Whether you are a newcomer to ecommerce or a seasoned entrepreneur, at some point you have probably wondered what the overall value of your ecommerce business is. There are many different strategies when it comes to the valuation of an online business, none of which should be based on arbitrary figures. In this blog I will explain exactly what metrics and tactics you can utilize to maximize the value of your store.
Although this blog does not focus on exactly how to value your business, if you are thinking about selling your ecommerce business, you can request a free valuation from the leading M&A advisory firm for online businesses, FE International, to see what your business might be worth and get actionable advice on how to increase the value. It’s also a good idea to browse their active listings to get a sense of what businesses that are similar to yours might be listed for.
Get Your Numbers Up
If you want to increase the value of your ecommerce store there are a few important metrics that you need to pay attention to. Once you understand each of these metrics and know the steps to grow them, you will be able to set goals and start working to increase the value of your ecommerce store.
1. Website Traffic: Your website traffic is one of the most important metrics when valuing your online property, because this will include invaluable insight into the demographics and frequency of your visitors. In general the more website traffic you have the higher the value of your store.
- Use Google Analytics to track your visitors. Get to know who’s visiting your site and how to better meet their needs.
- Do an email blast to all previous customers. Keep them in the loop with all that you’re doing for them - this can drive sales and create repeat spenders.
2. Average Order Value: To calculate this metric you simply need to calculate the average price of all your orders. This data combined with the traffic and demographics will help you understand more about what type of consumers your customers are.
- Upsell customers by displaying more low cost relevant items they can add into their order just before they checkout.
- Offer perks for certain price levels. Example: Free shipping on orders over $75.00.
Customer LTV is where you'll really get to see if there is loyalty, meaning that customers are willing to purchase from you not just once but continuously over a long-term.
3. Customer LTV: The long-term value metric tells you how much revenue you will earn per customer on a long-term scale. This is where you'll really get to see if there is long-term loyalty, meaning that customers are willing to purchase from you not just once but continuously over a long-term. You can calculate this for yourself by taking all of your recurring customer purchases over time and reporting how much each customer has spent over their lifetime.
You should be able to tell a potential buyer that your products are listed in the Google shopping feeds.
Get Your Products On Google
Getting your products on Google is a no-brainer. This is a surefire way to increase the value of your ecommerce store. You should be able to tell a potential buyer that your products are listed in the Google shopping feeds, so when people search for the right keywords they will see your products directly in the Google recommended shopping list at the very top of the Google results.
Whether you are getting a lot of sales or not just having that set up will increase the perceived value of your store immediately. Learn all about it in our dedicated post: Google Shopping 101: How to Set Up Your First Google Shopping Campaign.
Create a Package Deal
Regardless of your metrics and traffic numbers, creating a package deal is a great way to increase the value of your ecommerce store. Having a package with some extra assets will go a long way and help create a much higher perceived value for a potential buyer. In most cases you will already have some of these assets that you can include to create a package deal. Here is a list of common assets that are included with a website purchase:
The brand is the face of the business and long-term customers have loyalty to your brand.
1. Branding: Sometimes called a private label, if not already included as a part of the sale this can significantly increase the appraisal of your site. The brand is the face of the business and long-term customers have loyalty to your brand. This will include your logos, promotional materials, website designs, brand style guide, etc.
2. Social Media Accounts: This is an obvious one, although social media accounts can be rebranded and changed it often results in a massive loss of engagement and followers and may not be worth it. Usually the best thing to do is include them in the deal to increase the overall selling price. Depending on the size of your social followings these accounts could be worth a significant amount.
3. Personal Support: Your personal support could be part of a bigger package or priced by the hour. This is a great way to get the new team off to a good start and get a little more money into your pocket. Simply offer your expertise and experience for a period of time.
4. Inventory: This is very easy to valuate because you know the original cost and the retail price of the inventory. If you have physical or digital inventory you can include into the package. This is a very easy way to increase your store's value.
Not One Size Fits All
All of the strategies and figures explained in this post can be used to impact your overall site value, but there is no one set way to do it. Everyone is different, and to some people certain metrics hold more weight than others.
Don’t forget about the simple things. Focus on providing the best products and services that your customers want. Take care of your them, provide excellent customer service and ask for their feedback frequently. Make changes and updates based on that feedback to keep things fresh. Take care of the basics and and follow the strategies outlined here, and you'll be on track for maximizing the value of your ecommerce site.
Have any questions about increasing the value of your site? Let us know in the comments!