Fulfillment by Amazon (FBA) has become one of the easiest ways to ensure the continuity and scalability of a business. Most companies had to close down their brick and mortar stores during the pandemic, which forced them to switch to alternative ways to sell their products on the Internet.
FBA prep in Toronto became the new frontier for peer-to-peer e-commerce that enabled thousands of merchants to take advantage of Amazon’s well-laid distribution network and customer database.
Developed FBA businesses are attractive investment opportunities for buyers interested in purchasing an online business. So if you have been wondering how to sell your Amazon FBA business for the maximum possible price, you have come to the right place. We will guide you on aspects that investors focus on while considering purchasing and FBA business.
The dynamic between an FBA business and its supply chains is a critical aspect for investors.
The company cannot run successfully if it does not have the products in stock at all times. Many successful FBA businesses crashed because they ran out of inventory and had to wait a few months to get the optimum stock.
Therefore, make sure you have strong controls in place for procurement and shipping lead times to show the investor that they will not have to face inventory issues.
The success of an FBA business also depends on the price and uniqueness of its products. It allows the company to stay ahead of its competition. So make sure you maintain an exclusive wholesale rate with Amazon or have a list of unique products to sell. That will allow you to transfer the contractual terms for a sustainable period with the sale terms.
As an FBA business, you may have to work with many suppliers, points of contact, and shipping protocols. All of these might seem confusing to a potential buyer. Therefore, ensure that your operations are either automated or outsourced to a reliable third-party to simplify these aspects. Highlighting that to potential buyers can help you increase the price of your FBA business.
The range of products to sell and their contribution to your revenue and profit are essential aspects for a potential investor. For example, your business might sell ten products, but only two of them account for 90% of the sale volume. That means, essentially, you are only selling those two products.
If a buyer notices that they can procure those two products from any other source, they will not be interested in buying your business. Therefore, all of your products should have an even contribution to your total sale with consistent profit margins.
A potential investor would look for profit margins of about 30 to 50% with minimal margin fluctuations. If some of your products have a higher contribution to your total sale, make sure that the supplier is locked in.
Best Sellers Rank
Potential buyers would want to check the Best Sellers Rank (BSR) for your best products. While no one is absolutely sure how the BSR algorithms work, most people believe it depends on your recent sales.
You can demonstrate consistency and growth for your FBA business with an attractive BSR for your key products. Ideally, the products should display consistent growth in their BSR over a period so you can demonstrate sustainable transactions with the customers.
A dedicated site for your FBA business will make sense if you are trying to build your brand’s presence on Amazon. Customers will be able to search for your products on a professional website, which reinforces their willingness to buy your products. It will also help in driving the traffic back to your products on Amazon.
A website is an effective way to get customer information for marketing campaigns. A potential investor will look at your business website as an additional asset to increase traffic and customer details. They may also look at it as an active content strategy to increase brand awareness and sales.
FBA sellers can also earn affiliate commissions for customers that they refer to their website. That means, if you have an active website, you can earn between 4 to 10% of affiliate commissions on the sales that happen from it for your own products. Moreover, you do not have to pay any fees on the affiliate commissions, making it a lucrative income stream to attract potential buyers.
If you can show some new opportunities for the immediate future, you can sweeten the deal for potential buyers. For example, you may have just finished the negotiation and sales copy for a few new products. Or you may have evaluated new market opportunities with fresh suppliers.
You can consider holding off on these opportunities and offering them as a gift to the new buyer. It will work as an additional marketing tool to increase the salability of your FBA business.
These are some of the factors that can help you maximize the salability of your FBA business. There are several other aspects that you need to look into while considering selling your enterprise.
Contacting a business broker is one of the best ways to gain an overall understanding of these aspects. They will be able to give you the best possible advice to help you sell your business at the maximum possible price.