E-commerce Valuation Guide: How to Value Online Stores

Valuing an e-commerce business requires deep analysis of multiple dimensions: annual recurring revenue, net profit margin, product diversification, seasonality, supplier dependence, and traffic quality. Healthy e-commerce businesses with margins above 15% and consistent growth can be worth between 2x and 4x annual revenue. Factors that increase value include: private label brands, high-margin products, organic traffic (not just paid), loyalty systems, and scalable operations. Red flags include dependence on a single product or supplier, high return rate, 100% paid traffic, and very low margins. This guide covers inventory analysis, system evaluation (ERP, CRM), competition analysis, expansion potential, and how to structure due diligence for e-commerce businesses. We include financial analysis templates and complete checklists.