How can I tell if an online store for sale is really profitable?

A listing for an online store usually leads with sales. Sales are the easy number. Profit is what is left after the store pays to find customers, take their money, send the goods and deal with the ones who send them back. Before you trust any profit figure, ask for the records behind it, and rebuild the picture yourself or with your accountant.

What it costs to win a customer

Ask for advertising spend by month, and the number of new customers it brought in. If spend is climbing while new customers are flat, each sale is costing more than it used to. Ask how many orders come from repeat customers, search or email, which cost little, and how many depend on paid ads, which stop the day the budget stops.

The fees between the sale and the bank

Platform subscriptions, paid apps, payment-processor fees and marketplace fees all come out before the owner sees a cent. Match the sales reports to the deposits in the bank account and ask what explains each gap. Look closely at refunds and chargebacks, and at whether a payment processor has ever held back funds. Raise any unexplained gap with the seller and have your accountant check it.

Shipping, stock and the owner’s time

Check what the store pays for shipping and fulfilment, and who absorbs it. Ask what stock is sitting unsold, and whether any has been written off or discounted to clear. Then ask what the owner does each week. If the owner packs boxes, answers email and runs the ads for no pay, a buyer will either do that work or pay someone to. That cost belongs in the picture.

• Monthly ad spend next to new-customer counts for at least a full year.
• Sales reports matched to bank deposits and processor statements.
• Refund, return and chargeback history.
• Stock list with age, and any write-offs.
• A written list of the owner’s weekly tasks.

This page assumes the store is trading at all. If you are not yet sure of that, start with how to tell whether a Shopify store for sale is actually trading.