Guide to Sell your Amazon FBA business
Amazon marketplace has become the largest E-commerce selling platform globally. There are 9.5 million sellers on Amazon, and 73 percent use FBA.
In the presence of millions of sellers trying to capture market share on Amazon, it’s not easy for sellers to compete for sales. So, what about selling your Amazon FBA business in 2022?
You must be thinking of whether it is the right time to sell your Amazon FBA business and how you can sell it in 2022?
You will get the answer to these questions in this article.
Amazon Aggregators emergence
Amazon Aggregators came out in the market with full force to acquire different Amazon FBA businesses and scale them. According to the statistics for 2021, these aggregators have received around 12 billion US dollars in funding.
These Aggregators acquire hundreds of FBA businesses and afterward improve their performance to generate revenues for their investors. In 2022, these aggregators plan to purchase more FBA businesses to enhance their portfolios.
Is It the Right Time to Sell your Amazon FBA business?
With the emergence of COVID-19, there was an increase in the demand for goods sold online through e-commerce platforms. Amazon’s revenue in 2019 was 280 billion US dollars, and in 2021 the revenue was recorded at 469 billion US dollars.
The upsurge in revenues justifies the demand increase globally. However, every Amazon business can’t fulfill the order demands of customers. In 2021 and still, online businesses face disruptions in the supply chain, and suppliers impose high costs on sellers. The high price of the supply chain is impacting their revenues.
Amazon costs are rising in 2022, which can impact businesses’ revenues. You should know these points to acknowledge why it’s the right time to sell your Amazon FBA business.
- Nearly 60 percent of the sellers report receiving 4-4.5x of Seller discretionary earnings for their FBA business.
- The FBA storage fees will not increase in the peak months of October to December. However, in off-peak months (January to September), there will be an 11 percent increase in cost per cubic foot standard size, and for oversized items, a 10 percent rise in cost.
- Supply chain issues are expected to continue in 2022. Sellers can face difficulty in meeting the rising demands for goods and services. The supply chain cost is already very high, and in 2022 these costs can further escalate.
- The counterfeit market of Amazon is around 500 billion US dollars.
- Nearly there were around 200 million fake reviews on Amazon in 2020. These things are against the policy of Amazon that can disrupt the authenticity of the business.
These statistics portray that 2022 is the right time to sell your Amazon FBA business.
The Key Behind Successful Selling of Amazon FBA Business
One has to look at the market updates for choosing the right time to sell your FBA business. The Amazon market is competitive, and for finding the best deal for your business, finding the right time to do so is important.
However, time isn’t the only element required for getting a good deal. The expert’s provided some of the crucial points for sellers planning to sell their business in 2022. According to his suggestions, the below points are important to consider.
Business should be:
- Growing, but not at maximum growth. The business owners should leave “meat on the bone” for potential buyers.
- Stable: There should be no risky strategies, strong and promising growth history, easily transferable to new owners and all necessary documentation are important.
- At maximum automation: Including inventory management tools, chatbots, automation of PPC, email flows, and many other tools.
- Profitable: Your business should assure long-term profitability
- Diversified in different aspects: Sales channels should be more than one. It is attractive if the business operates in more than one international market. Not relying on SKUs. Your traffic should come from different platforms and not rely on a single traffic source.
Besides these above-listed points, FBA sellers should also consult good brokers having significant experience in merger and acquisition and e-commerce business operations. They will audit every part of your business and assess business value.
After receiving the exact value of your business from the broker, you can find the right buyer to sell your business. Please don’t sell your business to any unauthentic buyer, as it will end up giving your business at the lowest of its original value. Search for the right buyer for your business.
How Can You Increase the Worth of Your FBA Business?
Now you know the worth of your Amazon FBA business, the next step is how you can increase the value of your Amazon FBA business.
There are many to do that, and you will find some of the ways below:
Business Type
We are looking at this point from the buyer’s perspective. Buyers value the following points from most to least.
- Brand and product uniqueness: It will have a higher value if the product is unique. If your product is unique in the market with no substitutes, it will receive the highest possible value.
- Private label: The product should be labeled with your brand, providing an attractive look to the product.
- Reseller: These businesses are the riskiest to sell in the market.
Age
Amazon business buyers prefer to acquire old businesses. It is because every business has to go through different phases of growth.
- A less than one-year-old business is not great to buy.
- Two years old business is good.
- Three years old business is great.
EBITDA (Yearly Net profit)
Your Amazon FBA business will only be attractive if it receives healthy profits. You should record your monthly profits, highlighting the importance of using accrual accounting to track your monthly gains.
If your business is highly profitable, it becomes more attractive to the buyer.
Defensibility
Does this point reflect how secure your market share is? Is it easy for a competitor to enter the market and steal market share? If your product is easy to source, you can lose your market share.
If you have patents for your product, your business value will enhance. By using the below-listed ways, you can upsurge your defensibility.
- Proprietary rights
- Strong customer loyalty
- Offering High-quality products
Competition
The marketplace of Amazon is extremely competitive. If you are offering products that are easily available on the Amazon platform, you can lose market share within no time.
If competitors can easily replace your product in the market, it makes your business unattractive to buyers. However, if you diversify the range of your products and only two or three products are under competition, it will minimize the risk ratio for buyers.
Conclusion
There are several reasons why it’s the best time to sell your Amazon FBA business in 2022. With the rise of Amazon aggregators, top FBA sellers on Amazon are selling their business to these companies.
After the pandemic, every Amazon seller has faced disruptions in supply chain management and cannot meet the increased level of customer demand. Moreover, the FBA storage fees will also increase in 2022. So, by following the above guide you will know how to sell your Amazon FBA business with profit.
These factors can decrease your business profitability in 2022. In the presence of Amazon Aggregators ready to acquire your potential Amazon FBA business, it’s a great time to sell.
