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Thread: Story in the NY Times about valuing an ecommerce business

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    Story in the NY Times about valuing an ecommerce business

    The New York Times business section includes a blog by a business broker on buying and selling businesses, which has a story on valuing an ecommerce business :

    What Would You Pay to Buy This Business?


    Its a very basic overview, compared to some of the more detailed analysis I've seen on E-P , but worth a quick read. ( They have missed off the name of the business from the article, but one of the comments speculates it might be www.uncommongoods.com .)

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    Thanks, monty, that's an interesting analysis of a business for sale. There are some useful tidbits in the comments as well.
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    Thanks for the post, interesting reading. I agree with Clinton some interesting "comments" highlight several factors the most interesting to me was:

    "Most of the inherent value seems to be in the merchandising and media/PR savvy of the founders. Take them out of the equation, and what do you have? A website with some steady traffic that will dwindle if you can't replicate the founders' success. And if you could replicate the founders' success, why not just do it yourself?"

    This can be considered both ways; Yes the founders have grown the business ( however Gross Sales decreased in between 10/11 while Gross Profit Increased) this seems to show the founders have become more efficient in "managing the business" rather than growing it..

    This seems to be echoed in the artitle when the company is said to have an "email marketing list of 60,000 names" which considering the volume of annual visitors (8 Million) seems to show the business potentially under performing from a CRM and Visitor Conversion perspective. ( Again signs growth opportunities are not being capitalised by the current management)

    Regardless of the above, e-commerce is generally a crowded/fragmented marketplace so I think this sort of asset will more often than not be acquired to consoldate industry sectors by competitors or market leaders to boost "Market Share & Numbers" and as such may be likely to secure a "Price" beyond its "true value" because it will fit into a bigger picture strategy..

    For the record... I wouldnt consider buying it ( unless an absolute bargin............................................ .......

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    This article is an entertaining read. It is a bit gutsy to ask what the business is worth when there is so much info that is still needed. Labor, COGS and marketing costs need to be addressed. I also think that there is a disconnect in conversions with 8 million users and only 60,000 in their list. The broker is obviously trying to generate leads. I think their PR strategy is fantastic as it definitely worked to get us talking about them! Something we could all learn from as we have businesses for sale.

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