How to Sell Your Amazon FBA Business for Peak Profit

Selling your Amazon FBA business can be a daunting task. You’ve likely put in countless hours building your business, and the thought of walking away can be overwhelming. 

But, with careful planning and preparation, you can ensure that you sell your business for peak profit and set yourself up for success in your next venture. 

In this article, we’ll provide you with a step-by-step guide to selling your Amazon FBA business, including tips on how to maximize your valuation and position your business for a successful sale. 

Whether you’re planning to sell your business in the near future or just want to learn more about the process, this guide has everything you need to know about how to achieve a smooth exit from your Amazon FBA business.

Understanding the Motivation behind the Sale

Before you put your business on the market, it’s important to know your goals and motivations for the sale so you can make the right decisions throughout the process. You’re not likely selling your business on a whim, so what’s driving the sale?

For many entrepreneurs, the motivation to sell is to raise capital for other projects, like buying another business, purchasing a house, or preparing for retirement. Others may feel like they’ve hit a growth ceiling, and are unable to take the business any further on their own. And let’s face it, ambitious online business owners are always looking for the next challenge! 

Or maybe it’s just a matter of not having the time to dedicate to the business anymore due to other commitments, like running other businesses or having a young family.

Understanding why you’re selling the business will help to clarify what you want to get out of the sale. 

If you’re looking to raise capital, for example, you’ll probably want to negotiate for as much upfront cash as possible, rather than an earnout. And if you have a specific dollar amount in mind, it’s important to get your business valued early on to see if you’re on track to meet that goal. If not, you might need to hold off on selling for a few more months until you get there.

And don’t forget about timing! Small businesses often sell very quickly, while larger businesses may take a few months. If you have a tight timeline, it’s best to get your business on the market sooner rather than later. 

Knowing your objectives will help you achieve the outcomes you’re looking for and make the selling process as smooth and successful as possible.

Valuing your Amazon FBA Business

When you’re thinking of selling your FBA business, the biggest question on your mind is likely to be “how much is my business worth?” 

After all, you want to make sure you get a fair price for all the hard work you’ve put into it, right?

Business owners are often swayed by their emotional attachment and the amount of time, sweat, and sleepless nights they’ve invested into the business. While these factors may have contributed to its growth, they can’t really be factored into a business valuation. 

Instead, marketplaces and brokers rely on certain metrics, your net profit being the most important one, to calculate the value of your business. 

You’ll come across a variety of valuation formulas that are used throughout the industry, but here’s the one we use at Empire Flippers. 

The sales multiple takes into account various aspects of your business such as:

  • Growth trends
  • Earnings stability
  • Product diversity
  • Supply chain strength

These factors give you an idea of the growth potential as well as how stable and defensible your business is. 

Once you’ve determined the multiple, simply multiply it by your net profit over a rolling 12-month period to arrive at your business’s value. 

Calculating an accurate business value is crucial. You don’t want to end up undervaluing it and losing out on potential earnings. 

How to Increase Your Amazon Business Valuation

If your business valuation isn’t as high as you’d like it to be, that’s ok. There are some proactive steps you can take to increase your business’s worth. 

These steps will form part of your exit strategy. An exit strategy is essentially a step-by-step plan outlining the milestones and objectives you need to meet in order to exit your business profitably. 

The process of creating an exit strategy involves optimizing each area of your business, making your business more efficient and profitable as a result. 

Here are some things you can use as a starting point for your own exit strategy.

Trademark Your Products

Imagine this: you’ve spent countless hours building your Amazon FBA business from the ground up, and now it’s finally gaining traction. But suddenly, you start noticing copycats trying to ride on your success and steal your market share. Pretty frustrating, right? That’s where trademarking comes in.

By trademarking your brand and products, you protect your business from copycats and competitors who are trying to steal your thunder. Plus, it makes it easier to report instances of copycat products and helps establish your brand recognition.

Once your business is trademarked, you can apply for Amazon Brand Registry, deepening the protective moat around your business. This makes your business more defensible and can help you increase your valuation multiple.

Diversification

One of the best ways to build your Amazon FBA business defenses is by adding multiple layers of protection. 

You can do this by diversifying your store’s revenue supply and traffic sources. This way, if there are any unexpected changes, your business won’t be impacted as severely. Plus, potential buyers will see your business as a more attractive asset.

Most FBA sellers drive customers to their listings through PPC advertising. However, growing another traffic channel through organic search decreases your reliance on Amazon and adds another layer of protection to your business.

Creating a content site is an excellent way to extend your organic reach. By doing so, your business won’t have to rely on paid advertising on Amazon, which can be a significant expense. 

Adding new products to your current range is a great way to increase monthly revenue. Consider selling complimentary products in bundles. This not only generates more revenue but also cross-sells individual items.

Affiliate marketing is another fantastic way to generate more revenue. By signing up as a vendor on affiliate programs, content creators are incentivized to link to your products and earn a commission from each sale.

Lastly, branching out into multichannel selling by setting up shop on other e-commerce platforms like eBay or Shopify can increase your brand exposure and boost sales.

Reducing Owner Involvement in the Business

When selling your business, it’s important to remember that buyers aren’t looking to buy a full-time job – they want a business that is already set up and ready to go. 

This is where outsourcing comes in. The more hands-off your operations are, the more attractive your business becomes to potential buyers.

The amount of time you spend managing your business won’t directly affect your business’s valuation, however, it can make a difference in whether a buyer will make an offer or not. 

Ideally, you should be spending less than 10 hours per week managing your business. If you’re spending more than that, it’s probably time to outsource some of the time-consuming tasks to a freelancer or virtual assistant.

Outsourcing allows you to focus on the areas of the business where your strengths lie, while skilled specialists handle everything else. Hiring a freelance SEO copywriter for content creation or a VA to take on general tasks can free up more of your valuable time. 

At the end of the day, the more hands-off your operations are, the wider your buyer pool becomes!

Optimizing Your Supply Chain

Streamlining your supply chain is key to keeping your FBA business running like a well-oiled machine. It means getting your inventory from your manufacturer to FBA fulfillment centers quickly and efficiently.

If logistics planning isn’t your forte, it might make sense to outsource to a 3PL service provider who can handle it for you. This frees up your time so you can focus on what you do best – growing your business!

Another pro tip is to consider hiring a warehouse to store your inventory before sending it off to FBA. This can help you maintain optimum Amazon inventory levels, avoid those pesky long-term storage fees, and give you more control over your inventory.

And let’s not forget the most important benefit of a streamlined supply chain – keeping your stock levels in check. Nothing kills sales faster than running out of stock, especially during peak periods. So, make sure you’ve got your supply chain optimized to keep those orders coming in and customers happy.

Finding a Buyer

Once you’ve created an exit strategy, calculated an accurate valuation, and made your business as attractive as possible, it’s time to track down the final piece of the puzzle – the buyer. 

There are a variety of people who may be interested in purchasing an Amazon FBA business, such as first-time buyers, portfolio buyers, and brand aggregators. 

First-time buyers will typically not buy businesses valued over 6 figures and are looking for simple, streamlined businesses that they can grow into. Aggregators value brand and niche authority and have the capital to purchase larger businesses, often within the 7-8 figure valuation. Portfolio buyers fall somewhere in between. 

It’s important to recognize what type of buyer you will likely interact with, as this will help you determine where to find your buyer as well as their level of competence with online business acquisitions.

When searching for buyers, you have two options: selling privately or through a brokerage. 

Selling privately may seem like a good idea to avoid brokerage commissions, but there are some downsides to consider. For example, you’ll be responsible for managing every aspect of the deal, which includes finding a suitable buyer, negotiating the deal, and defining contract terms. 

On the other hand, working with a brokerage may help you get a higher price than the original valuation, as you’ll be working with a team of experienced sales advisors throughout the sales process. 

In many cases, the higher sales prices that brokerages attract more than makeup for the commission fees they charge. 

If you decide to go down the private sale route, make sure you conceal your FBA brand name and the products being sold on your storefront. These details should only be revealed to serious buyers who can prove their intent by showing proof of funds or placing a deposit. 

As well as having a system in place to find qualified buyers, consider using an escrow service to handle payments to protect both buyers and sellers during the last stage of the sale when the business changes hands.

Alternatively, you can use an online business broker, which is a recommended option. 

A reputable broker, like Empire Flippers, has a large audience of high-quality buyers who can prove they will pay top dollar for a good business. 

Not only will a good broker list your business for sale, but they’ll also help you market your business to the right types of buyers to increase the chances of you finding the right deal. When choosing the right broker, it’s best to work with one that’s experienced in selling different types of FBA businesses.

Transferring an Amazon FBA Business

Congratulations, you’ve successfully found a buyer, negotiated a deal, and signed a sales agreement! But hold up, you’re not done yet. You still need to transfer the business to the new owner and receive your hard-earned funds.

This phase of the deal is crucial. After weeks or even months of optimizing your business, finding a buyer, and going through the legal process, the last thing you want to happen is for your Amazon FBA business to get suspended just as you’re about to receive your funds. 

An account suspension could potentially result in a damaged or inactive business, and the whole deal could be canceled. That’s why it’s essential to get the migration phase right.

So, what should you consider when transferring an Amazon FBA business? 

First things first, there’s a big difference between transferring a North American account and transferring a UK/EU account. It’s crucial to understand Amazon’s terms of service, know the necessary information, and how to transfer it correctly. If your business stores inventory in the UK/EU, it is recommended to register for VAT as soon as possible to avoid delaying the migration process.

It’s also vital to select a broker or buyer with transfer experience. Brokers, in particular, have the advantage of having a specific team of migration advisors and specialists who guide buyers and sellers through the process. If you’re working with a broker, make sure their service includes migration assistance. 

If you’re selling privately, it’s critical that your buyer has experience transferring Amazon FBA businesses; otherwise, you risk triggering a violation and having your SKUs paused or your account suspended.

Now, let’s talk about the elephant in the room – getting paid. 

If you’re working with a brokerage that offers an escrow-type service, they will hold onto the funds until the terms of the deal have been met, and funds are released once the business has completed the migration process. 

If you’re on an earnout deal structure, the earnout period typically starts from this point unless otherwise stated in the sales agreement. 

If you’re selling privately, you will need to work with a third-party escrow company and define the terms of the release of funds during the negotiation process.

Finally, migrating an FBA business is not as simple as handing over a set of keys to a property. There are several different components, and providing incorrect information can lead to setbacks of weeks or even months.

You’ll need to contact Amazon to inform them of the change of ownership while submitting the right documents. If you’re only transferring product listings, that’s a different process that still requires all parties to inform Amazon of the deal and their identities. 

Every FBA business is unique, and the length of time a successful migration takes depends on the number of assets being transferred. Small businesses with fewer Amazon products will likely take less time to complete a migration.

So, there you have it – a smooth migration is essential for a successful sale. By taking these factors into consideration, you can avoid the heartbreak of a suspended account and ensure a smooth exit from your FBA business.

A Profitable Amazon Exit Requires Planning

Selling your Amazon FBA business can be a complex process, but with the right strategy and preparation, you can maximize your profits and ensure a smooth transition for both you and the buyer. 

By following the steps outlined in this article, from evaluating your business’s value to preparing it for sale and finding the right buyer, you can position yourself for a successful exit.

Remember, selling your FBA business is a major decision and requires careful consideration. Be sure to do your due diligence, seek out expert advice, and take the time to properly prepare your business for sale. 

With the right mindset and approach, selling your FBA business can be a rewarding and lucrative experience.

If you’re ready to take the first step toward a profitable exit, register an account on the Empire Flippers website to take full advantage of our trusted marketplace and large pool of qualified buyers.

Article written by Lauren Buchanan


About Lauren: Lauren joined the Empire Flippers team as a content specialist in August 2021. She started off her career as a Graphic Designer & Copywriter, then worked as a Financial Adviser before returning to her marketing roots with Empire Flippers. Empire Flippers is an Inc. 5000 company and the #1 curated marketplace for buying and selling established, profitable online businesses.