Suppliers and inventory: what buyers check before they buy your brand

Short answer. When you sell an eCommerce brand, inventory is either included in the price at an agreed normal level or paid on top at landed cost, counted close to closing. Buyers also check your suppliers: written terms, single-supplier risk, who owns designs and moulds, and whether the relationship survives without you. Agree the inventory mechanism in the letter of intent.

Key takeaways

• There are two common ways to handle stock: included at a normal level, or paid on top at landed cost.
• Inventory is valued at what it cost you to land it, not at retail. Old and damaged stock is often excluded.
• Decide the mechanism in the letter of intent. Leaving it to the end causes fights.
• Buyers read supplier risk as business risk: no written terms, one factory, designs owned by the supplier.
• Don't build a mountain of stock before selling, and don't run out either.

How is inventory handled when you sell a store?

Inventory is money sitting on shelves, so every deal has to decide who pays for it and how. There are two common approaches.

Inventory included in the price

The price covers the business with a normal level of stock, the amount you need to keep selling without running out. Buyer and seller agree what "normal" means, often based on the average of recent months. If the real stock at closing is higher, the buyer pays the difference. If it's lower, the price goes down.

This is closer to how larger deals handle working capital, and it protects both sides from a seller who runs stock down or a buyer who inherits an empty warehouse.

Inventory paid on top

The price covers the business, and the stock is paid separately at landed cost, based on a count close to closing. This is common in smaller online business deals because it's simple and easy to verify.

The risk for the seller is in the details: what counts as sellable, who does the count, and what happens to stock in transit.

Which one is better for me?

Neither is better in general. What hurts is leaving it vague. Write the mechanism into the letter of intent, including:

• whether stock is included or paid on top;
• how it's valued (landed cost, and what that includes);
• how obsolete, damaged or slow-moving stock is treated;
• who counts it, when, and how disagreements are settled;
• how stock in transit and paid deposits to suppliers are handled.

How is inventory valued?

Almost always at landed cost: the price paid to the supplier plus freight, duties and inbound handling. Not at retail price, and not at what you hope to sell it for.

Expect buyers to treat some stock differently:

• Slow-moving stock, for example a SKU with more than 12 months of cover at current sales, may be valued lower.
• Obsolete stock, like packaging from before a rebrand or a colour you stopped selling in 2025, is often excluded.
• Damaged or returned stock that can't be sold as new is usually excluded or written down.

Keep a clean inventory report by SKU, with quantities, landed cost and the date of the last sale. Export it from Shopify or your inventory app once a month. It makes the conversation short.

What do buyers check about my suppliers?

Your supplier is part of what they're buying. In due diligence, expect questions on these points.

Is there a written agreement?

Prices, minimum order quantities, lead times (for example, 45 days from deposit), payment terms (for example, 30% deposit and 70% before shipping), quality standards, exclusivity if any. Many small brands work on chat messages and a few invoices. That's a relationship with you, not an asset the buyer can rely on.

Who owns the designs and moulds?

If your product uses custom moulds, packaging designs or formulas, who owns them? If the supplier does, the buyer is exposed. If you paid for them, try to get it written down.

How dependent are you on one supplier?

One factory making everything is a single point of failure. Buyers will ask whether a backup supplier exists, whether samples have been tested, and how long switching would take.

Will the relationship survive the sale?

Some agreements include clauses that let the supplier end or renegotiate the contract if the owner changes. In an asset sale, contracts may need the supplier's consent to be transferred. Check before the deal, not during it.

Does the supplier know only you?

If every order, problem and negotiation goes through your phone, the buyer is relying on you. Introduce a second contact on your side, and make sure the supplier knows the company, not only the founder.

What about the 3PL and fulfilment?

The same logic applies. Buyers will want to see the agreement with your 3PL, the fees, the notice period, and whether the contract can be transferred or will need a new one. They'll also want inventory reports from the 3PL, or from Amazon if you use FBA, that reconcile with what Shopify and your accounts say.

What should I do with stock before selling?

Don't overstock

Buying a large order right before the sale ties up your cash, inflates the inventory you'll need to argue over, and may not be paid back the way you expect. It can also distort your margins if your P&L isn't matching product costs to sales.

Don't run out either

Stock-outs during a sale hurt the numbers a buyer is watching and look like poor planning. Keep the reorder rhythm you'd have if you weren't selling.

Clear the old stuff

Sell through or write off old variants and packaging before the sale. It makes the inventory list cleaner and the count faster.

Reconcile

Make sure your store's inventory, your 3PL's report and your accounts tell the same story. Differences found during due diligence become negotiation points.

What happens to supplier relationships after closing?

The contract changes hands in one day. The relationship takes longer.

During the handover, the buyer will usually ask you to introduce them to your main supplier, explain the history (past quality problems, how price increases were negotiated, what the supplier responds to), and sometimes join the first order or two. The length of that support is agreed in the purchase agreement.

Three things make it go smoothly:

1. A supplier who already knows the company, not only you, because a second contact has been placing orders for months.
2. Written terms that the buyer can read before closing, so there are no surprises in the first negotiation.
3. An honest briefing. If the supplier is slow in August, has raised prices twice this year or owns a mould you paid for, say so. A buyer who discovers it later will feel misled, and you may still be in an earn-out period with them.

Also think about timing. Suppliers notice when a new person appears. Plan with the buyer when and how they'll be told, ideally after signing, so a leak doesn't put the relationship at risk while the deal is still open.

A short checklist

These items sit in the middle of our 12-month preparation plan, because they take time to sort out with third parties.

Next step

If you'd like to know how a buyer would read your supplier setup and stock, request a free valuation. We look at 12 to 24 months of numbers and send you a realistic value range and a list of what to fix before going to market. Answer in 24 hours, zero upfront costs, no commitment to sell.