Recap of selling an ecommerce business

Every time that I sell an ecommerce company, I compose an internal overview with highlights of that offer. Including statistics like:
  • Asking price vs. selling price;
  • Conditions offered. terms negotiated between seller and buyer;
  • Challenges faced selling the company;
  • Number of offers received;
  • Time between the record date and selling date.

After the transaction is finished, when I talk and reflect with the vendor on the selling process, I hear interesting and lots of times repeated comments.

Lots of the comments are versions of”If I had known earlier, I wouldn’t have done or I’d have done it differently.” It occurred to me that additional ecommerce owners may want to learn from the insights of those experiences. Thus, going forward I will occasionally share a photo and key takeaways of a real sale of an ecommerce business I’ve completed.

With this setup, I will concentrate on an ecommerce business that diminished in earnings in the previous two decades. This company was manufacturing and selling artwork and related gift items. Here’s the financial overview. Notice that all identifying information has been changed, for example, product line offered, to maintain seller confidentiality.

  • Asking Price: $693,875.
  • Gross Earnings: $681,980.
  • Cash Flow (i.e., EBITDA): $284,177.
  • Inventory: $247,813 (not included in asking price).
Added information regarding the company is as follows.
  • In business for 6 decades.
  • Average yearly increase 30 percent since beginning
  • 50 percent earnings B-to-B from online wholesalers and brand-name brick-and-mortar shops.
  • 50 percent earnings B-to-C directly from the site.
  • Gross profit margin on the products: 80 percent.
  • Products manufactured in China but handled (manufacturing, factory communication, and transport ) by a third party U.S. vendor.
  • Shipping from 1,445 sq. ft. basement.
  • Staff consists of one individual, working 21 hour weekly, who oversees all aspects of shipping.
  • Excellent record keeping.
  • Tax returns show profit of approximately $281,000 per year for first 3 decades.
  • Seller desires out as he’s developed fire for another, unrelated company which requires additional time and money.
  • The earnings dropped by 40 percent in last two years because vendor began his new business, leading to lack of focus and marketing.

SWOT Analysis

Strengths, Weaknesses, Opportunities, Threats — SWOT — are as follows.


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  • Merchandise: The ability to further develop and produce current lines and capability to expand to other product types.
  • Low overhead costs.
  • Outstanding margins.
  • Great inventory turnover.
  • The business doesn’t take plenty of hours to handle.
  • Recognizable brand in the home decor and gift market.
  • Ecommerce website runs effectively, with easy accessibility to QuickBooks.
  • More than 175 established wholesale accounts.


  • A present and home-decor business needs product variety to be addressed each year and merchandise needs to be updated for the current and future market requirements.
  • Some products still constructed in-house.


  • Distribution strategy to distinguish wholesale vs. retail (goal setting, budget, margins, sales reps).
  • Improved marketing strategy for both wholesale and retail.
  • Move forward into the”digital technology” market with layouts.
  • Expedited shipping procedure through a fulfillment center.
  • Streamline product by moving all production to overseas factory or constructed at fulfillment center.


  • Additional businesses have emerged, producing similar products.

Sale Details

  • Selling price: $499,590 ($301,340 money down and $198,250 seller watch for at 6.25 per cent for 3 years).
  • Inventory paid in cash at closing: $233,935 (that is in addition to selling price).
  • Seller notice: Note was secured by purchaser’s property.
  • Time taken to market, from record date: 3 weeks
  • Asking price EBITDA ratio without stock: $693,875 / $284,177 = 2.44
  • Asking price EBITDA ratio with stock: ($693,875 + $247,813) / $284,177 = 3.31
  • Selling price EBITDA Ratio without stock: $499,590 / $284,177 = 1.76
  • Selling price EBITDA ratio with stock: ($693,875 + $233,935) / $284,177 = 2.58

Key Takeaways

  • Declining businesses can be sold if there’s an chance for turnaround.
  • Declining companies can have a dramatic effect on selling price.
  • Buyer will just purchase stock that’s in a fantastic salable condition. In this case, buyer denied roughly $14,000 of slow-moving inventory.

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