E-Commerce Due Diligence Checklist for Buyers
An online business can look excellent in a listing: steady sales, strong reviews and a polished storefront. E-commerce due diligence is where those impressions are tested against records, accounts and agreements. It is where a buyer learns whether reported earnings hold up after every cost, whether sales depend on a single channel, whether the accounts and assets can move to a new owner and what risks come with the products and suppliers.
This checklist is organized by area so buyers, advisors and lenders can work through it methodically. It is general information, not legal, tax or intellectual-property advice. For the overall process, see our guide on how to buy an e-commerce business.
1. Financial Records
- Several years of business tax returns and financial statements
- Monthly profit and loss statements
- Bank deposits and platform payout reports reconciled to reported revenue
- Owner compensation, add-backs and personal expenses, with documentation
- Existing debt, including any short-term or revenue-based financing
2. Sales by Channel
- Revenue and profit by channel: own website, marketplaces, wholesale and others
- Monthly trends and seasonality
- Platform fees and how they have changed
- Account health indicators and any warnings, suspensions or policy issues
Concentration in one channel is often the most important risk; see our guide to e-commerce platform dependence.
3. Advertising and Customer Acquisition
- Advertising spend by channel and month
- Sales attributed to paid versus organic sources
- Changes in advertising spend before the sale
- Email or customer lists and the permissions under which they were collected
4. Products and Customers
- Sales and margin by product
- Dependence on a small number of products
- Return and refund history, and the reasons for returns
- Customer reviews and complaint patterns
- Product compliance, safety or labeling requirements, reviewed with qualified advisors
5. Suppliers and Fulfillment
- Supplier agreements, pricing and lead times
- Dependence on a single supplier and whether alternatives exist
- Fulfillment arrangements, whether in-house, third-party or platform-based
- Shipping costs and carrier agreements
6. Inventory
- Current inventory by product and location
- Aged or slow-moving inventory
- How inventory will be counted and valued at closing
7. Digital Assets, Accounts and Intellectual Property
- Domain names and who holds them
- Marketplace, storefront, advertising, payment and social media accounts
- Trademarks, copyrights, product designs and content ownership
- Software, apps and subscriptions the business relies on
Whether each account or asset can be transferred depends on the applicable platform terms, agreements and circumstances; some may need to be re-established by the buyer. Have counsel review ownership and transfer questions. See our guide to asset vs stock purchases when buying an online business.
8. Tax and Regulatory Matters
- Sales tax collection and filing practices
- Any notices from tax authorities or regulators
- Import and customs arrangements, if applicable
These areas can carry liabilities and should be reviewed with qualified tax and legal professionals.
9. Operations and People
- Standard operating procedures
- Contractors, employees and agencies and their agreements
- How much of the work the owner does personally
- The seller’s planned transition role
How Findings Affect Price and Financing
Diligence often leads to price changes, revised deal structure, a longer seller transition or deferred payments tied to performance. Our guide to e-commerce business valuation explains how findings affect value. Lenders review many of the same items; see our guide to e-commerce loan requirements.
US Professional Funding works with buyers acquiring established, operating e-commerce businesses. Learn more about our e-commerce business acquisition financing.
