Selling Your Amazon FBA Business – Most Commonly Asked Queries
Introduction
The expansion of big e-commerce has given small entrepreneurs a platform to launch, conduct and expand their business online as well. These third-party sellers on Amazon can grow and expand up to a certain point, after which their limited resources and a lack of professional skills start to restrict them. At that point, many entrepreneurs may wish to sell their Amazon business and seek a suitable exit. If you are the owner of an Amazon FBA business, you may have these questions-
- Can I sell my Amazon FBA business?
The answer is, yes. You can sell your Amazon FBA business and will find a number of takers. But, before you can do that, you must consider a number of factors. These include the worth of your business, which can be determined by conducting valuation. Other things to keep in mind include the type, age and net profit of your business, among other things. In summation, yes, it is possible to sell your Amazon FBA business, but a lot of hard work goes into selling it at the best possible price.
- How much is my Amazon FBA business worth?
The value of your Amazon FBA business for sale depends on the size of your operations. Usually, for small businesses run by entrepreneurs with limited means, the valuation tends to be on the lower side. However, as more and more investors are expressing an interest in buying Amazon FBA businesses, their sales prices have also risen from $298,558 in 2019 to $538,742 in 2020 per one estimate.
The sales price of your business will be based on its valuation. Entrepreneurs can use a number of valuation methods to determine the worth of their business. Small operations, those under $10 million, can use Seller’s Discretionary Earnings (SDE). Bigger businesses with more complex ownership structures can use EBITDA for their valuation.
Remember, the better the valuation, the easier it will be for you to sell your business at your desired price. Factors like robust financials, older age, better customer service and good brand recognition make for a better valuation.
- What type of Amazon FBA businesses sell?
When you start thinking about placing your Amazon FBA business for sale, the first question to pop in your mind would be regarding the type of business that sells. The first thing to keep in mind is what type of business model your operations follow. Resellers are more difficult to sell because of high competition and constrained supply. Buyers find patented products and private labels attractive because they sell unique products.
Businesses with financial records that can be verified, a healthy history of earnings and quick returns investments can sell better. Operations that have seen steady growth for four to five years are more likely to fetch better prices than businesses which have been around for less than a year.
- How to make your business more saleable?
If you are looking to sell your Amazon FBA business, you can work on some factors that affect its valuation. Focusing on creating better margins, increasing their revenues, working on raising sales volumes, increasing your brand valuation, creating avenues for organic growth, diversifying revenues and enhancing customer satisfaction can all help increase valuation.
Amazon FBA businesses for sale are very attractive to buyers because it takes care of logistics and fulfilment. Your ultimate goal should be to groom your business into one that is ultimately easily transferable, sustainable and scalable. These will automatically increase the saleability of your business.
- How to find a buyer?
A big question for sellers is what type of buyers they can attract for their Amazon FBA business for sale. The most important thing is to find a buyer that not only offers a fair price, but also has a deep understanding of what is best for the scaling and expansion of the business. Some of the common types of buyers include aggregators, private equity firms and brokers.
Private equity firms invest in your business and keep the seller involved even after the business has been acquired. Brokers can help sellers find the right buyer and carry out the deal till the operations are handed over to the buyer.
Aggregators, on the other hand, buy the Amazon FBA business for sale directly. They grow and scale your business using their resources as well as professional expertise. Since these aggregators are in the business of buying well-performing Amazon businesses, these purchases are more efficient, streamlined and faster. As a seller, you can be assured that such aggregators will nurture and scale your business further by optimizing production, marketing and sales.
Conclusion
Selling your Amazon FBA business can be daunting. But if you, as a seller, ask the right questions and organise your selling process, finding the right answers is not that difficult. By keeping in mind the points raised by these questions, you can sell your Amazon FBA business with ease. Answering these key questions can also help you take steps towards building a business that offers good customer service, quality products and has strong financials, thereby increasing its chances of being sold.
