How to Sell Your Amazon FBA Business
Amazon continues to increase its market share in the U.S. On Prime Day 2020, for example, third-party sellers generated over $3.5 billion in sales, and top-selling products included diapers, mouthwash, wine, and card games. Amazon has over 300 million active customers worldwide and 90 million Prime subscribers in the U.S. alone.
COVID-19 has rapidly accelerated the shift from in-store buying to eCommerce:
Online holiday 2020 sales reached $201 billion, vs. $138 billion in 2019.
In November and December of 2020, consumers shifted over $41 billion in purchases to eCommerce.
45% of consumers said that they bought most of their holiday gifts online.
Amazon FBA (Fulfillment by Amazon) businesses are positioned to benefit from the rapid shift to eCommerce, and well-managed firms are valuable. If you want to know how to sell an Amazon FBA business, meet with an experienced business broker. These experts can help you make informed decisions, and speed up the sale process.
The type of FBA business you operate impacts company value, and the price you’ll receive from a buyer.
Types of Amazon FBA Businesses
The products you choose, price fluctuations, and competition are all factors that determine your profitability, which drives business value. An FBA business may use one or more of these strategies:
Operating as a Reseller
Resellers operate as wholesalers and generate a profit based on the retail price. Resellers may face a high level of competition since other companies can also purchase the same products.
Competition may also make it difficult to find a supply of products at a reasonable wholesale price. Profit margins may be small, and changes in demand can eliminate any profit for the reseller.
Managing a Private Label Business
Private labeling means that you have a contract with a product supplier, who creates the product for you, using a brand name that you control. Consider these factors:
If your private label product sells well, you can focus your efforts on marketing. Resellers, on the other hand, often have to find new products to sell when existing products are no longer profitable.
The private label business controls product supply, which is not true of a reseller.
A competitor may sell a similar product under a different private label.
Running a Proprietary Product Business
The most attractive FBA businesses sell a proprietary product that is unique in the market. This strategy allows the seller to control the supply, and to dictate the sale price. If you provide great customer service, you can develop repeat business and avoid discounting your prices. Buyers can check your Amazon Best Sellers Rank to determine how your business is performing.
Discuss your business with a business broker, who can help you create a marketing plan for potential buyers.
Other Business Considerations
A buyer will need to understand how these issues apply to your firm:
Outsourcing
Do you hire freelancers or an outside firm to ship your products to the Amazon Fulfillment Center, or to handle inquiries from Amazon? Do you personally check on inventory levels, or does someone on your staff monitor inventory?
If your business can operate without your direct involvement, it is easier to sell.
Protecting your Market Share
Buyers want to know if you can reliably source your product, whether as a wholesaler, private label seller, or as a proprietary seller. If you can build customer loyalty, you’re better positioned to succeed against competitors.
Developing a Product Niche
Selling products in a particular niche has several advantages. Your business develops brand awareness in the niche, and the seller gains more specific information about customers.
Can you sell an Amazon FBA business? A business broker can make the sale process much easier.
How a Business Broker Can Help
Ecommerce changes quickly, due to changes in technology and customer preferences. You need to invest your time in the business, and finding hours to work on a sale can be difficult. A broker can take on many of the responsibilities of a business sale, and keep the process on track.
Marketing and Finding a Buyer
The broker understands the factors that make your business attractive to a buyer, and those factors are included in the marketing materials.
Brokers maintain a network of accountants, attorneys, and investors who purchase businesses. Your broker will work the network to find buyers and provide marketing materials to the best candidates.
Managing Due Diligence
When a buyer is identified, your broker will help you gather documentation for the due diligence process. The buyer will sign a non-disclosure agreement before any records are provided. Brokers know which documents must be provided, and will keep the document review process on track.
Sell Your Business with Confidence
You’ve invested thousands of hours of time and effort to build a successful business. The brokers at Raincatcher have worked on hundreds of business sales, and know how to sell your Amazon FBA business.
Work with Raincatcher as your trusted advisor, so you can sell your business with confidence.
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