Valuation of Online Shops

Hours Updated on

Basic valuation

The basis of valuation is more or less identical for all companies. The Nimbo Company Value Guide provides you with useful background information and everything worth knowing about the topic.

Calculation Example for an Online Shop

Assumption: An online shop in Switzerland with up to five employees achieves a profit of 50,000 with a turnover of 500,000.

Multiply the profit by an industry-standard multiplier. There is no binding multiplier that could be mentioned here. A multiplier between 3 and 6 is common for small to medium-sized online shops.

If we assume a multiplier of “4”, the valuation would be:

Value = Profit x Multiplier = 50,000 x 4 = 200,000

General value drivers

Not only the profitability and size of a company determine its value. A series of internal value drivers also affects the selling price – both positively and negatively. Based on the basic valuation, the value can increase or decrease by up to 25%. The most important value drivers here are:

  • Independence from the owner: For a buyer, the question arises whether the success would continue without the current owner. The less the company depends on the activities and relationships of the owner, the higher the purchase offers observed on average.
  • Growth prospects and potential: Investors are interested in a company’s future prospects. Questions that are important here: Is the main market growing? What percentage of growth do I forecast for my company for the next three years? Is there potential within the core competency that could be profitably exploited? Is there a shortage of skilled workers or is the recruitment of new employees possible without problems? Is there sufficient cash flow for replacement and expansion investments?
  • Market position: This takes into account the company’s catchment area and pricing policy. Companies that are not only active regionally and companies that can implement prices above the market average receive significantly higher purchase offers on average.
  • Balance: How dependent is the company on individual customers or business partners (e.g., suppliers)? Companies without large cluster risks receive higher purchase offers on average.
  • Employees: A motivation for buying companies can be access to new qualified employees who are difficult to find in the job market. Companies that can attract and retain desirable employees receive significantly higher purchase offers on average.

Online Shop Specific Factors

What factors are particularly relevant when valuing online shops? What influences the attractiveness and thus the value of the company? If your company presents itself extraordinarily positively in the following points, this can mean an additional increase in value of approx. 10-15% on the base value.

  • Sales channels: For an online shop, it is crucial to have a well-thought-out multi-channel strategy that integrates and optimally uses the various sales channels and – very important for you – makes you independent of a single sales channel, especially individual platforms. With a good strategy, your reach and sales increase and you also improve the customer experience and strengthen customer loyalty. Companies whose sales are not or hardly dependent on platforms receive a higher rating.
  • Share of private labels: Have you succeeded in successfully implementing a private label strategy and do your sales consist of a large percentage of your own products? Private labels promise positive effects on profit margins, customer loyalty, differentiation, independence from suppliers and the potential for scaling. A strong private label is a sustainable competitive advantage and increases the value of your company.
  • New customer acquisition: What is your organic share of new customer acquisition? If you are only slightly dependent on external advertising, your acquisition costs are significantly lower, your profitability is higher, and your growth is more stable and sustainable. The less you depend on external platforms, the higher your economies of scale. All these factors contribute to making the online shop more attractive to investors and buyers, which ultimately increases the company value.
  • Customer loyalty and repurchase rate: Do your customers buy from you more than once or even frequently? A high percentage of returning customers is a sign of satisfaction and loyalty and also has a value-enhancing effect on the company value.

Online Company Valuation for Online Shops

The Nimbo company valuation takes into account both the internal value drivers and the industry-specific factors in your valuation. Start the Nimbo company valuation, select “Retail” for industry and “Online Shop” as a subcategory.