yet to calculate your CLV, do so now. Most ecommerce platforms such as Shopify and email marketing systems provide this metric.
Platform risk: Shopify vs Amazon vs multi-channel stores
This is where there has been a notable shift in ecommerce valuations over the last few years, an aspect that is often underestimated by sellers.
An ecommerce company fully dependent on Amazon FBA services operates within a risk framework that is not the same as a company that runs its own Shopify store or conducts ecommerce on several platforms. The seller cannot control the customer relationship, nor does the platform follow the seller’s policies. Moreover, the seller does not own the email address list of his customers; the seller cannot do any remarketing directly; and the seller has little to no control over pricing and fees, which can even result in account suspension and listing suppression.
In practical terms, this means that businesses will sell with smaller multiples. While an all-Amazon FBA company with SDE of $200,000 would be sold at a price range of 2x – 3x, the same financial performance from a branded Shopify company with an owned list of customers and various traffic sources would earn the company 3.5x – 4.5x.
Businesses that operate via multi-channel sales strategy are most likely to appeal to prospective buyers, especially those planning to acquire companies in 2026. With diversification in mind, these businesses are not heavily dependent on any platforms; moreover, having a direct sales channel allows buyers to have an email list and first party data about customers and develop their brand independently. To put it simply, this is the difference between buying real estate and buying a company renting the real estate.
If your ecommerce business is exclusively on Amazon, it would be wise to set up your Shopify or standalone channel first before listing yourself to the market. Half a year of sales data from multiple channels can already increase the valuation by an entire multiple. However, this is not just the case of being able to ask for a higher price. An additional advantage that you will have is the increased number of interested parties who will consider acquiring a multi-channel business, which they may exclude if it is solely on Amazon.
The combination of leveraging Amazon for scale and brand loyalty via the company’s own online store is becoming more and more popular among savvy customers.
How the selling process works from listing to settlement
It will take between four and eight months from the initial contact to the final agreement for most web-based organisations.
Choosing how to sell: broker, marketplace, or private sale
Online marketplaces are perfect for ecommerce companies with a value below $100,000. This approach involves minimal fees for listing and has a worldwide clientele base, so a business that has easy finances can be sold within a short period of time. The disadvantages of this method include self-management of the process, a majority of buyers being price-sensitive, and lack of negotiation assistance.
For ecommerce companies worth more than $200,000, the services rendered by a dedicated broker are generally sufficient to cover the costs of their commissions. A broker maintains confidentiality, qualifies potential buyers, represents you during negotiations, and pushes the transaction forward even when things get stuck. Commissions for selling a business via a broker are between 5% and 10%.
Private transactions take place where a member from your network reaches out to you. The benefit of doing so is that it will be faster and cheaper. The downside is that the transaction lacks competition (only one buyer), hence you might miss out on money.
Creating a sales prospectus that attracts serious buyers
Before a buyer sees your financials, they will receive your sales prospectus (also referred to as an information memorandum). This document will determine whether the buyer chooses to proceed or not. In essence, this is similar to a real estate property listing sheet, but it spans 20 to 40 pages detailing all the necessary financial, operational, and strategic information that the buyer requires to consider moving forward with the acquisition.
An effective sales prospectus will highlight the business overview, financial results over two to three years, traffic and customer information, operations and management structure, future growth potential, and the rationale for the sale. The sales prospectus should be factual and straightforward without any exaggerations. Exaggeration or understatement of your financial and operational results in your sales prospectus is the quickest way to sink a deal.
The business’s selling points should be included in the prospectus. How does this ecommerce business stand out from others? Is there something proprietary about it that prevents another business from duplicating it? Should this business’s competitive edge include things like its existing client base, its high ranking in natural search results, its exclusivity in dealing with suppliers, or even a recognised brand name?
Due diligence, contracts, and maintaining confidentiality
Once an NDA is signed, along with the letter of intent, you move to the most critical part of the selling process. For an online company, this involves matching up your financial statements with your bank and platform statements, evaluating your performance on Google Analytics and ads, checking out your mailing list and database of customers, verifying your supplier contacts, assessing domain ownership and your intellectual property and evaluating all leases or third-party agreements.
Due diligence may take anywhere between four to eight weeks. This will involve giving out sensitive information about your business, making it important that you first sign a confidentiality agreement (NDA). This helps maintain confidentiality during the sale process for the sake of building healthy relationships with your employees, vendors and clients.
Legally speaking, there is the initial phase of reaching a “heads of agreement” or a “letter of intent,” which is then followed up with a formal contract of sale drawn up by solicitors. In Australia, each party will normally get their own solicitor and accountant to oversee the deal. This is something you cannot afford to miss out on. A good contract will clearly specify what is included in the sale.
Using escrow and managing the handover to the new owner
The purchase price does not flow from the purchaser straight into your bank account. Instead, the purchaser will place the purchase price in escrow. This means that it will be held in an escrow account by a third party, usually a bank, until the terms of the sale have been fulfilled, which often takes between 30 and 90 days, depending on the length of time you take to transfer ownership of the digital goods and accounts.
Escrow is beneficial to both parties. The buyer is assured that their money is safe until they receive their goods. On your part, you know that the funds are ready for payment once you have fulfilled the terms of the deal. Escrow services are also useful in international sales.
It is at this point where the transaction will be decided whether it succeeds or fails. Always make sure that there are structured knowledge transfer meetings and not just phone conversations. Have a transition plan that encompasses all systems, logins, contacts with vendors, recurring tasks, and campaigns. It is essential to know how to sell the business when you’re trying to sell the business as a going concern.
How an Australian broker adds value to an ecommerce sale
Internet-based enterprises are inherently international, causing many local Australian online vendors to believe that they require an international broker or can just post their sale on foreign marketplaces. This strategy might be viable for smaller, uncomplicated businesses. But for larger operations, it adds unwarranted danger.
Why selling through an online marketplace alone is risky for established businesses
If your ecommerce business is bringing in $300,000 or more a year in profits, placing your company on sites such as Flippa or any other platform in similar nature will be taking chances. In this case, the buyers of the site will have little interest since most of the buyers here are seeking smaller businesses worth $100,000 or less. A larger sale means you need a buyer who has some financial capacity and can conduct a business. It is highly unlikely such a buyer will not use the service of a business broker.
The confidentiality risk of placing your business on the marketplace is another issue. The posting is visible to anyone including competitors and suppliers. This may hurt the company especially when dealing with supplier agreements and confidential staff within the business. It could be quite risky to sell a company whose operations are going smoothly.
The legal and tax issues involved with the transfer of ownership of an Australian business depend on the size. The process is complicated when it comes to transferring assets or shares, collecting GST, managing employee benefits, and compliance with consumer laws in Australia.
What to expect from Benchmark’s ecommerce sale process
Since its inception in 1999, Benchmark has conducted business transactions throughout Australia for over 5,000 clients. The brokers at Benchmark have knowledge regarding the e-commerce business metrics involved in valuing e-commerce companies, as well as an understanding of the laws and tax regulations concerning business transactions within Australia.
The process begins with an obligation-free, discreet business assessment. Our evaluation of your business takes into consideration your financial performance, customer metrics, business systems, and future plans for growth to determine the true value of your company. Next, we develop a professional sales brochure, qualify prospective purchasers from our nationwide database and contacts, manage the confidentiality of the process throughout the sale, represent you in negotiations, and liaise between solicitors and accountants through the completion of the sale process. Learn more about us on our business brokers page.
Our commission model is explained to you at the outset. We do not bill you if the business fails to sell.
Tax and legal obligations when selling an ecommerce business in Australia
That is what catches out many e-commerce businesses, especially those that have concentrated on the international market without considering the implications of Australian law in the process of exiting. Making an error with your exit strategy can end up costing you thousands.
Capital gains tax (CGT) and small business concessions
The net gain from selling the business (the sale price less the cost base) will be considered a capital gain and subject to CGT. With a top marginal rate of 47%, including Medicare levy, the effective rate of CGT, when taking into account the discount, is 23.5%. Hence, the amount of tax you will pay on your $1 million capital gain after the 50% discount for assets owned more than 12 months but without other small business concessions is $117,500.
The CGT concessions available in Division 152 of the Income Tax Assessment Act 1997 can make this tax payment much lower, even nil! Four CGT concessions apply in total, and all of them can be combined:
The 15-year exemption means the whole capital gain will be disregarded if you have owned the business continuously for 15 years or more and you are over 55 or permanently incapacitated. This concession gives the highest reduction in tax payable.
The 50% reduction on active assets applies to the leftover capital gain once the CGT discount has been applied. This means that only 25% of the initial capital gain will be subject to tax.
The retirement exemption can shield from capital gains tax up to $500,000 throughout your life. However, if you are below the age of 55 years, the amount will need to be invested in superannuation.
The small business rollover option enables you to defer the capital gain for up to two years by replacing the existing active asset with another asset.
In order to qualify for the concessional options, your small business needs to satisfy the basic eligibility criteria. The criteria include a maximum turnover of $2 million or net assets value of less than $6 million. In the financial year 2025-26, the capital gains tax lifetime cap for the super contribution is $1,865,000.
Timing is important. A price of 54 rather than 56 could forfeit your 15 years of immunity. Incorrect structure of the company could make you ineligible for the concessions altogether. It is not the kind of thing that you should do without help from a tax professional that specialises in business transactions. Our comprehensive guide on capital gains tax on a sale of a business covers everything from eligibility requirements to calculating the tax.
Structuring the deal: asset sale vs share sale
Most ecommerce business sales in Australia are structured as asset sales, where the buyer buys the individual assets of the business (goodwill, stock inventory, domain, customer base, digital assets, supply deals) without buying shares in the parent company owning the business.
Selling assets involves less paperwork and gives the buyer much greater control over their acquisition. It also allows the buyer to depreciate their acquired assets, and that can be an important consideration in negotiations. From the seller’s perspective, selling assets will bring them a capital gain from each asset sold, and they will have to apportion the total sales price among the assets in the deal.
Selling shares is typical for bigger ecommerce ventures that work via a company that enjoys CGT benefits. In the latter case, the company survives, maintaining all its contracts and liabilities as well as the entire track record. The buyer gets the company in entirety with everything inside, including problems unknown to them. That’s the reason for buyers undertaking thorough due diligence before buying shares.
Your decision on either of these options impacts CGT implications, stamp duties for the purchaser (stamp duties vary from state to state), GST implications, and contract transfers. State-by-state stamp duty variations are discussed in our stamp duty guide. You should seek professional advice on both options prior to signing any documents.
Common mistakes that reduce your sale price
From our experience of brokering hundreds of businesses, we know within minutes what topics your buyer will bring up regarding your ecommerce business. Once you have a list of these topics, you can use this as an actionable audit checklist to review your business prior to putting it on the market.
Single channel dependence is the most popular topic in valuation kill list. If your income is 80 per cent dependent on one website or traffic source, then it will be discounted when calculating the multiple for your business. Even just twelve months of diversification into email, SEO, or another marketplace will earn you an extra fifty thousand dollars.
Another topic that will surely be brought up are the financials. Blending personal finances with business finances, lack of consistency, unusual spikes in revenue, and poor record keeping are all factors that will make buyers wary of your numbers. You cannot take your word for how much the business makes.
Just as dangerous is dependence on the owner. When your personal contacts, personal role in marketing, personal understanding of the product or management of suppliers become indispensable to the business, the prospective buyer views the company as something whose worth is reduced to nothing the moment you decide to walk out of the picture. Having processes and having someone to take over in your absence becomes mandatory for a high value.
Overpricing makes your sales effort a difficult one right from the beginning. For example, a website that has been lingering in the market for several months without any buyer is sending out signals to potential buyers about problems in the process. It’s advisable to price according to SDE and multiples in order to create an impact from the start. Understanding how long it takes to sell a business can help you set realistic expectations and avoid the temptation to overprice.
Timing is also very important for sales; it could be disastrous to try to sell while experiencing low revenues, just after losing an important vendor, in the midst of a platform upgrade, or when a key person has left.
Get an ecommerce business appraisal
It all comes down to preparation when the disparity exists between the value you place on your business versus how much a potential purchaser will pay. Benchmark provides appraisals and certified business valuations so you know exactly what your business is worth. We analyse your financial information and other important figures, providing you with an accurate valuation range based on recent transactions and market conditions.
FAQs
How long does it take to sell an ecommerce business in Australia?
Typically, most ecommerce companies need anywhere from four to eight months to complete their sale from start to finish. Simple companies may be sold within three months, while more complex companies may require 12 months due to SBA or vendor financing. The key to a quick sell is proper preparation. Companies that come to market with clear books and well-documented operations sell faster than others. Pricing realistically also goes a long way in achieving a speedy sale.
Can I sell my ecommerce business if it runs on Amazon FBA?
Certainly. Ecommerce businesses that use Amazon FBA are sold quite frequently. However, the distinction here is that companies solely operating under Amazon usually receive less attractive valuations than ecommerce businesses with their own ecommerce store. For instance, Amazon FBA-based businesses are generally valued between two to three times annual SDE, whereas other ecommerce stores can be worth up to five times annual SDE. This is due to the fact that the buyer assumes all risks associated with the platform, including ownership of the database, fee structure, suspension of accounts, and rule changes.
What is an earn-out and when is it used in ecommerce sales?
An earn-out arrangement refers to an agreement that some of the acquisition fee will be payable upon closing, while the rest of the fees are payable over a period of 12 to 24 months according to how well the company performs following settlement. An earn-out is applicable where there is a difference in the value perceived by the seller and the amount the buyer can pay up front. Earn-outs are common in ecommerce transactions where buyers need assurance of continued revenue stream after sale. For sellers, the earn-out is risky since the amount that is eventually paid out is dependent on another person running the business.
Do I need to tell my staff or suppliers I am selling?
It depends on your personal choice, but the general advice would be that you do not need to do this right away or even during the whole process of selling. It is possible that by disclosing information too early, you risk having your employees searching for another place to work and your suppliers considering alternatives for future cooperation, which might negatively affect the overall business performance and lower the price of your company.
What financial records will a buyer want to see during due diligence?
Buyers may ask for income statements from the last two or three years, balance sheets, BAS lodgements, tax reports, bank accounts, credit card statements, earnings reports from online platforms like Shopify, Amazon, or similar sites, Google Analytics, ad spending, email marketing results, customer information data, supplier agreements, and leases or service contracts. The clearer and neater your financial documents are, the easier due diligence becomes, and the more confident the buyer feels about your figures.
