What is your ecommerce business worth?

Ecommerce business models remain a fascination of mine - see my previous post and paper on eCommerce Business Models. They represent both a very visible forefront of innovation, as well as a rich graveyard of hubris triumphing over good strategy. And that is why I am featuring an infographic from Digital Exits today. Although the sale prices of businesses are not always a guarantee of how good their strategies are, on average, they do give a fairly good indication of how good the market thinks they are.

In my opinion, the relatively low average price/earnings multiples suggest that whilst value can be created relatively quickly in ecommerce, the markets recognise that it can be very hard to hold on to.

Paul Garcia provides the following introductory text to the infographic which appears below:

Have you ever thought about how much your ecommerce business is worth? If you have, you aren't the only one. Everyone will eventually think about whether they should just sell the business for a massive payday or continue to grow it. When thinking about these things, it is important to get an accurate figure to ensure you can make the right decisions.

You can easily get the most accurate figure by simply using professionals, such as Digital Exits, to get a free valuation. They are also the people who created this helpful infographic. If you aren't ready to get a professional valuation, the using this tool will help to give you a better idea of where your business stands.

In this infographic, you will be seeing 150 different ecommerce businesses that were sold from 2010 to 2013. By using these statistics, you can easily measure your business and see exactly where it stands to figure out how much it is potentially worth. The statistics came from bizbuysell.com and the businesses were all U.S. based... although not all of the buyers were within the U.S. Of course, each sale is different, so you may be able to get less or even more than what this infographic says, but it is a great way to easily get an approximate value.

Strategy as Public Relations

A former employer recently announced the outcome of its latest "strategic review".

It picked up a number of unfavourable comments about it not being particularly strategic.

It struck me how commonly companies' stated strategies don't seem that strategic.   Are companies really that bad at strategy?

Sun Tzu said: "All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved."

If you had a good strategy, would you share it with your competitors?

So why do companies go through the pretense of publicly stating their strategies?

The reason is simple - it's more about PR than it is about strategy.

My former employer wanted to send a signal to the market.   In this case, what they wanted to signal is that they are paying attention to the debate on corporate governance, and that they are interested in selling parts of the business, and possibly buying other types of business.   This latter point is particularly important - its one of the few ways a company has of advertising its interest in acquisition and disposal opportunities.

Of course, it's possible that some companies believe their and others' spin, and do confuse this PR with strategy, but hopefully that is not across the board or we're all in trouble.

The same logic could probably be applied to many companies vision statements, which just aren't that visionary.

So next time you read a company's public statement of strategy, don't make the mistake of thinking that's really what the company's strategy is.   Know it for the PR statement it is, and understand what it is signalling, and why.