How to Value an E-Commerce Business in 2026

E-commerce has matured. The pandemic-era gold rush is over, and buyers are far more sophisticated about what makes an online business truly valuable versus what's just riding a trend. If you own an e-commerce business and you're thinking about selling — or just want to understand what it's worth — you need to understand how buyers evaluate these companies today.

The good news: well-run e-commerce businesses with strong fundamentals are still commanding premium valuations. The key is knowing what "strong fundamentals" actually means to a buyer.

How E-Commerce Businesses Are Valued

Most e-commerce businesses are valued using a multiple of SDE (Seller's Discretionary Earnings) or EBITDA, depending on size:

• Under $1M SDE: Typically valued at 2x to 3.5x SDE
• $1M–$3M EBITDA: Typically valued at 3.5x to 5x EBITDA
• $3M+ EBITDA: Can command 5x to 8x+ EBITDA depending on growth, brand strength, and channel diversification

These are wide ranges because e-commerce valuations are highly sensitive to a handful of key factors.

What Drives E-Commerce Valuations Higher

1. Brand Strength and Customer Loyalty

A branded e-commerce business with loyal repeat customers is worth significantly more than a generic reseller or Amazon-only business. Buyers pay premiums for:

• High repeat purchase rates (30%+ returning customer rate)
• Strong brand recognition and organic search traffic
• Customer email and SMS lists with high engagement
• Positive reviews and social proof at scale

2. Channel Diversification

The biggest red flag in e-commerce valuations is channel concentration. If 80% of your revenue comes from Amazon, your valuation will reflect the platform risk.

Businesses that sell across multiple channels — their own Shopify store, Amazon, wholesale, retail — command higher multiples because they're not dependent on any single platform's algorithm or policy changes.

3. Customer Acquisition Economics

Buyers scrutinize your customer acquisition cost (CAC) and lifetime value (LTV). The math matters:

• LTV:CAC ratio of 3:1 or higher is the benchmark
• Declining CAC trends signal operational efficiency
• Organic traffic and word-of-mouth reduce paid acquisition dependency
• Diversified acquisition channels (SEO, paid social, email, affiliates) reduce risk

4. Supply Chain and Margins

Post-2020, buyers are acutely aware of supply chain risk. Higher valuations go to businesses with:

• Gross margins above 60% (for branded products)
• Multiple supplier relationships (not single-source)
• Domestic or nearshore manufacturing options
• Inventory management systems with clean data
• Private label or proprietary products (vs. reselling commodity goods)

5. Recurring Revenue

Subscription models or consumable products with high reorder rates create predictable revenue streams that buyers love. A supplement brand with 40% subscription revenue will trade at a premium to a one-time-purchase accessory brand.

6. Operational Independence

Can the business run without you? Buyers want to see:

• Documented SOPs for fulfillment, customer service, marketing
• A team (even if small) handling day-to-day operations
• Automated systems for inventory, ordering, and marketing
• Outsourced or 3PL fulfillment rather than owner-managed warehousing

What Hurts E-Commerce Valuations

Amazon dependence. If Amazon is your only channel, expect a 20-40% discount on your multiple. One policy change or account suspension can wipe out the business.

Concentrated product lines. If one SKU drives 50%+ of revenue, that's a risk factor. Buyers want diversified product portfolios.

Declining growth. E-commerce businesses that peaked during COVID and are now trending down will trade at significant discounts. Buyers want to see stable or growing revenue.

High return rates. Above-average return rates eat into real profitability and signal potential product quality issues.

Paid acquisition dependency. If you're spending 30-40% of revenue on ads just to maintain sales, margins are fragile. Rising ad costs can quickly erode profitability.

Messy analytics. If you can't clearly show CAC, LTV, cohort retention, and channel attribution, buyers will assume the worst.

Who Buys E-Commerce Businesses?

Aggregators and Roll-Ups

Companies like Thrasio (and dozens of smaller aggregators) buy Amazon FBA businesses and branded e-commerce companies to build portfolios. They typically target businesses doing $500K–$5M in SDE.

Strategic Acquirers

Larger brands or retailers looking to acquire complementary product lines, customer bases, or capabilities. These buyers often pay the highest multiples because they can realize synergies.

Private Equity

PE firms interested in consumer brands typically look for businesses doing $2M+ in EBITDA with strong brands, diversified channels, and growth potential.

Individual Buyers

Often funded by SBA loans, individual buyers target smaller e-commerce businesses ($200K–$2M in SDE) that they can run as owner-operators.

Preparing Your E-Commerce Business for Sale

Clean Up Your P&L

Make sure your financials clearly separate business expenses from personal ones. Normalize one-time costs, owner perks, and non-recurring expenses. Buyers need to see a clean picture of true profitability.

Document Everything

SOPs for every function — product sourcing, inventory management, marketing, customer service, fulfillment. The more documented your business is, the lower the transition risk for buyers.

Build Your Brand Moat

Invest in building direct customer relationships. Grow your email list. Build organic traffic. Diversify away from paid acquisition. These investments directly increase your valuation.

Optimize Your Metrics Dashboard

Have clean, accessible data on all key metrics: revenue by channel, CAC by channel, LTV by cohort, return rates, inventory turns, gross margins by product. Buyers who can see clear data move faster and pay more.

Secure Your Supply Chain

Lock in supplier agreements, build inventory buffers for key SKUs, and document your entire supply chain. Buyers need confidence that product flow won't be disrupted.

What to Expect From the Sale Process

E-commerce business sales typically take 4 to 9 months from listing to close. The process moves faster when:

• Financials are clean and well-organized
• Metrics are readily available and verifiable
• The business isn't heavily owner-dependent
• You have reasonable price expectations based on market data

Next Steps

Understanding your e-commerce business's value starts with understanding your numbers. If you're thinking about selling — or just want to know where you stand — I help e-commerce and DTC brand owners navigate the M&A process.

Book a free confidential consultation to discuss your business, or check out our valuation multiples by industry to see where your sector stands.