eCommerce business valuation
Australian eCommerce businesses typically value at 2.5 to 4.5 times normalised EBITDA. The multiple depends almost entirely on whether the demand is owned — repeat customers, organic traffic, an email list — or rented from an ad platform.
Buyers separate demand you own from demand you rent. A brand with repeat purchasers and organic search traffic values well above a store of identical profit whose orders stop the day the ad account is paused — and in both cases the stock is examined line by line.
Quick answer
What is an online store worth?
Normalised EBITDA multiplied by 2.5× to 4.5×, plus saleable stock at market value. A brand with a repeat purchase rate above 30 per cent, meaningful organic and email revenue and diversified suppliers reaches the top. A store dependent on paid acquisition, a single platform or one supplier sits at the bottom — and dropshipping businesses with no owned brand often value below the band entirely.
What moves the number
What decides an eCommerce multiple
The core question is how much of next year's revenue arrives without being bought again.
| Factor | Pushes toward the top | Pulls toward the bottom |
|---|---|---|
| Demand ownership | Repeat purchase rate above 30 per cent, organic and email driving a third of revenue | Paid acquisition driving most orders, with rising cost per acquisition |
| Channel spread | Own site plus marketplaces plus wholesale, none dominant | A single marketplace account carrying the business, with suspension risk |
| Brand and product | Owned brand, registered trade marks, private-label or exclusive product | Reselling widely available product with no exclusivity or margin protection |
| Supply chain | Multiple qualified suppliers, documented terms, sensible lead times | One overseas supplier on informal terms, or a single freight dependency |
| Inventory quality | Fast-turning stock with clean ageing and honest write-downs | Aged, seasonal or obsolete stock carried at cost on the balance sheet |
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Demand ownership
↑ Repeat purchase rate above 30 per cent, organic and email driving a third of revenue
↓ Paid acquisition driving most orders, with rising cost per acquisition
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Channel spread
↑ Own site plus marketplaces plus wholesale, none dominant
↓ A single marketplace account carrying the business, with suspension risk
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Brand and product
↑ Owned brand, registered trade marks, private-label or exclusive product
↓ Reselling widely available product with no exclusivity or margin protection
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Supply chain
↑ Multiple qualified suppliers, documented terms, sensible lead times
↓ One overseas supplier on informal terms, or a single freight dependency
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Inventory quality
↑ Fast-turning stock with clean ageing and honest write-downs
↓ Aged, seasonal or obsolete stock carried at cost on the balance sheet
Normalising the earnings
Normalising an eCommerce P&L
Stock accounting and owner labour are where the real earnings hide. Both are restated before any multiple is applied.
How the earnings method works →- Owner labour Costed at market for the operations, marketing and customer service work performed
- Stock write-downs Aged and obsolete inventory written to net realisable value, not carried at cost
- Freight and duty timing Landed cost matched to the periods the stock was sold in
- Platform and app costs Normalised where current pricing is on legacy or promotional rates
- One-off marketing campaigns Launch or brand campaigns isolated from ongoing acquisition cost
- Returns and chargebacks Provisioned against actual history rather than assumed at nil
Worked example
Worked example: a direct-to-consumer brand
Revenue is $4.1m with reported profit of $610,000. The two owners draw $120,000 combined but handle buying, marketing and customer service — a $260,000 market cost, so $140,000 comes off. Stock ageing shows $95,000 of product over eighteen months old carried at cost, written down to $30,000.
Normalised EBITDA is $455,000. Repeat purchase rate is 34 per cent, email and organic drive 38 per cent of revenue and the brand is trade-marked with two qualified suppliers — supporting 3.9×.
$1.77m enterprise value, plus saleable stock at market value
Illustrative only. Every engagement is scoped to the specific business, its records and the purpose of the valuation.
What a buyer, a bank or an opposing expert will test first
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01
Blended versus paid ROAS
A healthy blended return can hide paid acquisition that no longer pays for itself. Channel-level economics are examined.
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02
Platform account risk
A marketplace suspension can remove most of the revenue overnight. Account health and policy history are part of the risk assessment.
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03
Stock ageing
Inventory carried at cost is the most common overstatement on an eCommerce balance sheet. It is aged and written down.
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04
Trade mark and domain ownership
Brand assets registered to a personal name or an agency, rather than the company, do not transfer with the business.
On annual normalised EBITDA. Online marketplaces quote small stores as a multiple of monthly profit — commonly 24 to 45 times monthly — which is the same arithmetic expressed differently, but it invites the mistake of using a recent good month. We use a full trading year, or three where they exist.
Usually yes, at market value rather than book. Saleable stock is treated as a separate asset transferred at settlement; aged and obsolete stock is written down or excluded. A buyer will not pay cost for product that has not moved in two years.
A full turn of the multiple or more. Revenue that requires ad spend to reappear each month is fundamentally less durable than revenue from returning customers, and rising acquisition costs make the risk asymmetric. Building email, organic and repeat purchase is the highest-return value work in this sector.
It is the single biggest platform risk in eCommerce. Concentration on one channel with an account that can be suspended by a third party is priced as a discount, and buyers will apply a heavier one than the earnings suggest. Diversifying even 20 per cent of revenue to your own site changes the conversation.
Yes, but honestly. Without owned brand, owned customer relationships or exclusive supply, there is little that transfers beyond a website and a supplier contact. These businesses typically value below the sector band, and sometimes at little more than their working capital.
Reviewed by a Certified Practising Valuer
Reviewed by Jarrad Khoury, Director and Head of Valuations — Registered Valuer (QLD, Not Limited), Licensed Valuer (WA, Not Limited), CPV and CBV. Published by Business Valuations Brisbane, the business valuation division of Asset Valuations Group.
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Value the demand you own, not the traffic you rent.
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