Buying an Ecommerce Business
Everyone starts on the marketplaces, and the marketplaces are where the competition is. By the time a business is listed it has an asking price, an adviser, and several buyers in the conversation. The businesses that are worth buying are usually the ones nobody has listed yet.
Listed versus off-market
Both are legitimate routes. They produce very different deals, and knowing which one you are in changes how you should behave.
| Listed on a marketplace | Off-market | |
|---|---|---|
| Competition | Several buyers, often an active process | Usually you alone |
| Price discovery | An asking price, set by an adviser | Negotiated from first principles |
| Information | Prepared pack, sometimes verified | You do the work yourself |
| Seller motivation | Committed to selling | Often exploring, which cuts both ways |
| Timeline | Fast if you win, but you may not | Slower to start, less likely to be outbid |
| Volume available | Limited to what is listed | Effectively the whole market |
The structural point
Only a small fraction of businesses that change hands were ever publicly listed. If you only look at listings, you are looking at a small slice of the market, and it is the slice with the most competition per opportunity.
What to check before you buy
Diligence on an ecommerce business is different from diligence on a traditional company, because the risks concentrate in places that do not appear on a balance sheet.
Traffic concentration
The first thing to check and the most common reason to walk. If most revenue comes from one ad account, you are buying a revenue stream that a policy review can end. Ask for the traffic breakdown by channel over twenty-four months, not a snapshot.
Whether the profit survives you
Who buys the media, writes the copy, manages the suppliers, answers the customers. If the answer to all of it is the founder, you are buying a job unless you have a plan and a person for each function.
Supplier position
One supplier with no contract is a single point of failure. Ask whether the supplier will honour the same terms with a new owner, and whether anything is in writing. Tooling ownership matters more than sellers expect.
Platform and account risk
For Amazon businesses in particular, seller account transfer is not straightforward and the deal structure has to account for it. The FBA guide covers what that involves. For Shopify businesses the mechanics are cleaner but the customer data position under GDPR needs checking, covered in the Shopify guide.
Financial reality
Reconcile the profit and loss to the bank and to the platform's own reports. Add-backs should be evidenced, not asserted. Where a seller cannot evidence an add-back, treat it as absent rather than arguing about it.
What to pay
Annual net profit multiplied by a multiple, typically 2.0x to 4.0x depending on size and durability. The valuation guide sets out the ranges and the factors that move them. Two things worth holding in mind as a buyer: a marketplace asking price is a starting position, not a valuation, and the cheapest business on a list is usually cheap for a reason that will become yours.
Where we sit, so there is no confusion later
VEKTOR acquires in consumer ecommerce, and only in consumer ecommerce. That means we do not source ecommerce targets for other buyers, because we would be handing over the businesses we want ourselves and nobody should believe a sourcing partner who claims otherwise.
If your mandate sits outside consumer ecommerce, in software, industrials, healthcare, business services or distribution, there is no overlap and the register screening described on the deal origination page is available. If your mandate is consumer ecommerce, we will say so on the first call rather than take a retainer we should not.
If you buy at scale
Individual acquirers, search funds, independent sponsors and holdcos all hit the same constraint eventually: the listed market is too small and too competitive, and building proprietary flow is a full-time job. That is a solvable problem, and it is a separate service rather than something you should expect a marketplace to do for you. The deal origination page sets out how off-market sourcing works, what it costs and what it cannot tell you.
Common questions
Marketplaces such as Empire Flippers and Flippa list businesses with prepared information packs and asking prices, but competition per opportunity is high. Off-market deals, sourced directly from owners who have not listed, are less competitive and represent a far larger share of the businesses that actually change hands.
Annual net profit multiplied by a multiple, typically 2.0x to 4.0x depending on size and durability. Businesses with diversified traffic, repeat purchase revenue and low founder dependency justify the higher end. A marketplace asking price is a starting position, not a valuation.
Traffic concentration first, because a business dependent on one ad account carries a risk you cannot control. Then whether the profit survives the founder leaving, the supplier position and whether terms transfer, platform and account transfer risk, and whether the financials reconcile to the bank and to the platform's own reports.
A business bought directly from an owner who has not listed it publicly. There is usually no adviser, no asking price and no competing bidder, so terms are negotiated from first principles. The trade-off is that you do the sourcing and the information gathering yourself.
Not straightforwardly. Amazon restricts transferring seller accounts, so deals are usually structured either as a purchase of the legal entity that holds the account, or as a purchase of the brand, listings, intellectual property and inventory which are then migrated to the buyer's own account. Confirm the current position and take advice on structure.
By approaching owners directly rather than waiting for listings, which means building a sourcing process: identifying businesses that fit your thesis, working out who owns them, and approaching them in a way that gets a reply. Some acquirers build this in-house and others outsource the origination.