How much is an ecommerce business worth in Australia?
An Australian ecommerce business is typically valued at 2.0x–3.5x Seller's Discretionary Earnings (SDE) for sub-$1m-revenue stores, around 2.5x–5.0x SDE between $1m and $5m, and roughly 4.0x–8.0x EBITDA once revenue clears $5m and the business supports a genuine management layer. SDE is net profit with owner remuneration, one-off costs and personal expenses added back, used while a single owner-operator effectively runs the business; the convention shifts to EBITDA once the owner's personal involvement is a smaller share of total cost and a management structure exists to value separately. Under IVS 104, market value is the price at which the business would exchange between a willing buyer and a willing seller, each acting knowledgeably and without compulsion — the standard Australian valuers apply, consistent with the willing-but-not-anxious principle from Spencer v Commonwealth (1907). These multiple bands are market ranges, not a formula: the position within each range is driven by platform dependence, inventory quality, brand and IP transferability, and customer acquisition economics, and current listings and brokered transactions should always be checked against the business being valued rather than applied as a rule of thumb.
- ·Sub-$1m revenue: typically SDE-based, single owner-operator model
- ·$1m–$5m revenue: SDE or EBITDA depending on management depth
- ·$5m+ revenue: typically EBITDA-based, genuine management structure
- ·The published range is a starting bracket — not the concluded value
Does selling through Amazon or a single marketplace lower the value?
Yes — platform dependence is the single biggest driver of where an ecommerce business lands within its multiple range, and the same maintainable earnings can be worth close to double depending on where the revenue comes from. A business generating the bulk of its revenue through a single marketplace — most commonly Amazon FBA — carries platform risk: account suspension risk, algorithm and ranking changes outside the owner's control, marketplace fee increases, and no direct relationship with the end customer. Current market commentary places single-marketplace, private-label FBA businesses toward the lower end of the SDE range, broadly 2.0x–4.0x, even where the underlying earnings are strong and consistent. A business with a genuinely diversified channel mix — its own transacting website, an owned customer list, and marketplace sales sitting alongside rather than instead of direct sales — sits meaningfully higher, commonly cited in the 4.0x–6.0x SDE band at comparable revenue, reflecting that the earnings are more transferable to a new owner and less exposed to a single external platform's decisions. The valuation question is not simply "what channel sells the product" but "if the platform changed its rules or terminated the account tomorrow, what proportion of maintainable earnings survives." A supportable valuation position quantifies channel concentration explicitly — the percentage of revenue by channel, the length and standing of the platform account history, and whether any single channel exceeds roughly 40–50% of total revenue — rather than asserting a multiple without that evidence.
Does the sale price include stock, or is inventory valued separately?
Inventory is not included in the price implied by the earnings multiple — in a properly structured ecommerce transaction it is valued separately. The multiple is applied to maintainable earnings to produce an enterprise value; inventory (along with receivables and payables) sits in working capital and is trued up separately at completion against an agreed target level, usually calculated as a trailing average of normal stock holding. If the business is handed over with materially more stock than the target, the seller is typically compensated for the excess; if materially less, the price is adjusted down. This distinction matters for valuation because a business that has quietly built up excess or aged stock ahead of a sale is not creating additional enterprise value — it is creating a working capital position that a buyer's due diligence will price separately, and in many cases at a discount to cost. Stock quality diligence looks at inventory age and turn rate by SKU, obsolescence and markdown risk, evidence of stock that exists on paper but not in the warehouse, and whether the reported cost of goods sold reflects real landed cost or has been managed to flatter margin in the period being used to set maintainable earnings.
- ·Inventory is valued separately via a working capital adjustment, not baked into the earnings multiple
- ·A stated 'normal' stock level (often a trailing average) sets the completion target
- ·Aged, slow-moving or obsolete stock is a diligence flag, not free enterprise value
- ·Reported COGS and margin should be tested against real landed cost, not just the ledger
What brand and IP assets add value beyond the earnings multiple?
Registered trademarks over the brand name and logo, a documented content library of product photography and video, an owned email and SMS subscriber list with demonstrated engagement, and accumulated review equity on the business's own site and on marketplace listings are all assets a buyer acquires along with the earnings stream. Two businesses with identical revenue and profit margin can have very different transferable value depending on which of these assets actually change hands at completion. Where these assets are undocumented, informally held, or dependent on the departing owner's personal social media following or personal supplier relationships, a buyer has genuine reason to discount the multiple applied, because part of what generated the historical earnings may not transfer. A supportable valuation position identifies which intangible assets are owned by the entity and are transferable (trademark registration in the entity's name, content and creative assets held on business-owned accounts and drives, list ownership and platform access documented) versus which are personal to the owner and therefore a key person risk rather than a transferable asset.
Does paid-ad dependence affect an ecommerce business's value?
Yes — maintainable earnings in an ecommerce business are only as reliable as the customer acquisition engine that produces them, and heavy reliance on paid advertising is treated as a risk factor rather than a neutral input. Two aspects matter for valuation. First, the relationship between customer acquisition cost (CAC) and customer lifetime value (LTV) — a business acquiring customers profitably on a single purchase, with limited repeat purchase behaviour, has a fundamentally different risk profile to one where a meaningful share of revenue comes from repeat and organic customers who were not paid for in the period being valued. Second, the degree of paid-channel dependence — a business where the bulk of current-period revenue is directly attributable to ongoing paid advertising spend is effectively renting its customer base each period, and a change in platform ad costs, account restrictions, or attribution changes (of the kind that have repeatedly affected paid social and search over recent years) can compress earnings quickly. Where organic traffic, direct/branded search, repeat purchase rate and email/SMS-attributed revenue make up a meaningful share of the total, the earnings are more resilient and that resilience is a legitimate input into where within the supportable range the conclusion sits — not an assumption to be taken on trust from the seller's narrative, but a claim that should be evidenced from the platform data itself.
How much does a professional ecommerce business valuation cost?
Prismi's fixed fees for an independent ecommerce business valuation run from $1,495 + GST for a single-methodology Essential report through to $12,995 + GST for a structured Valuation Range & Scenario Review, with the tier set by the purpose of the valuation and how likely it is to face review, not by the size of the store. Every fee is fixed at engagement and never billed by the hour or contingent on the outcome.
- ·Essential — from $1,495 + GST, 10–14 business days: single methodology, senior-reviewer signed, suited to straightforward compliance events with clean records
- ·Comprehensive — from $3,995 + GST, 15–25 business days: dual methodology with cross-check and normalised earnings, the typical depth for CGT and sale-negotiation matters
- ·Defensible Valuation File — from $8,995 + GST, 25–35 business days: triple methodology with a complete evidence pack, for higher-stakes or likely-reviewed matters
- ·Valuation Range & Scenario Review — from $12,995 + GST, 30–45 business days: structured supportable-range and scenario analysis for complex or contested matters
Building the supportable range for an ecommerce business
In practice, an ecommerce valuation tests SDE or EBITDA multiples against comparable transaction evidence for businesses of similar scale and channel mix, cross-checked where relevant against a net asset value floor once inventory and any owned intangibles are accounted for, prepared under the APES 225 Valuation Services standard that governs how Australian valuation engagements are conducted. The range that results is then narrowed to the most supportable position based on the specific evidence: documented channel concentration, inventory quality and working capital position, ownership status of brand and content assets, and the CAC/LTV and organic-versus-paid mix. Two ecommerce businesses reporting identical maintainable earnings can land at very different points in that range — and in some cases at different points entirely — once platform dependence and asset transferability are properly evidenced rather than assumed. This is prepared with the ATO's market valuation guidance in mind where the valuation supports a CGT event under s 116-30 ITAA 1997, a sale negotiation, or a small business CGT concession claim, but Prismi is not a registered tax agent and does not provide tax, legal or financial advice — your accountant or lawyer should be engaged for that assessment.