eCommerce Model - Complete Strictly Confidential

Table of Contents
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Notes
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© Corporate Finance Institute. All rights reserved. Startup year Terminal year
2016 2017 2018 2019 2020 2021 2022
Balance Sheet Check OK OK OK OK OK OK OK

Assumptions

Site Traffic (Avg monthly visits)

Email 0 5,000 10,000 20,000 30,000 50,000 60,000
Organic Search 10,000 50,000 100,000 130,000 155,000 170,000 180,000
Paid Search 30,000 20,000 10,000 10,000 10,000 10,000 10,000
Affiliates 20,000 10,000 5,000 5,000 5,000 5,000 5,000
Total Monthly Visits 60,000 85,000 125,000 165,000 200,000 235,000 255,000
Growth Rate 41.7% 47.1% 32.0% 21.2% 17.5% 8.5%

Site Traffic (Annual) 12

Email 0 60,000 120,000 240,000 360,000 600,000 720,000
Organic Search 120,000 600,000 1,200,000 1,560,000 1,860,000 2,040,000 2,160,000
Paid Search 360,000 240,000 120,000 120,000 120,000 120,000 120,000
Affiliates 240,000 120,000 60,000 60,000 60,000 60,000 60,000
Total Annual Visits 720,000 1,020,000 1,500,000 1,980,000 2,400,000 2,820,000 3,060,000

Conversion Rates
Email 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%
Organic Search 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Paid Search 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%
Affiliates 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Total Monthly Visits 2.8% 2.5% 2.4% 2.6% 2.7% 2.9% 3.0%

Orders Placed
Email 0 3,600 7,200 14,400 21,600 36,000 43,200
Organic Search 2,400 12,000 24,000 31,200 37,200 40,800 43,200
Paid Search 7,920 5,280 2,640 2,640 2,640 2,640 2,640
Affiliates 9,600 4,800 2,400 2,400 2,400 2,400 2,400
Total Orders Placed 19,920 25,680 36,240 50,640 63,840 81,840 91,440

Order Details
Average item value (gross) 250 250 250 250 250 250 250
# of items per order 1.1 1.2 1.3 1.4 1.5 1.6 1.7
Average markdown 10% 10% 10% 10% 10% 10% 10%
Average promotion/discount 20% 18% 15% 12% 10% 8% 8%
Cost of Goods Sold (Gross Product Marin) 50% 50% 50% 50% 50% 50% 50%

Average Gross order value 275 300 325 350 375 400 425
Average Net order value 193 216 244 273 300 328 349

Customers
Churn Rate 25% 25% 25% 25% 25% 25% 25%
Opening active customer base 0 14,940 27,765 42,604 59,133 76,030 91,402
Plus new customers 19,920 22,080 29,040 36,240 42,240 45,840 48,240
Subtotal 19,920 37,020 56,805 78,844 101,373 121,870 139,642
Less churned customers 4,980 9,255 14,201 19,711 25,343 30,467 34,911
Closing customer base 14,940 27,765 42,604 59,133 76,030 91,402 104,732

Marketing Expenses
Variable
Email (cost per click) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Organic Search (cost per click) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Paid Search (cost per click) 3.00 3.25 3.25 3.50 3.50 3.75 4.00
Affiliates (cost per click) 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Average 3.17 1.35 0.46 0.36 0.30 0.27 0.25

Order Fulfilment
Variable
Freight/shipping per order 12.00 10.00 9.00 9.00 8.00 8.00 7.00
Labor/handling per order 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Total 17.00 15.00 14.00 14.00 13.00 13.00 12.00

Fixed
Warehouse rent 150,000 150,000 150,000 250,000 250,000 500,000 500,000

General & Administrative

Fixed
Office rent 100,000 100,000 100,000 200,000 200,000 200,000 200,000
Salaries, wages & Benefits 500,000 700,000 1,000,000 1,200,000 1,500,000 2,000,000 3,000,000
Professional fees 100,000 100,000 100,000 200,000 200,000 200,000 200,000
Other 100,000 100,000 200,000 200,000 400,000 400,000 400,000
Total 800,000 1,000,000 1,400,000 1,800,000 2,300,000 2,800,000 3,800,000

Balance Sheet Items

Current Assets
Accounts Receivable Days 5 5 5 5 5 5 5
Inventory Days 120 100 90 90 90 90 90
Inventory Turns 365 3.0 3.7 4.1 4.1 4.1 4.1 4.1

Current Liabilities
Accounts Payable Days 60 50 40 30 30 30 30

Capital Expenditures
Technology Development 300,000 50,000 50,000 500,000 50,000 1,000,000 100,000
Office Equipment 200,000 50,000 50,000 50,000 200,000 100,000 500,000
Acquisitions 0 0 0 0 0 0 0

Depreciation
Technology - Straight-line Years 5 5 5 5 5 5 5
Office Equipment - Straight-line Years 5 5 5 5 5 5 5

Financing
Interest Rate 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Debt Issued (Repaid) 0 0 0 0 0 0 0
Equity Raised (Repurchased) 5,000,000 0 0 0 0 0 0
Dividends Paid 0 0 0 0 0 0 0

Valuation
Tax Rate 25% 25% 25% 25% 25% 25% 25%
Cost of Capital / Discount Rate 20% 20% 20% 20% 20% 20% 20% 20%
Terminal Value Exit Multiple 8.0x

Income Statement

Balance Sheet

Cash Flow Statement

Supporting Schedules

Customer Metrics
R e v e n u e ( $ m illio n s )

Valuation
M a r g in M a r g in

Charts & Graphs

-$ 1 5 ,0 0 ... - 50
2 01 20 1 2 0 1 2 01 2 0 2 2 0 2 20 2