Jeff Bezos wasn't kidding when he said, "It's hard to find things that won't sell online." On Amazon alone, over 350 million products are available for sale, and 1.6 million packages are shipped daily. This means that by the time you finish reading this blog post, Amazon will have fulfilled some 12,000 orders.
If you can sell almost anything, does that mean you can also sell your Amazon FBA store? The answer is YES. Amazon business selling has been around since the advent of the platform, and it might unlock the opportunity you've been waiting for.
Why Sell Your Amazon FBA Business
Amazon sellers choose to sell their stores for various reasons. Some want an early cashout to salvage what's left of their capital, while others need money to cover a massive outlay, such as a downpayment for a house, a child's education, or hospital bills.
You don't have to be in a similar situation to sell your Amazon FBA store. There are genuine advantages to it. For instance, your profit can be a lifesaver if you plan to invest in a new business or if you manage multiple stores and want to focus on just one. It's also a good option if you're eyeing early retirement.
Who's buying Amazon FBA stores?
Those with prior experience managing an Amazon FBA store know how difficult it is to start an online business from scratch. Just coming up with an idea, raising capital, and finding suppliers take time and resources. They know that buying an existing Amazon FBA store spares them from the risks and challenges of the setup phase.
However, it's important to note that each buyer has distinct preferences. Listing your Amazon FBA store isn't enough to guarantee a sale. Identifying the interested market segment is also crucial for optimizing your search and marketing strategies.
Buyers typically select a business based on its size. Amazon FBA stores valued at under $1 million often attract individual operators and solopreneurs, whereas those valued at over $1 million may draw interest from aggregators and other large investors.
The type of business you have matters to buyers. Is it a private label or a reseller? Do you sell proprietary products? Private label businesses are more attractive to Amazon FBA store buyers than reseller stores because the reseller market is highly volatile, and none of your products are inherently protected.
How to Sell Your Amazon FBA Business
Selling an Amazon FBA business involves a detailed and intricate procedure. For now, let's skip the technical specifics and concentrate on the key points. Here's a simplified outline of the process:
Step 1: Value your business.
This is supposed to be a crucial step in your exit plan, but we will present it as the first step to underscore its importance. After all, crafting a successful exit strategy is impossible without understanding the current value of your Amazon FBA store.
To calculate the value of your Amazon FBA store, multiply your seller discretionary earnings (SDE) or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) with a monthly or annual multiple corresponding to your industry.
You can calculate SDE by subtracting the cost of the goods you've sold and your operating expenses from your total revenue and adding it to your salary as the owner. EBITDA, on the other hand, is simply your gross earnings.
As for the industry multiple, many factors, including the age of your business, the number and quality of reviews you've received so far, and the diversity of your earnings and SKUs, are considered to obtain it. It increases as your SDE or EBITA grows. Businesses valued below $1 million are usually assigned a multiple of 3x and 6x.
Step 2: Plan your exit.
To minimize risk for potential buyers, you should enhance the value of your Amazon FBA store. This process takes time and requires proactive measures before your sale, potentially spanning months or years. Here are some of the things you can include in your exit plan.
- Simplify supplier contracts to improve operations and storage terms.
- Enroll your brand in the Amazon Brand Registry for easy listing and protection against counterfeit products if you design and manufacture your own products.
- Remove underperforming or poorly reviewed products to enhance your reputation and streamline your inventory.
- Check your account's health and ensure that your order defect rate, pre-fulfillment cancel rate, and late shipment rate are below the minimum.
- Create a website to enhance your brand's authority beyond just relying on your Amazon account. Once your website gains traction and attracts visitors, join the Amazon Affiliate Program to monetize your online presence further.
- Optimize your listings for better visibility. Doing so boosts sales and increases your chances of achieving an Amazon Best Seller Rank, something buyers would want.
Step 3: Reevaluate your business.
Keep working towards your Amazon FBA store's target value before considering an exit. Regularly reassess its worth to decide if adjustments or more time are necessary. Hiring a broker is also a good idea. They offer more than just selling assistance. Below are other services they can offer.
- Manage valuation and pre-listing due diligence
- Advertise your business and find buyers, all costs covered by their fee
- Handle all negotiations and facilitate escrow
- Draft all documents necessary to complete the acquisition
- Manage post-contractual obligations
Hiring a mergers and acquisitions advisor or broker can ease your workload, letting you concentrate on running your business and preserving its value. Unlike selling privately, using a broker increases the likelihood of finding a suitable buyer due to their extensive network and advanced techniques.
IMPORTANT: Selling an Amazon FBA store may take weeks or months, depending on the type, complexity, and profitability of your business. Hiring a broker can speed it up.
Step 4: Find a buyer.
Online business sales are flourishing because of the substantial market demand. Thus, locating buyers is relatively easy when you know where to search. Many buyers start their search on platforms such as Empire Flippers, Flippa, FE International, and Quiet Light.
If you're not hiring an M&A adviser, you can sell your Amazon FBA business on these platforms. You could also try auctioning it, but that might lower its value. A private sale is an excellent option if you know people looking to invest.
Step 5: Transfer your account.
Once you've sold your Amazon FBA business with the help of a broker, it's crucial to transfer the account smoothly. As part of your exit plan, ensure that you understand the proper steps for the transfer so you can proceed promptly after the sale.
Contact Amazon's customer support for guidance on transferring ownership of a seller account, including reviews and incentives. The process for account transfer is not publicly accessible, so their assistance is necessary. Follow their guidelines closely to avoid errors that might affect the sale.
Step 6: Prepare for transition.
Your responsibility as the previous owner extends beyond just the transfer and migration process. You should ensure the new owner is equipped with the necessary knowledge to operate the store effectively. If you have specific methods and systems in place, the new owner needs to learn them and determine if they are as effective as advertised.
Typically, the seller and buyer agree to a two-week due diligence period for the new owner to inspect the business processes. Occasionally, buyers may request employee training before finalizing payment if they find the system complex. However, the buyer may waive this period if all conditions have been met.
Sell Your Amazon FBA Store Today!
Don't miss the chance to sell your successful Amazon business. Once you've prepared it and completed your research, act promptly. Utilize all resources at your disposal and consider professional services to expedite the sale and find a reliable buyer.