How To Sell An Ecommerce Business – David Holmes David Holmes David bought, grew and exited two Amazon-based companies for six-figure sums. He has been in the Amazon space for over 6 years and has experience with Amazon print-on-demand and all types of Amazon FBA businesses. He is currently consulting on several Figure 7 brands while developing his own new FBA brand.
Learning how to market your e-commerce business can be an exciting and fruitful endeavor. Profit is good for many e-commerce business owners, but the goal has always been a large payment with the last sale.
How To Sell An Ecommerce Business
Selling successfully in e-commerce sales can be a life-changing event, but it’s not as easy as clicking on a listing and waiting for offers to come in.
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In my opinion, one of the biggest decisions you can make is deciding where to sell your e-commerce business. There are some great options out there, but the options for an e-commerce based site are a little different than affiliate or display ad based sites.
There is some overlap, but after talking to others in my experience and space, these are the names that come up the most as the best platforms to sell your eCommerce business for significant amounts of money.
Empire Flippers is the largest verified marketplace in the world and has a reputation as one of the best places to buy and sell profitable established online businesses. They are suitable for both buyers and sellers of existing online businesses.
Generally, your e-commerce business must earn at least $2,000 per month in seller discretionary income to be listed here. If so, Empire Flippers is one of the first places to market your eCommerce business.
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This is also a good place to check current market multiples and the status of e-commerce mergers and acquisitions.
Flippa is the world’s largest marketplace for buying and selling online businesses. They have the most traffic, but it is important to remember that this is an untested market. Screening is therefore important on both the buy and sell side.
Many investors see this as a better place to find undervalued trades to buy than to sell.
But given its size, Flippa should still be on our short list of places to consider. If your total sales price is less than $75,000 – $100,000, we primarily recommend using Flippa. In addition, we recommend using Empire Flippers or Quiet Light mediation.
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FE International is one of the oldest pillars when it comes to buying or selling a business online and one of the best options for large companies. FE International only focuses on online sites valued at $100,000 or more.
FE International is not as popular as other platforms, but due to its long history and focus on high value online properties, it is very likely that every company listed here will eventually sell.
Quiet Light Brokers is a broker with many positive reviews from e-commerce business sellers due to its legendary support. Each seller is assigned a broker who helps them through every step of the process. Brokers will also take care of all technical details of escrow and migration upon request.
Few brokers offer this much support, making it a great option for first-time sellers or e-commerce business owners who don’t have a technical team to handle the details.
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One aspect I like about Quiet Light is that each broker rather has their own company. So it is especially useful when deciding whether to sell now. Many times they will advise you to sell now.
I have used Quiet Light before and have been impressed with the level and quality of service.
Digital outlets have not been around as long as some of the others on this list, but they are an excellent opportunity to sell a large, profitable e-commerce business if your e-commerce business is profitable enough.
The support is fantastic from start to finish and has the added boost of actively looking for good buyers who want your business. That said, Digital Exits is very much aimed at large e-commerce businesses, so you need to earn a decent amount to qualify to sell.
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Acquire, formerly known as MicroAcquire, works completely differently from other platforms and is suitable for business owners who have experience in sales negotiations and have bought/sold online businesses before.
Get the artwork by debiting the buyer. They do this by finding great online businesses to sell and getting exclusive rights (for a limited time) to give to their buyer pool. They then act as intermediaries connecting buyers and sellers, after which the two parties negotiate a transaction.
Going personal selling is always a viable option and there are undeniable pros and cons between going this route and using a broker. Not recommended for first time sellers, especially if you don’t have reliable accounting or negotiation experience.
For e-commerce business owners who have gone through the buying and selling process before, personal selling can be an attractive way to avoid brokerage and gain complete control over the selling process.
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E-commerce aggregators are a relatively new phenomenon in the world of online business mergers and acquisitions. They rose to prominence in 2019/2020 with Thrasio at the forefront (one of the fastest companies to reach a billion dollar valuation.
Many aggregators work with simple math. They will buy your e-commerce business at 2-4 times your return and their business will be valued at 10 times your return. In other words, the moment they buy your business, it is worth more.
The biggest advantage of selling on e-commerce or Amazon FBA aggregators is that they are likely to have made 50 or more purchases. This means that due diligence must be done quickly and without problems.
Many aggregators do not offer 100% cash upfront. The most common payment terms I have personally seen are 50-60% up front, the rest being earnings or stability payments over many years. This makes you dependent on being a good operator to move your business forward.
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Ultimately, the decision is up to you. Selling to e-commerce aggregators can be easier than selling to high net worth individuals, but be aware of the risks involved. You are more likely to receive lower payments from e-commerce aggregators than individuals.
Preparing your e-commerce business for sale is key to positioning yourself for the highest multiplier, and therefore the highest possible payout. These are the things you should take care of before the listing date.
The e-commerce market is a hot one, generating hundreds of millions of dollars in sales each year, and perhaps much more.
Most studies are limited to the size of the sales sample, but here are some interesting data that we can gather about the current sales market for e-commerce companies:
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Overall, the M&A market has cooled significantly in Exceed 2020/2021. But that means there is always an opportunity to sell a great brand or acquire a great business.
As an e-commerce business owner, the better prepared you are, the better your final price can be. There are a few key steps to making your store the best it can be.
Is your eCommerce store on Shopify? While not using Shopify is not disqualifying, it has become standard enough that e-commerce stores that use Shopify tend to have significantly higher demand than those that do not, a sentiment that FE International confirmed with buyers and advertisements.
If you’re already using Shopify, great. You might want to review the move or at least enter the SOP and make sure both the frontend and the backend are as clean and functional as possible.
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The cleaner and more functional the platform, the better. If there are elements on the front end that make the user experience (UX) worse, they should be addressed before continuing the list.
Buyers expect to have inventory on hand so that when the business is acquired, it will continue to operate with minimal problems and be profitable from day one. It is important to have an active SOP where potential buyers can easily see what is there, how it works and where your current inventory is.
Remember when you sell your business. You want to sell your warehouse together with your business. Often the inventory is sold to the buyer upon arrival.
As you prepare to sell your eCommerce store, there are some important financial information you should have on hand.
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Tax returns provide important information to buyers and are considered highly reliable data that provide a complete picture of a company’s bottom line. This helps ensure that the figures quoted are reliable, verified and free of red flags that might cause buyers to proceed with the sale.
The income statement should be well organized to the letter and include total income, expenses,
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