An Australian e-commerce business typically sells for 2x to 5x its annual seller’s discretionary earnings (SDE), or 3x to 5x EBITDA for larger operations above $1M in profit. The multiple depends on how dependent the business is on a single platform, how concentrated revenue is across a handful of SKUs, and whether a buyer can run the business without you present every day. A $2 million Shopify store and a $2 million Amazon FBA account can both generate $350K in profit — and differ in value by $500K or more.
If you’re thinking about selling, here’s how the numbers actually work.
SDE vs. EBITDA — Which Metric Applies to Your Business
Most e-commerce businesses in Australia are owner-operated. The owner runs the ads, manages the suppliers, packs orders on weekends, and pays themselves a salary that does not reflect what a replacement would cost. For these businesses, seller’s discretionary earnings (SDE) is the right starting point.
SDE = net profit + owner’s salary + super + any personal expenses run through the business.
A business generating $300K in SDE at a 3x multiple is worth $900K in goodwill, before adding inventory.
Once you get above $1M in normalised profit, buyers shift to EBITDA — earnings before interest, tax, depreciation and amortisation — because at that scale, a buyer would hire a manager rather than run the business themselves. EBITDA strips out the personal salary question and treats the business as a standalone entity.
The EBITDA add-backs that apply to e-commerce are similar to any other business: one-off costs, owner-specific expenses, depreciation on assets already paid off. The difference is that e-commerce businesses often have unusual cost patterns — promotional discounts booked as expenses, platform fees lumped with cost of goods — that need untangling before you arrive at a clean number.
What Multiple Does an Australian E-Commerce Business Sell For?
Here’s a rough guide, based on deals in the Australian market:
| Business Type | SDE Multiple |
|---|---|
| Own-brand DTC, diversified channels | 3.5x – 5x |
| Shopify + Amazon, balanced split | 3x – 4x |
| Amazon FBA (>50% channel concentration) | 2x – 3.5x |
| Subscription / recurring revenue component | 4x – 6x |
| Pure dropshipping or reseller | 1.5x – 2.5x |
These are indicative ranges, not guarantees. A $250K SDE Shopify brand in the outdoor lifestyle space with 42% repeat customer rate and a clean 3-year email list might attract 4.5x from a PE-backed rollup. The same revenue from a dropshipping operation with no proprietary product and no customer data is worth half that.
For businesses above $3M in annual revenue, you might also see buyers use a revenue multiple as a cross-check — typically 0.5x to 1.5x revenue for established e-commerce — but profit-based multiples almost always drive the negotiation.
This article focuses on e-commerce with physical product. For SaaS and content site valuations, the methods are quite different.
The Platform Problem: Why Channel Mix Is the First Thing Buyers Ask About
I worked with a seller last year who had $3.1 million in annual sales, took home just over $400K, and thought his business was worth north of $2 million. The actual value was closer to $1.1 million — because 81% of his revenue ran through a single Amazon Seller Central account, and when you factored in the platform risk, the multiple compressed to around 2.5x. He hadn’t done anything wrong; he’d built a genuinely profitable business. He’d just built it on rented land.
A buyer acquiring your Amazon FBA account doesn’t own anything Amazon can’t take away. Account suspension, algorithm changes, new competition from Amazon’s own-label products, policy updates around returns — all of these are real and frequent. Buyers price this risk by lowering the multiple, or demanding an earn-out, or both.
The same logic applies to Shopify businesses that generate 70% of traffic from Meta ads. That’s not diversification — it’s dependency with better branding.
What reduces platform risk in a buyer’s eyes:
- Owned email list with demonstrated purchase behaviour (open rates, conversion rates, not just list size)
- Organic traffic from SEO that accounts for 20%+ of revenue
- Multiple sales channels with no single channel above 50%
- Repeat purchase rate above 25%
- Subscription component, even if small
Platform risk is the single biggest factor that separates a 2.5x business from a 4x business in Australian e-commerce deals. It matters more than revenue size.
Inventory: The Number That Surprises Sellers
Physical e-commerce businesses have inventory. This creates a complication that doesn’t exist for SaaS or services businesses, and it’s one of the areas where Australian e-commerce deals fall apart.
Here’s the issue: inventory is typically excluded from the headline sale price and transferred separately at cost.
So a business valued at $1.2M in goodwill (based on 3x SDE of $400K) might carry $350K of stock. The buyer pays $1.2M for the business plus $350K for inventory — a total outlay of $1.55M. If the seller was expecting $1.55M “for the business,” both parties are in for an uncomfortable conversation.
A few things worth knowing:
Inventory is counted at landed cost, not retail value. GST is not included (it nets out). Obsolete or slow-moving stock gets discounted — sometimes heavily.
Working capital is negotiated. A buyer needs to know how much stock they need to carry to maintain normal trading. If your business runs 90 days of inventory and you’re trying to liquidate stock before settlement, a smart buyer will notice.
Supplier terms transfer with the business in an asset sale — but only if the supplier agrees. If you’ve built a relationship with a Chinese manufacturer over five years and payment terms aren’t documented in a written supply agreement, those terms may not survive a change of ownership. That’s a due diligence red flag.
Check out the asset sale vs share sale implications if your business trades through a company structure — the treatment of inventory and IP differs, and the tax outcome can be significant.
What Drives a Higher Multiple
The businesses that achieve 4x or above tend to share certain characteristics. None of them are difficult to understand; most take two or three years to build deliberately.
Own brand and product IP. If your SKUs are exclusive to you — you designed them, you manufacture them, you own the trademark — a buyer is buying something they can’t replicate from Alibaba in six months. That exclusivity is worth real money.
A customer list with proven behaviour. Not just email addresses. Purchase frequency, average order value, 12-month retention rates. A list of 30,000 customers who buy twice a year is worth more than 300,000 cold leads who downloaded a discount code once.
Repeat purchase rate above 30%. This tells a buyer the product solves a genuine problem, not a one-time curiosity. For consumables — supplements, cleaning products, pet food — buyers actively seek repeat rates as a key indicator of sustainable margins.
Management in place. If a second-in-command runs the day-to-day and you work 20 hours a week on strategy, a buyer can acquire and step back (or install their own team). If the business grinds to a halt when you take a holiday, the multiple reflects that dependency.
For a broader view of how these factors apply across industries, see EBITDA multiples by industry.
The Australian Buyer Pool
One thing that separates Australian e-commerce sales from the US and UK markets: the local buyer pool is genuinely smaller, and the threshold at which you attract institutional interest is higher.
Individual buyers looking for an owner-operated e-commerce business dominate deals under $1M. They’re often people with marketing or operations backgrounds who want to run something. They’ll use their super, a bank loan, and their savings. They will run the business themselves (which means they value the SDE highly, but they also need it to work immediately).
Between $1M and $3M, you get a mix of individual buyers and small PE-backed operators doing rollups — particularly in health and beauty, outdoor lifestyle, and pet care. These buyers are more sophisticated and will stress-test your customer acquisition cost and LTV more rigorously.
Above $3M, international platforms like Flippa and Empire Flippers bring in offshore buyers from the US, UK, and Southeast Asia. This broadens competition and can push multiples up — but it also means buyers who don’t understand Australian GST, Australian consumer law, or the local logistics landscape (which, in Perth and Brisbane, has meaningful differences from Sydney and Melbourne).
Preparing Your E-Commerce Business for Sale
You don’t need to start at zero. Most businesses can be sale-ready within 12 to 18 months with some deliberate preparation.
Clean up your accounts. Three years of financials showing consistent profit, with clear separation between personal and business expenses. If your accountant has been running personal expenses through the business (and of course they have — it’s legal, it’s common), document them now so you can justify the add-backs.
Document your processes. A buyer needs to run this without you. That means written SOPs for ordering, customer service, returns, and supplier relationships. It doesn’t need to be pretty. It needs to exist.
Transition your platform accounts. Make sure accounts are in the business entity, not your personal name. Amazon Seller Central accounts tied to a personal email address create headaches at settlement that can delay or kill deals. Fix this well before you go to market.
Get your supplier agreements in writing. Even a simple email chain confirming pricing, minimum order quantities, and lead times is better than a verbal relationship a buyer can’t rely on.
The tax on selling a business is the other thing to sort out early — specifically whether you qualify for the CGT small business concessions (the 15-year exemption, the 50% active asset reduction, or the retirement exemption). For a business generating $400K in SDE, the difference between a clean CGT position and an unplanned tax bill can be $80,000–$150,000.
If you’re trying to work out what your e-commerce business is worth, the valuation calculator gives you a starting point. For a more detailed conversation about your specific business and what’s likely to affect your sale price, get in touch.