How to Sell Your Amazon Business

By Greg Elfrink

You’ve done all the hard work. You’ve found a product, you’ve sourced it, you’ve optimized your listing, you’ve ranked your keywords, and you might’ve even received an “Amazon’s Choice” badge. You’ve got money coming in and going out every month. Well done!

But… after all this hard work, you might also ask yourself… what’s next?

For many people, “what’s next” is to sell. You might not have even realized that selling was an option, and that’s one reason we’ve put together this little article for you. We’ve sold sites ranging from $20K single-product Amazon businesses to behemoths like this $1.7 million Amazon FBA business. So let’s take a moment to look at some info that will help you to sell your Amazon business when the time arrives.

Why would you sell?

This is definitely one of the most common questions. It’s not unusual to wonder to yourself, “Why would someone sell a profitable business?” The answer to this question ranges from “I’m just tired of working on this” to “I want to buy a house” to “I want to adopt a kid” to “I want to travel the world”, and every possibility in between. Receiving somewhere between 20 and 40x your monthly profit all at once will propel you into the future. Think of it as being able to fast-forward two years ahead with all the profit you’ve made along the way.

The Amazon space is going to continue becoming more and more competitive. Knowing this, you don’t have to just exit the game. By standing on the shoulders of your accomplishments, selling can help you level up. You can use the capital to enter a market that requires more stock, a wider range of products, or to invest in product development. This would give you an edge over anyone who is just getting started with Amazon FBA.

“I thought that was against the rules”

This is a common misconception. While it’s true that it’s against the rules to just sell an Amazon account, Amazon will actually assist in the transition required when an account owner is selling a business asset, which is what you would be doing.

Amazon FBA businesses continue to be some of the most popular listings on our Marketplace, so we do these migrations all the time. There are two different ways that we successfully transfer FBA businesses:

1. Including the entire Amazon Seller Central account
2. Selling individual product listings

How do I transfer over an Amazon Seller Central account?

Selling the entire business, including Amazon Seller Central account, is by far the easiest way to carry out migration. The process is as simple as just changing the login information over to the new buyer. The buyer will also need to update all payment and tax information. Our team at Empire Flippers can help you navigate this process, especially if this is the first Amazon FBA business you’ve purchased. Before we do this, we get written approval from Amazon, recognizing that a sale of the business has been made. This approval is typically quite easy in the U.S. Amazon marketplace, but it can take longer in other marketplaces.

The current process for transferring product listings is also relatively straightforward. The buyer creates their own Amazon Seller Central account and then prints out the SKUs exactly the same as the SKUs previously printed out by the seller. This allows Amazon to consider the buyer as the seller on that listing page.

There is one potential hurdle: When products are part of Amazon’s Brand Registry. The recently established rule is that brand-registered products must have trademark documentation associated with the products in order to be in good standing with Amazon. So, the trademark must be transferred before the buyer will be recognized as the new seller. This process is not complicated, it just takes a little longer.

Well, what’s my FBA business worth?

Ok, so you’re settled on the fact that it’s possible, and now you’re dreaming of what you’d do with the money. But how much money are we talking? Typically, Amazon FBA businesses sell for a multiple between 20 and 40x their monthly profit. That’s quite a range. Let’s say, for example, your business brings in a $10,000 profit. Depending on your valuation, that would mean your business would sell for $200,000 on the low end or $400,000 on the high end. While there is definitely a trend of multiples rising, the exact value of a business is almost always specific to a few factors. This tool will help you get an idea of what your Amazon FBA business is worth.

The number one factor in valuing a business is stability. If a business is declining, it’s not only less appealing, it’s also a higher risk for the buyer. A stable or growing business gives the buyer the most faith that they will earn back their investment and be able to continue forward. It’s not rocket science—if all variables remain constant, it will take as many months as the multiple for the buyer to make their money back. For example, if the multiple for your business is 24, then the buyer will need two years of consistent profit before they break even. That’s why consistent income is so important.

How do I get the best price?

With consistent earnings considered, there are a few other aspects that really influence how quickly your business sells and for what price. These include:

• Business Age: The longer your business has been around, the better multiple you will get. It lets you provide more data and shows that it is well-established.
• Variety of Markets: Having your products sell in international markets such as those in Europe, Canada, and Australia gives your business diverse income streams.
• Amount of SKUs: There is no “magic number” of products, but the fewer you have, the more vulnerable your business is to competition. Expanding your offerings will give you more of a “moat”, especially if some of them are successful.
• Third-Party Warehouses/Quality Control: Though some sellers own garages to keep their products and save on storage fees, finding someone with that exact situation would limit your buyer pool. There are many services offered that take care of everything from basic storage to quality control. Getting this set up so that the buyer doesn’t need to will be attractive to them.
• Outsourced Services: Streamline your processes and establish systems that will allow you to create SOPs. Creating a business that can run without your constant upkeep is the ideal direction, and having operations in place to make that happen will benefit everyone. This might include outsourcing some tasks to a VA or a dedicated service.

What about inventory?

It is VERY important to keep your business running at their current level through the sales process and to be able to hand over the business to the new owner as fully operational. This means keeping all SKUs in stock and ordering more inventory as necessary. It also means that, at the time of sale, inventory will need to be transferred over. Since most FBA businesses store their inventory with Amazon or a third-party warehouse, the transfer is straightforward, and the inventory is usually sold at cost to the new owner. At Empire Flippers, we feel that inventory should not be subject to any commission fees, so it is not included in the sales price. This is for the benefit of the seller.

Who’s gonna buy it?

Amazon FBA business are very attractive assets! There are many qualities that buyers are looking for because Amazon FBA businesses tend to be:

• Easier to manage than traditional e-commerce
• Able to rely purely on Amazon organic traffic, or mix in Amazon’s paid traffic
• Tangible physical products
• Filled with avenues for growth beyond Amazon, such as creating a branded website or wholesaling to brick and mortar stores like Walmart or Home Depot

People buy Amazon FBA businesses to build on their proven success. Some buyers will only ever purchase the business and make it their bread and butter. Others are building portfolios, or expanding brands, using the online business you’ve built to speed up their expansion. There’s a vast array of buyers out there looking for a business just like yours.

Where do I start?

Giving yourself about 6-12 months to prepare for selling is smart. This will allow you to get your business in the best shape possible, and to get the best price. The fact is, businesses don’t sell on potential, they sell based on the numbers.

The first thing you’ll want to do is make sure you’re keeping your finances clear and separate from any personal accounts. Buyers are going to want to “look under the hood”. Good bookkeeping practices will go a long way.

You’ll also want to lock in contracts with your suppliers. This is especially important if you’ve formed a special relationship that gives you better pricing or faster turnaround. Getting these agreements in writing will assure the buyer that they will be able to continue running the business with the margins you established.

What next?

Maybe you’ve read through all this and realized you have a little bit of work to do to get the best value for your business. Or maybe you’ve found that you’re ready to take the next step. For most people, this is the point where the path gets “blurry”. How do you find someone that would want to buy your business? How do you sell without giving every Tom, Dick, and Harry access to your very valuable niche and stats?

Don’t worry. You’ve already done the most important thing by building a successful business. You don’t need to do this next part alone if you don’t want to.

That’s where using a brokerage comes in handy. As brokers, we help you sell your business for the best possible price. Reputable brokers will help with negotiations and will have an entire team in place to help you successfully migrate your business over to its new owner.

If reading this made you realize you’re ready to sell, we can definitely help make that dream come true. When you decide to sell your Amazon FBA business with us, we will help you clean up your P&L, make your business presentable, and market it to over 80,000 professional buyers in our database.

Of course, that is a decision only you can make.

Gregory Elfrink is the director of marketing for Empire Flippers, an INC 5,000 company that helps people buy and sell online businesses. Empire Flippers is the #1 curated marketplace for online businesses and recently won the Top Deal Maker Award and Top Global Producer Award by the International Business Brokerage Association.