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What Determines the Value of an Ecommerce Business?

Posted by Ron Matheson in Articles


Ultimately, the value of an ecommerce business is what someone is willing to pay for it. This is true for most anything that is put up for sale. However, there are some key indicators that can be used to determine the overall value of an ecommerce business. When an entrepreneur is selling an ecommerce business, it’s always best to trust the experience of reputable business brokers, but to get an idea of what goes into the website valuation process, take these aspects into account.

  1. Traffic statistics – does the ecommerce business have a long history of consistent traffic? Is the business seasonal and is that reflected in the traffic stats?
  2. Repeat customers – does the ecommerce business reflect a high number of repeat customers and ultimately repeat sales?
  3. No legal problems – does the business have a clean history when it comes to legal situations?
  4. Documentation – does the ecommerce business have all of its processes and systems documented so they can easily be handed over to the buyer?
  5. Ability to drive new sales – are there efforts in place – and are they consistent – in driving in new sales?
  6. Clean brand – is the company’s brand name free of any copyright, trademark, or legal concerns?
  7. Potential for growth – is there consistent and decisive potential for growth?
  8. Diversified traffic sources – does the site have consistent traffic coming in from a multitude of sources?

The Importance of Site Age

Generally, the older a site, the higher its value. This is because the ecommerce business is proving its growth year after year. So, it’s only natural that the longer you’re able to grow a business, the more profitable it will be upon selling it. The important distinction to point out here is that to sell your ecommerce business for the highest profit, it’s important to sell it before you’ve lost interest in it. Your loss of interest will be reflected in the sales and profit, causing a decrease in website valuation.

Business brokers, provide their clients with a free website valuation and free seller consultation. If you are interested in buying or selling an ecommerce business, contact them today at 1-800-251-1559 to set up your free consultation. They look forward to assisting you!