Can I sell my Amazon FBA business?
As the leading Amazon marketing agency we deal with a lot of buyers and sellers of online businesses. Helping many buyers with due diligence and many Amazon sellers with increasing the value of their business before listing for sale. ASC has also purchased businesses directly from Amazon sellers, so if you sell in the UK and/or USA feel free to get in touch. We may be able to purchase your brand directly or connect you directly with individuals who can purchase in a quick and hassle free way.
Buying an Amazon business can be seen as more risky than a traditional brick and mortar or ecommerce business. Unlike traditional brands, the due diligence process if far more concealed than a brick and mortar business or even an ecommerce store due to the nature of the data Amazon allows us to see. Which is very limited to individual product listings stats rather than individual customer data. Even technical differences such as earnings before interest, taxes, depreciation and amortization are often so low. As a result, the first question we get from first-time sellers is “how much is my Amazon business worth?”, or even “is it legal to sell my Amazon business?”.
The short answer to the first question is “It depends”. And yes selling an Amazon brand is legal. Amazon itself has even made this a lot easier than it was in the past with the old transferring loopholes that had to be done.
How to sell an amazon business account to someone else
Many people are thinking of ways to get out of their Amazon business, but aren’t sure how to go about it.
Some people may even have just quit selling on their Amazon account without realising it’s worth money to others!
Of course, every Amazon business is different, and there are plenty of factors that may make it easier or more difficult to sell an Amazon account.
You will likely have plenty of questions too, such as “where can I sell my Amazon FBA business”, “how to sell my Amazon business”, and perhaps most importantly, “how much is my Amazon business worth?”.
Luckily, we’ve been doing this for a while, and as such we have answers to all of those questions and more.
If you’re looking to sell your Amazon FBA brand, get in touch now to discuss what we could offer, or simply read on:
What type of business is your fba account?
This is the first thing to take into account because there are a few different kinds of Amazon FBA business, and the differences do have an effect on how you go about selling Amazon accounts.
For example, some Amazon FBA businesses are simply involved in reselling.
Others offer private label products.
Others still offer proprietary products.
First, let’s look at resellers since they are the most numerous by a considerable margin:
Selling Amazon FBA Reseller Accounts
Amazon FBA resellers are businesses that simply buy stock in wholesale and then sell it on Amazon for a markup.
It can be quite difficult to sell a reseller account, even if it is a successful one with a good level of profit.
This is because it’s a highly competitive market to step into, and the products being sold won’t be unique to you or patented.
Getting stock can also be an issue since success as a reseller counts on finding things for the lowest price possible at all times, something the buyer may not be as experienced in as you are.
One situation that can change all of this and make a reseller account quite lucrative, is if you have exclusive rights to sell certain brands or products on Amazon.
Selling Amazon FBA Private Label Accounts
Private label sellers have their own brand but are still selling products that are similar or the same as elsewhere.
This does give you a little more leverage to sell for a better price than resellers can, especially if your brand is well-known within the space or has a history of being high quality.
Selling Amazon FBA Proprietary Product Accounts
This can be a real goldmine.
If you’re selling products that nobody else is able to sell, your brand’s value increases dramatically.
For example, imagine if you saw two protein shake companies for sale.
Both have the same sales volume and reach, and both are asking for the same price too.
But one of them uses a generic whey protein recipe that is the same as what’s available from almost any protein brand in the world, and the other has a unique, self-developed recipe that’s highly regarded in the industry.
Which would provide you with more value in the long run?
Hopefully, the answer is obvious, but when wondering how to sell an Amazon business, the type of account isn’t the only factor:
Historic earnings of your Amazon FBA business
For most people looking to buy an Amazon business, this is the number one question, as they need to know how long it will take for them to make a return on their investment.
The longer your business has been making a good profit, and the more detail you have on it’s success, the more tempting it is to a potential buyer.
It’s a good idea to get as much proof and as many metrics together as you can, to help the potential buyer get a full picture of what you do and the value of your brand.
Annual Net Profit
In most situations, a buyer’s offer will be a specific multiple of your annual net profit. This is the industry standard way that most business owners value or create a sale price for their business. Net profit tends to be almost directly related to 5 areas (of an Amazon business); product, product price and margins, specific rankings of products, volume of customer reviews, ratings of reviews.
The overall business model for an Amazon business doesn’t really change from one product category to another, as a result you will have a lot of buyers looking in multiple categories rather than being very narrow in the more traditional private equity spaces. Saying all this, annual net profit is still the start to any valuation or discussion.
Annual net profit is also often called EBITDA, which means earnings before interest, taxes, depreciation and amortization.
It’s crucial that you provide as much accurate, up to date information on this as possible, as lacking or inconsistent records are going to be a major turnoff for any potential buyer. This is common in any “businesses for sale” type marketplace, a seller not wanting to “reveal their products” but as a result simply not giving enough information to a potential buyer for them to get interested.
Other areas such as intellectual property, trade marks, competitive edges, business moats can also add or improve your multiple. But other elements that are seen as important in day to day business, such as product descriptions, virtual assistants or accountants, won’t be valued correctly as most acquirers will have teams in place to cover these types of roles or tasks.
Consistent records over time make it possible to track trends, such as whether sales are increasing, decreasing, steady, or seasonal etc.
How Much is Your Amazon Business worth?
When you think about your business, you might think about the time you spent setting it up, your favourite products to sell, and the obstacles you overcame along the way.
A potential buyer isn’t interested in any of those things.
For them, the value of your business is based entirely on its ability to generate a profit for them.
For example (using simple numbers to keep things easy), let’s pretend your business made $2,000,000 in sales last year and your profit from that (known as SDE, or seller’s discretionary earnings) is $500,000.
The current market rate for Amazon FBA businesses seems to be between 150% and 300% of the profit, so your business would likely be valued at between $750,000 and $1,500,000.
The simplest way to calculate the SDE is this formula:
Total Sales – Cost of Goods Sold – (Expenses + Owner’s Salary)
However, where you fall on the scale between 1.5x and 3.0x varies depending on a lot of features.
Luckily, you have control over them:
Can I Increase the Value of my Amazon business Before Selling?
Of course you can!
There are multiple major factors that a buyer will take into account when making you an offer, and you can always work on improving these factors before selling, if you want to increase the value of your business.
Here are the most common aspects of your business a potential buyer will look at:
Suppliers: High-quality suppliers with good inventory levels, quick delivery, and a good setup that benefits your business are all a good sign. If you have an exclusive deal that means they can’t sell the products you sell to other retailers, this is even better! If you’re using suppliers with a bad reputation or generic dropshipping companies, this will devalue your brand a lot, as anybody could just go to these suppliers and start their own business.
Amazon Best Sellers Rank: A strong BSR rank is a sign that you provide a good service, your products are good quality, and that your product rankings are likely to be on the increase. All good selling points to a potential buyer.
Time in Business: the longer you’ve been running your business, the more valuable it is, for two reasons:
- A long-running business suggests a business plan that works, a product that has demand, and healthy profit margins.
- The further your historic data goes back, the easier it is to predict the future success of the business
Niche: The niche that you sell in matters a lot. For example, if you’re selling a generic product with high competition such as cheap earbuds, you’ll need to be at the top of the game for anybody to consider buying your business. On the other hand, if you’re selling something unique and rare with low competition, this could be a selling point in itself.
Brand: As discussed briefly above, a company that sells it’s own unique branded products is worth a lot more than one that sells generic Alibaba products that can be bought for a similar price elsewhere.
Product Range/Diversification: If 90% of your profit comes from one product, this is a big risk to a potential buyer because a drop in demand for that product, or the launch of a better version by a competitor, could kill your business dead in the water. A diversified selection of products reduces this risk drastically and therefore should increase your selling price too.
Where to sell your amazon business
Once you’ve decided you want to sell your Amazon business, your next question is probably regarding “the best broker to sell my Amazon business”.
There are some great Amazon FBA account brokers and marketplace sites out there that can provide you with numerous potential buyers. Although fees and costs mean they are unlikely to offer as much as us or other private buyers, they can be a great way to find a buyer if you’re struggling through other methods.
Selling Amazon Businesses Online
The ideal place for selling smaller Amazon businesses ($500k or less in sales per year) is to your business contacts, in technical forums, or general online selling sites. At ASC we also have a wide network of people who purchase Amazon businesses.
There are also marketplaces out there that may help you sell larger businesses, but once again they are likely to pay less than a private seller and some won’t be interested in any business valued at less than $20,000,000.
We have interest in buying Amazon businesses of all sizes, and we may also be able to help with finding a buyer even if you don’t have interest in yours personally.
To get in touch and find out, click the button below: