New Study Reveals the Valuation Multiplier Formula for Online Sellers

Quartile, the world’s largest e-commerce cross-channel advertising platform, recently conducted research to understand the key variables on business valuation on an exit strategy for online brands and sellers. The study is the first of its kind to uncover what makes a business more attractive to these buyers and what the top aggregators are paying attention to.

The research discovered an astonishing result: brand valuation can be 130% increased when sellers are diversifying their sales channels. Based on the research, 93% of Amazon Sellers also selling on their website – as opposed to marketplaces only – received a significant valuation multiplier boost.

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But is there a formula to achieve this success – and how can someone replicate it in their company? Quartile’s research shows that selling on a marketplace is not enough to increase brand valuation. Over 20% of total online sales must come from a direct-to-consumer website, and that must count for over $1 million in sales.

The reason behind this is simpler than expected, but also game changing. A brand with its own website has a valuable asset in its hands: customer data. That means a deeper understanding and knowledge of client behavior and preferences; better audience segmentation for new campaigns; and more effective, low-cost strategies like email marketing. It also shows that they are not just selling products, they are in fact building a brand.

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By getting to know customers and building a closer relationship with them, a company will be more successful when launching new collections and products. A brand will also gather more constructive feedback and suggestions for improvement. This can also help when targeting new customers by building lookalike audiences.

“It’s a flywheel effect: the more data you gather from customers, the better your marketing accuracy, the greater your reach, the more customers you get and the more data you gather from customers again” said Quartile CEO Daniel Knijnik.

The study highlights the importance of long- and short-term strategies for profitability and brand building. As the economy and market conditions present challenges for e-commerce, channel diversification becomes a must-have strategy.

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