How to buy Amazon FBA business
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Buying an Amazon FBA business can be a great way to break into the e-commerce world and start earning money right away. With an established business, you'll already have a customer base, inventory, and a proven sales model.
However, it's important to do your research and choose the right business for you.
In this post, we'll look into how and where you can buy a profitable Amazon FBA business. We will also discuss what to look at during business acquisition and how that affects the business value.
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Why Buying Amazon FBA Business?
If you consider entering the Amazon marketplace, buying an Amazon FBA business can be a great way to achieve your financial goals.
Building an Amazon FBA business from scratch takes effort, time, and commitment. You'll experience many challenges along the way. Though Amazon businesses can be profitable, it may take 3-6 months to achieve success.
If you want to start earning money right away and have the financial resources, you can buy an established Amazon FBA business from an existing seller. This skips the growing pains of a startup, saves you time, and gives you a solid foundation to build on while also reducing your risk.
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Benefits of buying an Amazon FBA business
The potential rewards of buying an Amazon FBA business can be significant. Below you can find the key benefits of acquiring Amazon business.
Immediate profitability
Established Amazon FBA businesses are typically already profitable, so you can start earning money right away.
Reduced risks of failure
Buying an established Amazon FBA business reduces the risks of starting a new business. When you launch a new business, many factors can lead to failure, such as lack of experience, poor product choice, and competition. However, the established business you buy will already have a proven track record of success.
Existing customer base
You'll inherit the business's existing customer base, which gives you a head start on building your own business.
Proven sales model
The business you buy will already have a proven sales model in place, so you don't have to experiment to find what works.
Access to Amazon's infrastructure
Amazon FBA businesses have access to Amazon's vast infrastructure, including its fulfillment centers and customer service team. This frees you up to focus on other aspects of the business, such as sales and growing business.
Scalability
Amazon FBA businesses are highly scalable, so you can easily grow your business by adding more products or expanding into new markets.
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What to Look at When Buying Amazon Business?
When buying an Amazon business, you must make sure it will bring you profit, and you will be able to smoothly and effortlessly operate it. To do so, you must consider the following business valuation factors.
Business structure
A business that sells unique products under a trademarked brand (private label products) is more valuable than a business that resells other products. That is because private label products have less competition and higher profit margins. However, a profitable and growing reseller business like wholesale or online arbitrage can also bring you good money if you buy it.
Multiple sales channels
You must look into buying businesses that offer a variety of products and utilize diverse sales channels. That is because they are less dependent on a single source. Such a diversification can offset losses if one product or channel underperforms.
Operational history
Businesses should have at least one year of operational history to be appealing. That enables buyers to assess product performance over time and showcase the business's success and sustainability. You can also estimate its future earnings potential.
Growth potential
When buying an Amazon business, make sure that it is growing and not stagnant or declining. A growing business has the potential to generate more revenue and profits in the future.
Competition
A business that operates in less competitive categories is more attractive than a business in a highly competitive category. It is easier to compete for customers and market share in a less competitive industry and allows for higher profits.
Profit margins
One of the key parameters to look at when you buy a business is high profit margins. With high-profit margins, you can get more profit from each sale. That means you can generate more overall profit, even if you don’t sell a variety of products. The attractive Amazon business must be able to bring over a 15% profit margin.
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Customer satisfaction
Customer satisfaction is essential because if the buyers are happy with the business's products and services, it is more likely they will buy from that business. The key indicator of customer satisfaction is positive reviews. Make sure the overall star rating is more than 4 stars.
Owner involvement
A business you buy should have low reliance on the owner. Such businesses are more easily transferable to a new owner and are seen as being more stable and sustainable.
Account health
That refers to the overall status of the Amazon seller account, including metrics such as Customer Service Performance, Policy Compliance, and Shipping Performance. A business with a healthy account is less likely to face suspensions or other penalties from Amazon.
Supplier base
When buying a business, you must look into the network of suppliers it uses to source its products. A business with a strong supplier base has access to high-quality products at competitive prices. That can help the business to maintain its margins and to keep its customers happy.
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How Much Do Amazon Businesses Cost?
The price of an Amazon business can vary depending on the size and profitability of the business, as well as other factors such as the industry and other assets. Generally, Amazon businesses are priced based on a multiple of their annual net profit.
Amazon business valuation formula
Cost of Amazon businesses based on size
The multiple for the business can be different. It is typically between 3 and 5 times for smaller businesses and can be up to 7 for larger, more established businesses.
Small Amazon businesses
Smaller businesses with $50,000 in annual profits may sell for a multiple of 3 to 4 times and might be priced between $150,000 and $200,000.
Medium-sized Amazon businesses
Businesses with moderate profits of $150,000 can have multiples ranging from 4 to 5 times. They may be priced between $600,000 and $750,000.
Large Amazon businesses
Larger and more established businesses with substantial profits can command even higher multiples. It is not uncommon for these businesses with $500,000 in profits to be priced at 6 times or more and will be sold for $3 million and up.
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How Does Buying Amazon Business Work?
When you decide to buy an Amazon business, you must find the one that aligns best with your strategy and financial targets. You will need to decide whether you purchase the whole Seller Central account or separate listings and follow a step-by-step buying process. The process usually lasts for 2.5 to 3 months.
Listing transfers vs. account transfers
When buying an Amazon FBA business, you can either take over the seller's entire Amazon Seller Central account or some of their listings.
Seller Central account transfer means that the seller will give you their entire Amazon seller account, including all of the listings.
Listing transfers happen when a seller only wants to sell some of their listings but not all of them. In this case, you would need to create a new Amazon Seller account and manually enter the product information for each listing you bought from the seller.
Note. If you buy an Amazon FBA business in the UK or the EU, you must be VAT-registered for each country where the inventory is stored.
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Buying Amazon business step by step
Step 1. Set your goals and budget
Identify what kind of Amazon business you want to buy. Consider profit goals and business size. Set a budget based on the amount you're going to invest.
Step 2. Find a business to buy
There are a number of ways to find Amazon businesses for sale. You can browse online marketplaces, search for brokers who specialize in selling Amazon businesses, or reach out to Amazon sellers directly.
Step 3. Valuate a business you want to buy
To determine the preliminary cost of business, you must consider all relevant factors, including its assets, profitability, growth potential, and performance. You may also want to consult a business broker or financial advisor for assistance.
Step 4. Negotiate with the seller
Conduct a detailed negotiation with a seller to have a good understanding of their business. Negotiate the terms of the sale, the price, payment conditions, and closing date. That can be a complex process, so it is important to have a qualified professional, such as a business broker or attorney, to represent you.
Step 5. Purchase agreement and business transfer
Once you have reached an agreement on a price, you will need to sign a purchase agreement with the seller. This agreement will outline the terms of the sale, including the price, payment terms, and closing date.
The seller will then transfer the business to you. They must also inform Amazon about the change of ownership, and you must submit all necessary documents.
Step 6. Conduct due diligence
As soon as you have access to the seller’s account, you must conduct due diligence for 14 days. You will assess the businesses' financial health, growth potential, and competitive landscape. You should also review the businesses' Amazon accounts and supplier relationships.
Step 7. Close the sale
On the closing date, you will need to pay the seller the agreed-upon purchase price.
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Where to Buy Amazon FBA Business?
There are a number of places where you can buy an Amazon FBA business. Below, you can find the key options to buy Amazon business.
Online marketplaces
There are a number of online marketplaces that specialize in selling Amazon FBA businesses. Some popular marketplaces include Empire Flippers and Flippa.
Business brokers
Business brokers can help you find and buy Amazon FBA businesses. They can also help you with the negotiation and closing process.
Direct from sellers
Some sellers choose to sell their Amazon FBA businesses directly to buyers. You can find sellers who are selling their businesses directly on websites like Reddit, LinkedIn, and Facebook.
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FAQ
How to buy an FBA business?
To buy an FBA business, find a reputable marketplace or broker and browse through the Amazon FBA businesses for sale. Negotiate the price and deal terms, do your due diligence on the business, and work with a qualified professional to help close the deal.
Can you buy Amazon FBA store?
Yes, you can buy an Amazon FBA store on online marketplaces, through business brokers, or directly from sellers. Make sure to do your due diligence before purchasing an Amazon FBA business.
Is it a good idea to buy an Amazon store?
Buying an Amazon store can be a great way to start or grow an e-commerce business, but it is important to do your research and choose the right business for you.
How do I value my FBA business?
To value your FBA business, consider all relevant factors, such as your business's assets, profitability, growth potential, and performance. You may also want to consult a business broker or financial advisor for assistance.
Final Thoughts
In conclusion, Buying an Amazon FBA business can be a great way to start or grow your e-commerce business. It can save you time and effort and give you a head start on the competition. However, it is important to do your research and choose the right business for you.
When doing your due diligence, make sure the Amazon business you buy doesn’t sell any problematic products. You can do that quickly with Seller Assistant App. This browser extension is a powerful tool for Amazon FBA sellers to find the most profitable products to sell. It provides all the essential data directly on the Amazon search and product pages, including the FBM and FBA Profit Calculator, a Quick View of product information, a Stock Checker, a Restrictions Checker, and many other helpful features.
