Executive summary / Overview
This is a UK-based ecommerce jewellery retailer (Shopify) selling stainless-steel plated pieces (lifetime warranty claim; “waterproof / no green skin”) across multiple collections (chains, bracelets, rings, pendants, sets). The storefront is active and visually consistent; price points on visible SKUs typically sit in the low-to-mid £20–£60 range, with bundle/set offers and occasional discounts. Public reputation is mixed: many 5★ reviews praising quality and delivery, but a meaningful share of 1★ complaints around returns / customer service.
You supplied seller/listing financials (treated here as seller-provided / Flippa listing data): Annual revenue £57,244; annual profit £21,015; monthly revenue ≈£4,770; monthly profit ≈£1,751; margin ≈37%; site age ~3 years; profit multiple 3.6x; revenue multiple 1.6x. (We rely on these figures for valuation commentary — they must be validated via bookkeeping & platform access.)
Key insights (high level)
1. Product & margin profile: SKU mix (chains, pendants, rings, sets) and manufacturing (316L stainless steel + plating) supports high gross margins compared with commodity jewellery. Warranty / “waterproof” positioning is a defensible angle for market differentiation.
2. Price positioning / AOV potential: Visible pricing and bundle options indicate AOV can be lifted with sets/upsells; seller claims “nice AOV” but exact AOV & LTV are not publicly disclosed and must be verified.
3. Traffic & demand volatility: Seller note (and your review) that only Sep, Nov, Dec 2024 produced “good numbers” and revenue/profit has been unstable since — this signals seasonality and/or reliance on short bursts (ads/promotions) rather than steady organic growth.
4. Reputation & customer service risk: Trustpilot shows a mix of strong praise and some complaints about returns/communication — that mix impacts repeat purchase potential and CAC effectiveness.
5. Multiples vs market: The stated profit multiple 3.6x and revenue multiple 1.6x sit toward the higher side for micro e-commerce assets but are not impossible — multiples depend heavily on verified growth trends, retention, and marketing assets. Industry resources show typical small ecommerce multiples commonly between ~2.5–4× annual net profit (SDE) and revenue multiples vary widely; caution advised.
Detailed due diligence areas
1) Website performance & metrics
What we can verify (public):
Platform: Shopify storefront with collections for Best Sellers, Bracelets, Chains, Cuban, Gold, Necklaces, Pearl, Pendants, Rings, Sets. Visible SKU pages and bundles exist.
Product claims: 316L stainless steel, 18K plating, lifetime warranty/anti-tarnish (used in product copy).
Missing / must-request from seller (critical):
Website conversion rate (by channel) — GA4 / Shopify conversion % and landing page conversion.
AOV, repeat customer rate, LTV (Cohort LTV over 6–24 months).
Traffic sources & trends (organic search, paid social, direct, email) — last 12 months and month-by-month.
Site speed / Core Web Vitals (lab & field): we were not able to produce a lab PageSpeed report from public indexing here; recommend buyer run PageSpeed Insights / GTmetrix / WebPageTest for desktop + mobile and collect CrUX data. (Site speed improvements often yield measurable CVR lifts.)
Quick public UX notes (opinionated):
Design is product-forward and consistent; collections navigation is clear. Product pages show multiple variants, bundle options and warranty language (good).
Potential issues: image sizes / unoptimized assets and third-party scripts can depress speed (needs lab test). Mobile UX must be tested (jewellery buyers often browse on mobile). Recommended technical check: image compression, lazy loading, theme JS/CSS bundle optimization, and a CDN.
Benchmarks to compare when seller provides data:
Jewellery / luxury items often have lower conversion rates than mass retail (benchmarks show luxury/jewellery conversion ~1–2% while fashion averages 3–4%). Use these as priors when judging seller CVR.
2) Finances
Seller-provided figures (to be validated): Annual revenue £57,244, annual profit £21,015 (≈37% margin). Site age 3 years. Multiples listed: profit ×3.6, revenue ×1.6. (We treat these as listing/seller numbers — require proof.)
Immediate validation checklist (must obtain before closing):
Shopify payouts / Merchant statements (last 24 months).
Reviewed profit & loss and balance sheet (QuickBooks exports) + bank statements to reconcile.
Reconciliation of “one-off” months (Sep, Nov, Dec 2024) vs regular months — ask for monthly P&L for last 24 months to analyze seasonality and marketing spend.
Seller’s SDE adjustments (owner wages, related party transactions) — produce normalized SDE.
Valuation / multiples commentary:
Small e-commerce businesses commonly trade in ~2.5–4× annual net profit (SDE) depending on transferability and growth profile; revenue multiples vary and are typically lower for micro sellers. The stated 3.6× profit multiple is within the upper part of common micro-SDE ranges but only justified if growth and retention metrics (LTV, stable revenue, diversified traffic, positive margins after ad spend) are proven. If revenue is volatile and reliant on promotions, a lower multiple is warranted.
3) Marketing (Paid & Organic)
Public signals:
Instagram activity (reels / posts) indicates social creative usage to drive demand.
Trustpilot and site reviews are being used on the site — some positive social proof visible.
Unknown / ask the seller for:
Ad accounts: Meta Ads & Google Ads access (or ad spend exports), ROAS by campaign, last 12 months.
Email provider & list size (Klaviyo/Shopify Email), flows (welcome, cart recovery), list growth and revenue from email. (Flippa listing left email list blank — red flag / missing asset.)
Organic channels: SEO visibility (top keywords), Google Search Console access, backlinks, organic traffic share.
Paid performance benchmarks: CAC, CPP, ROAS (by audience & creative).
Benchmarks & commentary:
CAC and social ad costs for jewellery can be higher than average; recent lighting of similar categories shows CPC/CPP volatility — jewellery PPC/CPP often runs materially higher than commodity retail. Before assuming scaleability, confirm historical CAC and LTV; a healthy LTV:CAC is roughly ≥3:1 for repeatable scaling. Typical ecommerce CAC benchmarks fall in broad ranges (e.g., median CPC/CPP for jewellery reported data) — exact target should come from seller data.
4) Operational efficiency
Public / site signals:
Site copy indicates orders shipped from a UK warehouse and an extended returns policy & lifetime warranty for accidental damage. There’s also a “build a bundle” product which implies some SKU bundling/fulfilment logic.
Operational items to verify with seller:
Inventory model: Is the business holding stock (inventory on hand) or drop-shipping / 3PL? Obtain current inventory list + cost basis + supplier lead times.
Fulfilment & logistics: Warehouse location(s), courier contracts, shipping rates, average fulfilment time, shipping exceptions & chargebacks.
Returns & warranty costs: Volume % of returns, refund rate, average refund cost (warranty replacements), RMA policy adherence. Trustpilot 1★ reviews mentioning returns/unresponsive support are a red flag — quantify the scale.
Supplier contracts & IP: Proof of supplier relationships, MOQ, exclusivity (if any), proof of product origin and compliance.
5) Customer data & relationships
Public evidence:
Trustpilot profile (~33 reviews, TrustScore ~3.6) with both high praise and some serious complaints about returns/communications. This split reduces immediate trust leverage.
Metrics to request (must have):
Customer list / email size and segmentation (by recency, frequency, monetary value).
Repeat customer rate and cohort LTV (30/90/365 day). Benchmarks suggest repeat rates in fashion/jewellery are often ~15–30% but vary widely — your buyer should expect lower repeat without a retention program.
Customer service logs (tickets), average resolution time, refund rates.
Opportunities:
If the brand has positive product reviews and a defendable product claim (no tarnish / lifetime warranty), a retention program (post-purchase sequences, replenishment/bundle incentives, subscription for gift wrap or care kits) could lift LTV. However, existing complaint threads must be addressed first.
6) Legal & compliance due diligence
Quick red flags / checks:
Consumer law (UK): Distance selling rules require explicit 14-day cancellation information and compliant refund handling; verify the site’s T&Cs and that returns are handled in line with UK law. Non-compliance risk here can create refunds & fines.
Data protection (UK GDPR / ICO): Verify privacy policy, cookie consent (PECR) and data processing records; confirm how customer data is stored (Klaviyo/Shopify) and if data transfers are lawful. ICO compliance is critical for email and tracking.
Product safety / claims: Ensure product claims (hypoallergenic, lifetime warranty, waterproof) can be backed by suppliers/QA; false claims risk consumer complaints and returns.
Intellectual property: Check domain ownership, trademarks, and any outstanding disputes; check that product images/copy do not infringe third-party IP.
Challenges Identified (detailed)
1. Revenue volatility / seasonality — seller only produced strong months in Sep/Nov/Dec 2024; recent months weaker. This reduces confidence in forward EBITDA run-rate. (Require monthly revenue/profit detail.)
2. Insufficient verified marketing assets — no public evidence of a sizeable email list or diversified organic funnel; likely heavy reliance on paid bursts. Flippa listing omitted email list size (blank) — that’s a notable missing asset.
3. Customer service / returns complaints — Trustpilot shows a non-trivial set of 1★ reviewers referencing returns and communication issues; unaddressed this can depress repeat purchases and increase CAC over time.
4. Unknown CAC & LTV — without historic CAC and LTV, we can’t reasonably model scalable paid growth; jewellery categories can have high CAC and variable CPP.
5. Valuation / multiple risk — stated multiples appear optimistic for a small, volatile business; buyer should apply haircut unless retention + verified channels are strong.
6. Operational transparency — unknown inventory model, supplier contracts, returns burden and warranty costs; these materially affect working capital and margin stability.
Recommendations (practical, prioritized)
Immediate (pre-offer) items — must obtain
1. Full financial pack (verified): Shopify payouts, Stripe/PayPal statements, QuickBooks exports, monthly P&L for last 24 months, bank statements. Goal: reconcile revenue and profit and confirm the months of spikes.
2. Access to marketing & analytics: read-only access to GA4 / Shopify analytics, Meta Ads + Google Ads, and email provider (Klaviyo/Shopify Email) for last 12 months. Goal: compute channel CAC, ROAS, CVR, AOV, repeat rate, LTV.
3. Inventory & supplier disclosure: current inventory valuation, supplier invoices, lead times, MOQ, and any exclusivity terms.
4. Customer service & returns report: tickets, refund rate (% of orders), average refund cost, warranty claims.
5. Legal documentation: domain ownership, trademark filings, standard T&Cs, privacy policy, supplier contracts, and any disputes or claims.
Conditional (post-access) analysis
6. Run technical audit: PageSpeed/GTmetrix + Lighthouse for home page & typical PDP + audit of checkout flows (mobile). Actionable fixes prioritized (image compression, unused JS, CDN).
7. Perform cohort LTV modeling: using 6/12/24 month cohorts to determine true LTV and LTV:CAC ratio. If <3:1, scaling paid channels is risky.
8. Customer service & brand repair plan: triage Trustpilot 1★ complaints, create standard operating process for returns & warranty fulfilment; roll out an automated post-purchase care flow to reduce returns / build loyalty.
Tactical growth ideas (if metrics validate)
Increase AOV: improved bundles, product sets, post-purchase upsells, gift messaging at checkout. (Site already has a “build a bundle” product; optimize the funnel for it.)
Retention playbook: 3-mail post-purchase sequence (care instructions → cross-sell → review request + incentive) to raise repeat rate.
Creative & channel testing: shift budget to high-ROI creatives and test lookalike vs interest audiences; move some spend into prospecting on TikTok/Instagram if younger demo.
Operational improvement: negotiate better courier rates and test pre-paid return labels for a limited SKU set to improve returns experience.
Valuation Note (practical guidance)
With seller figures: revenue £57k / profit £21k, a raw 3.6× profit multiple gives an asking price ≈ £75.6k. That multiple is in the brighter end for micro ecommerce but could be justified only if (a) revenue is stable/growing, (b) profitable after ad spend with predictable CAC/LTV, (c) diversified traffic & clean operations. If revenue is volatile and heavily promotional, apply a conservative multiple (e.g., 2.0–2.5×) or structure price with earn-out tied to stable monthly revenue. Market benchmarks show small e-commerce deals typically cluster in ~2.5–4× profit, but variability is high.
Practical next-step checklist for buyer (copy/paste to seller request):
Please provide the following before any offer:
1. Shopify exports: last 24 months orders (CSV) and payouts (Stripe/PayPal).
2. QuickBooks / accounting exports (P&L, balance sheet) last 24 months + bank statements.
3. Meta Ads & Google Ads read-only access or exported reports (last 12 months).
4. GA4 / Universal Analytics (read-only) and Search Console access.
5. Email provider (Klaviyo/Shopify Email) list size, flows and last 12 months revenue from email.
6. Inventory list with cost basis + supplier invoices for the last 12 months.
7. Copy of standard supplier agreements, MOQ terms, lead times.
8. Customer service logs: refunds, RMAs, warranty claims (last 12 months).
9. Legal: proof of domain ownership, any trademarks, pending disputes.
10. Clarify why the seller is selling (this is essential).
Conclusion (recommended buyer stance)
This jewellery Shopify business shows credible product positioning (quality-led stainless steel jewellery), a coherent Shopify storefront and demonstrable proof of product quality in many positive reviews. However, there are material unknowns: validated monthly revenue trend, customer acquisition economics (CAC / ROAS), repeat purchase behavior, inventory model, and returns burden. Trustpilot mixed reviews and the seller’s reported month-to-month volatility raise execution and valuation risk.
If you’re interested: proceed to a strict, document-driven diligence round (items in the “must obtain” list). Absent verified metrics and clean operations, treat the listing as a medium-risk micro-ecommerce asset and price accordingly (consider lower up-front multiple plus earn-out tied to stabilized monthly revenue and verified repeat rates).
