Where Can I Sell My FBA Business: The Complete Guide
Are you thinking of selling your Amazon FBA store? You’re on the right track!
Amazon has enabled countless FBA sellers to achieve their goals; financial freedom, remote-work flexibility, escaping the shackles of a 9-to-5 job, and the personal satisfaction of creating a successful business from the ground up.
It’s not easy, but you made it happen.
Now, if you’re wondering, “where can I sell my FBA business?” or “Can I sell an Amazon business?” then, whether you realize it or not, you’ve taken the first step towards creating wealth.
Successful Amazon business owners can be rich, but not all are wealthy. A rich person has plenty of disposable income. In contrast, a wealthy person owns assets that generate income and creates sustainability—sell an FBA business today for 12-40 times the monthly profit, reinvest the money to set up smaller FBA businesses (since you’re looking to sell an FBA business, you already have the blueprint for success), and repeat the process.
The purpose of this blog is simple: to teach Amazon sellers like yourself where you can sell FBA business in a safe, legal, quick way and fetches you the highest possible quote for your Amazon FBA business.
No more delays; let’s jump straight into it!
Selling an Amazon FBA Business – A Few Considerations
Before we get into the meat and potatoes of selling FBA businesses, here are a few factors you should consider:
- What is your Amazon FBA business worth?
- What type of people buys an FBA business?
- What are the best places to sell your FBA business online?
Let’s answer each question in detail.
FBA Business Valuation: How Much Is My Amazon Business Worth?
It’s imperative to know how much your Amazon business is worth; otherwise, you could fall prey to a lowball offer made by a sneaky Amazon business buyer. Carry out a proper FBA business valuation—don’t make decisions based on gut feelings.
There are several ways to determine the value of your FBA business. Two popular ones include:
- SDE or Seller Discretionary Earnings (sometimes called Seller Discretionary Cash Flow), and
- EBITDA or Earnings Before Interest, Tax, Depreciation, and Amortization
The Corporate Financial Institute defines SDE as a “metric used to measure the value of an organization to provide potential buyers with a better picture of their expected return on investment.”
In simple terms, SDE is used to calculate your net profit after cutting out expenses like Amazon FBA fees, cost of goods sold, advertising expenses, employee salaries, owner’s benefits, software subscription fees, and other assorted costs.
The formula for this method is as follows:
SDE = Revenue – Operating Expenses + Owner Compensation, or
SDE = Revenue – Essential Operating Expenses – Cost of Goods Sold + Owner Compensation
SDE is suitable for businesses valued at $5-10 million. For FBA brands worth more, EBITDA provides more accurate figures to potential investors and buyers. The formula for EBITDA is:
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization, or
EBITDA = Operating Profit + Depreciation + Amortization
After using SDE or EBITDA, you arrive at your net profitability. Online businesses follow a general rule of thumb: add a multiplier to a business’s net profitability to determine its value. These multipliers range from 20-55x monthly net profit or 1.5-4.5x annual, monthly profits.
But how do FBA business owners know what multiplier applies to their Amazon store? Well, the answer depends on something known as ‘valuation drivers, ’ i.e., factors that influence the value of a business.
The value of an Amazon FBA brand isn’t simply determined by the revenue figures it churns out every month or its annual net profit; other factors also play a vital role in the evaluation process. Below is a list of factors that determine how lucrative your business appears to buyers:
- Profit margins and monthly/annual earnings: High-profit margins generated by evergreen products are highly sought after.
- Account health and seller performance: Is the seller performance up to par? Is the account close to receiving a suspension, or has it been in the past? How well does the business manage inventory, and what’s their IPI (Inventory Performance Index) score? Companies with clean records attract buyers.
- Age of the business: Older businesses that have stood the test of time are seen as low-risk investments.
- Niche: Mid to low, competitive niches make it easier to run a business.
- Seasonality: Evergreen products (those that sell well all year round) aren’t heavily impacted by shifting trends and are better than products that perform well during certain times of the year.
- Differentiation: Do you sell a generic product with a low review count? Then you’re susceptible to being overtaken by competitors with more robust marketing and product differentiation strategies. It pays off to be unique on Amazon.
- Business or selling model: Are you a private label brand or a reseller? Private label brands are valued higher than others, especially those with a strong brand presence on social media platforms. Having perks like Amazon Brand Registry is also a big plus.
- Best Seller Rank: Your place in the sales hierarchy for relevant keywords (i.e., buyer search terms). High BSR usually correlates with greater visibility.
- Off-platform SEO: Does your store receive digital footfall from platforms other than Amazon? Does this traffic come from paid or organic SEO? The latter is preferred.
- Complexity: Is your business relatively easy to run and manage, or will buyers need to invest time and resources to run your Amazon FBA store properly? Do you outsource operations? The faster a buyer can purchase and make money from your store, the better.
- Documentation: Self-explanatory—how well you’ve documented business operations and how accessible this information is to potential buyers.
Suppliers and Manufacturers
- Exclusivity: Are there stipulations within the supplier contract that make working with a new owner challenging?
- Supplier count: Working alongside multiple suppliers may lead to inventory management complications, too few, and your Amazon business is at risk (a sole supplier nullifying the contract could leave the new owner stranded without inventory).
- Return customers: What percentage of your customer base comprises return customers? It’s cheaper to retain buyers than it is to attract new ones. (P.S: Apply for Amazon Brand Registry as it offers more significant insights into consumer behavior if you aren’t brand registered already).
- Brand loyalty: Do customers leave positive reviews? Do they interact with your brand representatives on social media (if you maintain social media handles)? Stronger brands have a higher probability of success in the long run.
- Market trends: We’ve already discussed product niche competitiveness, but what about market trends? Are you selling a product that’s currently riding a popularity wave only for demand to fizzle out in the future? Buyers also determine viability for FBA businesses based on longevity.
- Unmet product opportunities: In product research terms, are there viable products (complementary to your current catalog)? Is there room for expanding your product line? Can the buyer grow your business? If yes, expect more buyers to show interest in purchasing your FBA store.
This is an exhaustive list, but it covers the main valuation aspects or drivers buyers use to assign multipliers.
So—hypothetically speaking—if your Amazon FBA business meets most of these benchmarks and your SDE is around, let’s say, $6,000 a month, then the value of your FBA business could look something like:
$6,000 net profit/mo. x 35/mo. = $210,000.
If any or all of the above explanation doesn’t help calculate your FBA store’s value, check out this FBA business calculator that lets you know how much your FBA business is worth in 2 minutes.
Note: Some people like to clump FBA business valuation drivers into three categories: transferability, sustainability, and potential growth.
Where Can You Sell Your FBA Business
After answering how much Amazon FBA businesses sell for, let’s look at the options FBA sellers have for selling or flipping their business.
A side note: if you’re interested in selling your FBA business, you’ll likely come across terms like FBA flipper or FBA flipping—flipping refers to selling an Amazon ASIN/product/store at a greater value than what it was purchased for or the amount it took to set up the store and scale the business.
Here are the type of individuals or entities you can sell your FBA business to:
Independent buyers can be Amazon sellers or FBA store owners like yourself—they might even be competitors looking to grow their business. With this crowd, you cancel out brokers or intermediaries and handle the A-Z of Amazon store selling yourself.
Reaching out and selling FBA businesses to independent buyers might seem like the cheapest option; however, it carries risks and could end up hurting your brand, some of which include:
- Getting paid less than your worth.
- Time-consuming—unless buyers show interest in your store, prepare to cold call and email potentially hundreds of candidates.
- Divulge sensitive information to buyers who can use it against you, e.g., set up a competitor brand
- Get scammed
- Longer timeframes for flipping a store (usually between 3 months to 2 years).
This method is not without its pros—you forget the commission fees needed to pay brokers, and if you’re well-connected, you may have buyers interested in purchasing your FBA store. Still, the cons heavily outweigh the pros, especially if this is your first FBA business selling rodeo.
Online marketplaces are a step up from individual buyers; they provide some financial safety, and it takes less time to flip an FBA business than the DIY route. Still, you’re up against other FBA business sellers, so you might have to bring the price down a bit to increase your store’s visibility.
Then, there’s the process of vetting qualified buyers, negotiating the price, asking prospects to sign non-disclosure agreements and other things that take time away from managing your FBA business. Also, it takes around 6-9 months on average to sell and finalize a deal on one of these marketplaces.
But it’s not all bad—maintaining a listing on popular marketplaces isn’t too expensive, and there’s always the option to run paid ads and target the right type of buyers. Selling FBA businesses on online marketplaces can be a viable option for sellers with experience in flipping stores.
Partnering with a Broker
The third option for selling Amazon FBA businesses online is to partner up with a broker. eCommerce brokers (also known as mergers and acquisitions or M&A advisory firms) have plenty of experience selling FBA businesses.
A Reputable firm may handle the entire FBA store selling process on your behalf, including marketing your brand, negotiating the offer, drafting the contract, and facilitating the handover via escrow.
Such brokers are in contact with high-quality clients and maximize your chances of finding the right buyer. Since most brokers charge a percentage of the sales value, it’s in their interest to fetch you the highest price possible, all while making the selling process as convenient as possible.
But know that such firms will ask you for proper documentation, so you’ll need to have everything ready before reaching out to them. For FBA business owners with assets less than $100 million, working with M&A brokers is ideal—you have experienced people working on your behalf, giving you peace of mind and the time needed to grow your Amazon store.
Aggregators are investors or investment firms that purchase, maintain, and grow Amazon FBA businesses and flip them later for profits. Also known as consolidators, these buyers search for FBA stores within the $2.5-10 million mark and are interested in quick payouts.
What sets aggregators apart from others is that sometimes they don’t fully purchase an FBA store. Instead, they’ll let the owner retain some equity and might even ask them to run the store. So, aggregators might be the right fit if you want to partially sell your FBA business or enter into a partnership with an investor, aggregators might be the right fit.
Auctioning Your FBA Business
The last option on our FBA business buyers list is an auction. These platforms operate much like online marketplaces, except that each listed FBA store must be sold within a time limit. So why would FBA business owners visit auctions?
- Larger audiences: Popular auction places boast many buyers looking to purchase FBA stores.
- Fast deals: Auctions have set timeframes, so the longer your ad is listed, the higher the chances of a sale.
With these advantages in mind, there are a few downsides to listing FBA businesses in auctions. These include:
- Inexperienced buyers: A large segment of buyers at these auctions are looking for cheap deals. As such, they lack the knowledge and experience needed to close deals and ensure a smooth transfer of ownership.
- Low multipliers: Again, buyers with smaller pockets are probably looking at 0.5-1.5x annual multiples, which falls well below average for FBA businesses.
- Time investment: Similar to independent buyers, you’ll have to manage the A-Z of selling your Amazon FBA business which requires considerable time and expertise.
- Fees: Auction houses can charge around 10% of the total sales value, which is slightly less than an M&A firm but requires you to do all the heavy lifting.
This wraps up the types of FBA business buyers. Let’s talk about where you can list and sell your FBA business.
5 Places to Sell Your FBA Business Online
Here are the 5 places you can visit to sell your FBA business online:
Flippa is a platform where websites, online businesses, domains, and apps are bought and sold. It’s a popular marketplace that’s been operational since 2009 and offers various features that make online purchasing more manageable, especially for first-time buyers.
You can sell your FBA business by creating a classified or an auction listing. Auction listings remain to live for 30 working days, whereas the classified ones don’t have a time limit. The former is ideal for selling an FBA store quickly, whereas the latter is for sellers who don’t wish to compromise on price.
Like any reputable platform, Flippa vets buyers and sellers and utilizes escrow services to protect its members from fraud.
2. Empire Flippers
A well-known name within the FBA flipping world, Empire Flippers is a marketplace for purchasing and selling online businesses—primarily FBA stores. It has a vast subscriber base, making your listing easier to get lost in the crowd. Nonetheless, escrow services, personalized migration support, and accurate data extracted from Google Analytics are all sought-after features for FBA business sellers.
Other key features include:
- Looking up online stores based on monetization methods like dropshipping, eCommerce, and affiliate ads.
- An extensive podcast library
- Without a listing fee, you only get charged when your business is sold.
The sales commission rates on Empire Flippers are as follows:
- 15% on the final sales price for businesses sold under $700,000
- 8% on the final sales price for businesses sold between $700,000 and $5 million
- 2.5% on the final sales price for businesses sold at $5 million or above
Empire Flippers also negotiates on behalf of sellers, which is always a plus point.
3. FBA private market
FBA private market is a smaller platform than the previous two entries, but it’s still worth mentioning in our list. It’s a specialized marketplace focused solely on FBA businesses acquisitions and, as such, offers several benefits:
- Informed Buyers: Visitors to the website aren’t here to purchase any online business; they want to invest in FBA stores and have more knowledge regarding evaluation and purchasing practices. This results in smoother transitions and less headaches for FBA business sellers.
- Customized Support: Each seller has access to a dedicated listing manager who collects information regarding your Amazon store and prepares an offer accordingly.
The website also has verified buyers or premium buyers with a successful track record of acquisitions and proof of funds, which translates to buyers willing to pay top dollar for your FBA business.
Dragonflip is a European M&A firm and a leading broker for eCommerce brands. They’ve been operating in this space for 5 years and boast an extensive network of aggregators, investors, and private equity groups, all interested in purchasing Amazon FBA businesses.
The firm maintains high-quality buyer and seller standards, part of which is done by implementing the following criteria:
- FBA businesses must have stable sales and profits for the previous year
- Display concrete and actionable growth opportunities
Today, Dragonflip has over 2,500 registered buyers that maintain over $1 billion in cash, so finding a buyer ready to pay the right price for your store is easy.
Sellers don’t have to pay a listing fee or monthly retainer, and the signup process is relatively straightforward. The people over at Dragonflip like to do things the right way, which explains its rise in popularity over the past few years.
Reasons for listing your Amazon FBA business on Dragonflip include:
- A highly-knowledgeable customer support team
- A seamless selling and business transfer process
- Buyers are ready and willing to purchase your business, saving you precious time
- Protection of your intellectual property and financial assets.
We recommend that FBA business owners check out Dragonflip as they tick all the right boxes.
Unybrands is an online aggregator that deals with Amazon and Shopify DTC brands. The platform is flexible and works with businesses of all kinds of valuations. They claim to be strategic serial buyers to acquire brands that promise long-term growth and expand them further.
Headquartered in Miami, Unybrands operates globally and has a team whose combined experience spans over 200+ years in the industry. They work in 8 categories; Juvenile & Baby, Garden & Outdoor, Sports & Fitness, Lifestyle, Arts, Culinary and Home, Personal care, Home care, Pet care, and Supplements.
The lack of focus and specialization on FBA businesses might make you spend time targeting the wrong audiences.
Is It Legal to Sell My Amazon Account?
It’s against Amazon’s terms of service to sell your Amazon Seller Account. However, it’s legal to transfer the ownership of your FBA business to someone else. But before you sell your FBA business, you will need to inform Amazon regarding changes in ownership.
How Do I Transfer My Amazon FBA Business?
To transfer your Amazon FBA Business to a buyer, you will need to carry out the following steps:
- You and the buyer must communicate with Amazon regarding changes in ownership and provide them with the necessary documentation.
- You must update your seller central account by inserting your buyer’s information, including contact, authentication, tax, and financial details.
- Transfer assets to the buyer, including trademarks, social media accounts, marketing lists, email services, etc.
- Finalize the deal, including the transfer of funds.
To make the process hassle-free, you can always reach out to experienced brokers who can get the job done.
Now it’s time to answer some commonly asked FBA business selling questions.
What multiple do Amazon businesses sell for?
Most amazon businesses sell for multiples ranging from as low as 1.5x of their annual proceeds to as high as 6.5x or more. The multiple depends on the benefits, long-term stability, and your business’s appeal in front of buyers.
What is my Amazon store worth?
Your amazon store’s worth depends on the sales you make and the performance metrics of your business. We usually calculate the FBA business worth using different valuation methods depending on the type of business.
Can you transfer ownership of an Amazon account?
Yes, you can transfer ownership of your Amazon account upon the sale of your business once you inform Amazon’s Seller Support Team.
Having gone through this blog, you should have the knowledge needed to:
- Calculate the value of your FBA business
- Find the right types of FBA business buyers
- Contact the right people that make FBA store selling easy
One last piece of advice: working with qualified M&A eCommerce brokers ensures you get the best deal and your FBA store sells as fast as possible.