Can You Sell an Amazon Business?
Many Amazon business owners are so focused on improving their product and growing their bottom line that they have never even thought about selling their business of Amazon seller central account. A question we have seen repeatedly over the past couple years is “Is my business even sellable? I never even thought about that.”
The short answer is “yes” but there are a few boxes it needs to check first. In order for your business to really be a worthwhile for a purchaser, it needs all 3 of the following:
- Make at least $50k in profit per year. (these are a fit for other brokers. Our clients at Upward Exits make over $200K/yr. We’re a small shop, so we need to get our money’s worth on each deal.)
- Be at least a year old
- Must not be dependent on a skill or asset that only you possess. (this rules out people selling their own artwork or pottery.)
You can still sell your business if it doesn’t check all of these boxes, but it is really too small for a website broker like us to help you. You may look into selling it on a forum or message board in addition to listing it on a platform like flippa.
How Much is My Amazon Business Worth?
As of the writing of this post (January 2019) we are seeing most Amazon FBA businesses sell for between 2.4 X and 3.3 X their annual profit.
Businesses making over $250K in annual profit will be at the higher end of that valuation, while smaller businesses <$100K annual profit will typically sell quicker, it will be for the lower end of the valuation spectrum.
Factors Affecting Amazon Business Valuation
The primary factor affecting the valuation of your Amazon business is simple, “how much money is it making you”
There are a variety of other factors that we see playing a role in what the sales price of the business is as well as how quickly it will sell. Some of them are:
The industry your product is in.
Some industries are more popular/ competitive than others.
How old your business is.
- A sustainable track record of profitability is as good as gold.
Where your business is based.
- Sellers based in the USA that have tax returns on their business are at a major advantage. When a business has clean books and tax returns, we can help buyers secure financing to purchase the business. Not only does this provide cash closings for the buyers, it also gets the business a higher valuation.
How many hrs./ Week are you working in your business.
What countries are you selling to.
- The more diversified your sales are geographically, the more valuable your Amazon business.
How are you sourcing product.
- Are these non-proprietary products that you are marking-up 200% and reselling? Your days are limited and your competitors are close. We likely won’t be listing your business for sale.
- Do you have proprietary products or unique relationships with your manufacturer? That’s a business that will see some attention.
Number of products.
- Your business will sell best if you have more than 5 profitable products, but less than 20.
- Getting into the buy box and proving that you can stay there will increase valuation.
90% of sellers we see have great vendor reviews, the product reviews are where the money is made. We expect this to be of increasing importance moving forward.
Do I Sell The Corporation, Product Listings or Seller Central Account?
Typically, small business transactions are asset sales. The buyers will make an offer for all of the assets they want to acquire and have the seller keep all of the liabilities. For Amazon sellers and omnichannel retailers, this means you’ll be selling your website, seller central account and inventory, along with the supplier relationships, standard operating procedures and training.