How to value an e-commerce business: repeat purchases, traffic and stock

An online store has numbers an offline business lacks, such as conversion and customer acquisition cost. The buyer relies on exactly those: they show how durable the growth is.

Profit and margin

The buyer looks at normalised profit: after all advertising, delivery, returns and platform fees. Gross profit without those items gives an inflated picture.

Repeat purchases

The share of customers who come back affects value the most. If revenue rests on regular customers, the business is more predictable and advertising is cheaper.

Customer acquisition cost

The buyer compares the cost of acquiring a customer with what that customer brings over time. If acquisition gets more expensive while repeat orders do not grow, the business loses its safety margin.

Dependence on traffic and platforms

• the share of traffic from one source, such as a single advertising system;
• the share of sales through one marketplace and the risk of its terms changing;
• your own website, customer base and mailing lists as an asset the company owns.

Stock and suppliers

• the volume and turnover of inventory and the share of dead stock;
• dependence on a single supplier;
• logistics and returns terms.

What raises value

• a growing share of repeat orders;
• several traffic sources;
• transparent analytics by channel and product;
• documented purchasing and logistics processes.