How To Sell Amazon FBA Business — Complete Guide
Selling your Amazon FBA business can be a great way to realize your profits and move on to new ventures. But with so many steps involved, it can be daunting to know where to start.
In this post, we'll walk you through the entire process, from valuing your business to finding a buyer to closing the deal. We'll also provide tips on how to make your business as attractive as possible to buyers and get the best possible price.
Can I Sell My Amazon FBA Business?
Recently, selling Amazon businesses has become increasingly popular. Amazon FBA businesses are in high demand, which means you can often get a reasonable price for your business.
If you consider selling your Amazon FBA business, there are a few things you should keep in mind. First, it is essential to make sure that your business is in good shape. That means you should have a good track record of profitability, and your Amazon account should be in good standing.
Additionally, it is important to prepare your business for sale by getting your finances in order and cleaning up your Amazon account. Once your business is ready for sale, you can start the selling process.
Note. You can sell your Amazon business, but not your Amazon seller account. However, if your business is acquired by another business through a buyout, merger, or other type of transaction, all of your business's assets, including your Amazon account, will be legally transferred to the new owner. It requires you to contact Amazon and ensure the transfer is done correctly.
How to sell Amazon business
Business brokers can help you find a buyer for your business and negotiate the sale.
You can also try to sell your business privately by reaching out to potential buyers directly.
Benefits of selling Amazon FBA business
Realize your profits
If you have built a successful Amazon FBA business, selling it can be a great way to realize your profits and move on to new ventures.
Get out of the day-to-day business
Running an Amazon FBA business can be a lot of work. Selling your business can allow you to get out of the day-to-day operations and focus on other things.
Diversify your investments
Selling your Amazon FBA business can be an excellent way to diversify your investments. That can help reduce your risk and make your overall financial situation more secure.
Exit with cash
Selling your Amazon FBA business can serve as an exit strategy if you no longer want to operate the business. Selling your business can give you time and money for other opportunities, such as traveling, spending time with family and friends, or pursuing other interests.
Minimum Requirements to Sellable Amazon Business
If you are considering selling your Amazon FBA business, it is important to ensure it meets the minimum requirements. That will make it attractive to potential buyers. Below are the typical minimum requirements for a sellable Amazon business.
Your business must be profitable, with at least $100,000 in annual profit.
Your business should be performing well, either stable or growing.
Your business should be at least a year old, ideally three or more years old.
Your business should have a unique offering with limited competition.
Your business should have a good base of existing customers and decent reviews.
Your business must be consistently compliant with Amazon's policies and have good Amazon account health.
Your business's books and accounts must be in proper order.
Your business's processes should be thoroughly documented.
When Is the Good Time to Sell My Business?
The right time to sell your business depends on a number of factors, including your personal goals, the condition of the market, and the state of your business. Here are some specific signs that it may be the right time to sell your business.
You’ve reached your goals
If you have achieved the personal goals you set for your business, it may be time to move on to something new.
Your business performs well
If your business is profitable and growing, you may be able to get a reasonable price for it.
The market is strong
If the market for businesses in your industry is strong, you may be able to get a higher price for your business.
You have a buyer lined up
If you have a buyer interested in your business, this is a good sign that it is time to sell.
How Much Does My Business Sell for?
In general, Amazon FBA businesses sell for multiple of their annual profits. This valuation multiple can vary depending on the many factors, but it is typically between 2 and 5 times annual profits. In some cases, the multiple was as high as 7.
For example, if your Amazon FBA business has annual profits of $100,000, you could expect to sell it for between $200,000 and $500,000.
However, that is just a general estimate. The actual value of your business will depend on a number of factors, and you must do an accurate valuation. Also, you must remember to deduct taxes, legal fees, and broker or marketplace commissions if you use them.
What Are Amazon Business Valuation Drivers?
Amazon business valuation drivers are the factors that influence the value of an Amazon FBA business. When valuing an Amazon FBA business, it is important to consider all of these factors to get an accurate valuation. The key drivers of value include the following.
If you are a private label seller and a brand owner with unique products, your business will have a higher value. That is because a trademarked brand is considered an asset and makes your business more attractive to buyers. If your business is a reseller, like wholesale or online arbitrage, it will still be attractive for aggregators, but its value can be lower.
Your business is less reliant on a single sales channel or product if you sell a variety of products and use multiple sales channels. That is because if one sales channel or product underperforms, your other channels and products can help to offset the loss.
Typically, your business must be at least one year old to be attractive. That is because the buyer must be able to analyze the sales history of your products over time to estimate how they are doing. A longer business history shows that your business is successful and sustainable.
A growing business is more valuable because it has the potential to generate more revenue and profits in the future. A growing business is more attractive to potential buyers.
A less competitive industry is more valuable because competing for customers and market share is easier. Additionally, a less competitive industry or brands (like private label products) are more likely to be profitable.
Barriers to entry
Higher barriers to entry make your business more valuable because they make it more difficult for new businesses to enter your industry. High entry barriers give you a competitive advantage and make it easier to maintain your profits. That may include a solid brand name, trademarks, proprietary designs, and customer reviews.
Higher profit margins make your business more valuable because they generate more profit for each sale. This means your business can give more profit overall, even if it sells fewer products.
Positive customer reviews make your business more valuable because they show that your customers are happy with your products and services. That makes it more likely that potential customers will buy from you.
A business that is less reliant on the owner is more valuable because it is more easily transferable to a new owner. Additionally, a business that is less reliant on the owner is seen as being more stable and sustainable.
How Does Amazon Business Selling Work?
The process of selling an Amazon FBA business can be complex, but it can also be very rewarding. On average, the process takes around 2.5 to 3 months.
Steps to sell Amazon business
Step 1. Prepare your business for sale
That includes getting your finances in order, cleaning up your Amazon account, and creating a detailed business profile. You should also make sure that your business is compliant with all Amazon policies and regulations.
Step 2. Value your business
When valuing your business, it is essential to consider all relevant factors, such as your business's assets, profitability, growth potential, and performance. You may also want to consult with a business broker or financial advisor to get help valuing your business.
Step 3. Create a business prospectus
This involves creating a description of your business that details your business's finances, operations, market share, and other relevant information. That will help your buyers better estimate your offer and its value.
Step 4. Find a buyer
When finding a buyer, it is important to target buyers who are interested in the type of business you are selling. You can find buyers by listing your business for sale on online marketplaces, working with a business broker, or reaching out to potential buyers directly.
Step 5. Negotiate with a buyer
Once you have found a buyer, you will need to negotiate the terms of the sale, including the price, payment terms, and closing date.
When conducting a negotiation, it is important to be prepared. You should have a good understanding of your business's value and be ready to walk away from the deal if you are not happy with the terms.
Step 6. Transferring your business
When you agree with the buyer about the terms and price of the sale, you must transfer the business to the new owner. You can do that in two ways.
You can choose to transfer your Amazon Seller Central account to the buyer. To do that, you must inform Amazon about the change of ownership and provide all required documents.
You can transfer your product listings if you want to keep your account. In such a case, you must notify Amazon and provide information about the new owner.
Step 7. Due diligence
Once you have reached an agreement with a buyer, they will perform a 14-day due diligence. They will inspect your business's performance and sales to ensure everything is as you described.
Step 8. Close the deal
Once the due diligence period is complete and all necessary paperwork is signed, you will transfer ownership of your business to the buyer and receive your payment.
Tips to Increase the Selling Value of Amazon Business
All Amazon businesses have different prices; you can increase it by being well-prepared. Below, you can find 7 tips to increase the selling value of your Amazon FBA business.
Tip 1. Sell your business on a marketplace
Online business marketplaces are specifically designed to connect buyers and sellers of Amazon FBA businesses. Reputable marketplaces like Empire Flippers or Flippa have a vast international customer database and can help you sell your business quickly and for a good price.
- Empire Flippers is a premium marketplace for selling Amazon FBA businesses. They have a team of experts who can help you value your business, prepare it for sale, and market it to potential buyers;
- Flippa is a comprehensive marketplace for selling online businesses. They have a large pool of buyers and third-party brokers from all over the world.
Tip 2. Prepare your business for sale
That involves getting your finances in order, cleaning up your Amazon account, and getting your books in order. You'll also want to make sure that your business is compliant with all Amazon policies and regulations.
Tip 3. Increase your profitability
The more profitable your business is, the more valuable it will be to buyers. You can increase your profitability by growing sales, reducing costs, or both.
Tip 4. Grow your business
A growing business is more valuable than a stagnant business. You can grow your business by expanding into new product categories, entering new markets, or increasing your sales volume.
Tip 5. Invest in branding
A strong brand can make your business more valuable to buyers. You can invest in branding by creating a unique brand identity and marketing your brand to potential customers.
Tip 6. Document your processes
Buyers want to see that the business's processes are well-documented and easy to follow. You can document your processes by creating written procedures or flowcharts.
Tip 7. Build strong relationships with suppliers
Strong supplier relationships can be considered an asset if you can transfer them. That can save money and make it more attractive to buyers. You can build strong relationships with your suppliers by communicating regularly, paying your bills on time, and being respectful.
What does it mean if something is fulfilled by Amazon?
Fulfilled by Amazon (FBA) is a service where Amazon stores, picks, packs, ships, and provides customer service for sellers' products. That means sellers do not have to worry about managing inventory, shipping, or customer service.
How much does it cost to ship to Amazon FBA?
The cost of shipping to Amazon FBA varies depending on the weight and dimensions of your products, as well as the shipping method you choose. In general, shipping costs to Amazon FBA start from a few dollars per shipment.
How much does it cost to start Amazon FBA?
The cost to start Amazon FBA varies depending on the products you sell and the size of your business. In general, you can start Amazon FBA with as little as a few hundred dollars.
Do I need a Professional selling plan to use FBA?
No, you do not need a Professional selling plan to use FBA. However, the Professional selling plan is more cost-efficient for sellers who want to sell more than 40 monthly units.
How much does FBA cost per item?
The cost of FBA per item varies depending on the size and weight of the item, as well as the shipping method you choose. However, you can get a general estimate of FBA costs by using Seller Assistant App's FBA&FBM Calculator.
How can I become an Amazon FBA seller?
To become an Amazon FBA seller, you need to create an Amazon seller account and sign up for the FBA program. You can then list your products on Amazon and ship them to Amazon's fulfillment centers. Amazon will then store, pick, pack, ship, and provide customer service for your products.
In conclusion, the key to selling your Amazon FBA business for a good price is to make it as attractive as possible to buyers. That means having a profitable business with a good growth trajectory, a solid customer base, and a clean Amazon account.
If you can make your business attractive to buyers, you will be well on your way to selling it for a reasonable price.
One of the significant assets of your business that will help you maximize its value is selling profitable products. You can find such products with Seller Assistant App. That is a browser extension popular with Amazon FBA sellers. It lets you find high-profit products to sell by displaying all the data you need on the Amazon search and product pages. Its FBM&FBA profit calculator, Quick View, Stock Checker, Restrictions Checker, and other features help you quickly identify the winning products for your business.