How to Sell Your Amazon FBA Business

How do I sell my Amazon FBA business? 

You’ve done the hard part, investing your time, and sweat equity to build a thriving e-commerce brand. Your business survived the pandemic and soaring inflation. However, there comes a time in every owner’s journey when they begin to wonder about selling their business. 

Enter Mantaro Brands. We buy e-commerce brands and give them the tools to grow faster and succeed. In an effort to make our processes as transparent as possible, we are writing a series of articles all about selling Amazon businesses. Have you always wondered if you can sell your FBA business? Do you want to know how much your Amazon seller account may be worth? In this article, we’ll unpack exit strategies, business valuations and more. 

‍Why Selling Your Amazon FBA Business Can Be a Smart Move

There are plenty of reasons to consider taking a fair buy-out. We often hear the obvious ones, such as owners looking to retire or take a step back due to personal circumstances. But there are some more strategic reasons as well. 

1.) Growth Plateau: Some entrepreneurs recognize the potential of their brand to expand but don’t have the resources (time, capital, employees) for growth.

2.) Risk: In today’s economic climate it is not uncommon to hear from entrepreneurs that the risks have become unpalatable. We’ve written about how 2023 will be a challenging year. 

3.) Competitive threat: One large danger for European and American FBA businesses is from traders from Asia, especially from sellers in China.

Many FBA sellers are looking to exit: According to a report by Feedvisor, more than 50% of Amazon FBA sellers are looking to exit their business within the next 5 years.

‍Understanding the Valuation of Your Amazon FBA Business‍

There’s a thriving market for Amazon FBA stores just like there is a thriving market for Amazon wares. The market for Amazon FBA businesses has been active in recent years. Here’s how we approach business valuation.

Determining the valuation of a brand involves a mix of analysis and judgement. Most buyers prefer to use Seller's Discretionary Earnings (SDE) as a proxy for earnings, and then determine a multiple to apply to it in order to get a valuation range.

It’s difficult to give an exact market rate for selling an Amazon FBA business, as they fluctuate with market conditions. What’s most important, however, is to look for a ‘strategic fit’ with the potential buyer.

We look at dozens of factors related to the brand in order to understand longevity, earning potential, scalability, and more. 

Did you know that Mantaro has paid founders in the past between $1.5M and $9M in cash for their Amazon FBA brands?

‍Getting Your Financials in Order Before Selling Your Amazon FBA Business

There are a few things you'll want to do to get your financials in order if you are considering selling your business. Potential buyers will need to see a clear picture of your business's financial performance before they decide whether or not to make an offer. Here are some steps you can take to prepare:

First, gather all of your financial records: income statements, balance sheets, and cash flow statements. You'll also want to compile a list of all of your business's assets, such as inventory, equipment, and intellectual property. Make sure your records are accurate and up-to-date, as this will help build trust with potential buyers. 

If you are a founder without a strong financial background (more of the visionary type) you may also want to consider working with an accountant or financial advisor to ensure your records are in order and to help you prepare for any questions potential buyers may have. 

‍How to Prepare Your Amazon FBA Business for Sale

Running your business well is the best way to prepare it for sale, but our e-commerce experts have found a few best practices if you're thinking about pursuing an exit soon.

First up, "spring cleaning." A buyer will want to see your web presence from a customer's perspective, so focus on sprucing up your site architecture. Keep things simple and clean so a buyer can imagine new possibilities for your brand.

Additionally, pay attention to your inventory. It's frustrating for customers to come across products that are out of stock. You don't need to fill every gap, but a website with too many products marked "out of stock" is a warning sign. 

Finally, keep optimizing your store to stand out from the competition. Improving keyword conversion and optimizing your listing are two places to start. Research which products customers are clicking on after conducting a search for a particular keyword. Keep your writing concise, keyword-optimized, and compliant with Amazon's guidelines.