How Long Does it Take to Sell an FBA Business?
You’re ready to sell your Amazon business and have listed it for sale. Excited, you can’t wait to do everything you’ve planned post-exit.
However, the interlude turns from days to weeks, and you start doubting yourself. Eventually, panic kicks in, and you end up signing a deal with the next buyer, leaving money on the table.
Not the fairy-tale ending you had hoped for, eh?
Unfortunately, this is the reality for many Amazon sellers who make wrong decisions as they try to force the sale of their business, unaware of how much time the whole process can take.
So, how long does it take to sell an FBA business?
Selling and negotiating an Amazon store can take around 60 to 120 days. However, that’s not a given, as multiple factors can influence this timeline.
You can avoid the above scenario and considerably shorten your business sale time if you implement the suggestions given in this blog.
Here’s what to look out for:
- How long does it take to sell an FBA business
- Strategies to sell an Amazon FBA business faster
- How to evaluate your Amazon business worth
How Long Will it Take to Sell an FBA Business?
The total time it takes to sell an FBA store depends on the contractual terms and business size. Larger and more complex businesses usually take longer. On average, it takes approximately 70-90 days to sell an Amazon FBA business when working with a broker.
Also, organized FBA stores with clean documentation and a promising growth trajectory tend to sell quicker.
Just remember not to rush a deal because the negotiation and sale of an Amazon FBA business involve many moving parts, from considering a sale to creating an effective migration plan. Taking your time to consider the right offers will also help you fetch the highest selling price possible.
What to Do To Sell an Amazon FBA Business Real Quick?
Now that you’ve learned about the expected timeframe of selling an Amazon FBA business let’s discuss different ways to level up your store to increase its value and sell it as fast as possible.
Work on Increasing Profitability
If you’re looking to sell your business fast, you should work on increasing its sales and profitability. In the end, buyers care about the bottom line and don’t want to miss out on stores with good numbers.
Your Amazon business should at least register over $50,000 in annual profits if you want to get the attention of investors and stand out from the competition.
Although increasing profitability is easier said than done, two methods that could prove helpful include:
- Negotiate better rates with your suppliers in exchange for larger order quantities or extended contract periods (whichever they find more attractive),
- Look for new freight forwarders that offer better shipping rates.
Stock Products That Have Room for Growth
Avoid selling Amazon FBA products in saturated niches or ones headed in that direction. Such products can undervalue your business. Why would anyone invest in something that has already hit its peak or has no room for growth?
On the other hand, Amazon FBA businesses on an upward trend promise higher ROI, assuring potential buyers that their investment can grow further in years to come.
Pro tip: Stuck with a product in a saturated niche? While there’s no easy way out of this situation, if the budget and time allow, consider adding a complimentary, non-saturated product to your lineup to boost sales.
An ideal Amazon FBA business for buyers features evergreen products, i.e., products with consistent demand.
FBA stores with evergreen, non-seasonal products generate relatively stable revenues all year round. On the other hand, seasonal products perform exceptionally well for a few months but then become dormant for the rest of the year.
These inconsistencies make managing inventory complicated and sales trends hard to predict. Therefore, you should try to keep evergreen products in your portfolio.
Note: Even evergreen products can sometimes experience fluctuations in demand. The point is to not rely on products that are difficult to manage and carry risks, e.g., inventory problems during peak seasons can make an Amazon FBA business miss its only chance to make money.
Optimize for Automation
A big reason why people purchase online businesses is to eliminate the hassle of performing operational tasks. They invest in an established Amazon FBA business with automated systems in place.
The more automated an online business is, the faster it sells on the market.
Work towards streamlining and automating core processes for your Amazon FBA business to make it more attractive to buyers.
The best business is where the seller only has to monitor day-to-day operations, make changes if and when necessary, and focus on growing it further. You can create appropriate SOPs, use third-party seller software, or hire Amazon virtual assistants.
Sellers should strive to document and organize all aspects of their Amazon business.
An FBA store with clean and accurate documentation allows for easier management and ownership transfer.
Do your due diligence. Put yourself in your potential buyer’s shoes and document all aspects of your business, from the workflow to the financial and the standard operating procedures.
Maintain documents regarding your account details, agreements with the supplier, transferring and storage of inventory, accounting records, tax information, and details regarding your social media pages (if any).
Also, compile your balance sheets, sales records, and revenue trends, and keep them ready at all times.
Partner Up With a Brokerage
The easiest way to shorten the turnaround time for selling your Amazon FBA business without doing the legwork is by partnering up with a reliable broker.
Business brokers are middlemen that connect legitimate sellers with buyers.
Often, brokerages offer free consultation services to discuss sellers’ needs and expectations. They inspect a store to find room for improvement, advertise and market the business to prospective leads, and handle the negotiation and transfer process.
With an extensive network of interested buyers and years of experience, brokers fast-track the selling process and bring forward the best deals in exchange for a commission.
How to Evaluate FBA Business Worth
Sellers looking to sell their FBA stores should learn how buyers assign value to Amazon businesses. There are several factors used to appraise the value of an Amazon FBA Business, including, but not limited to:
- Earnings: Used to verify the sales and net profits generated by the listings and deduce whether the business will meet ROI targets.
- Age: Potential buyers prefer older businesses as they’ve already passed the initial hurdles of product launch and ranking. Also, older Amazon accounts are less susceptible to suspensions.
- Product Catalog: Inventories consisting of a broader range of related products are favored over those spread across unrelated categories. Also, revenues earned from multiple SKUs represent a lower risk than stores with just one or two ASINs as their big earners.
- Stability and Development Trends: Businesses with consistent growth and decent profits are preferred over businesses with sudden sales spikes (i.e., seasonal products).
- Intellectual Property: Trademarks, patents, and Amazon Brand Registry show that the brand is strong on both the R&D and legal sides. It also protects from hijackers and sets up higher barriers to entry for future competitors.
- Workforce: A business run by numerous employees or outsources its operations is seen as more valuable than a company that relies solely on its owner to function.
- Branding: Creating brand awareness, establishing social proof, and increasing customer satisfaction creates a robust FBA store that attracts investors.
All of these factors contribute to the valuation multiple of your business. The more benchmarks your business meets, the higher the assigned multiple.
Common ways of determining the value of Amazon businesses are using the ‘SDE (Seller’s Discretionary Earnings)’ or ‘EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)’ methods.
Get the Valuation of Your FBA Business
We looked into the factors that affect your Amazon FBA business’s worth and how to calculate it. However, arriving at a definite number for your business can be tricky as it requires considering numerous factors, from sorting out your sales and SDE (Seller’s Discretionary Earnings) to selecting the best calculation method.
Does calculating the value of your business feel too complicated? Don’t worry; here’s a custom FBA valuation calculator that helps sellers estimate the worth of their Amazon business in a matter of minutes!
All in all, selling an Amazon FBA business can be a hectic process and may take quite a few months. However, an experienced Amazon brokerage firm can help you get the deal done faster while ensuring everything is well taken care of.
We hope you benefited from today’s discussion and found the insights helpful. We wish you all the best for your exit–good luck!