How to Sell Your Amazon FBA Business for Six (or Seven) Figures in 2022
Get a lucrative return on your hard work by selling to an FBA aggregator
Building a thriving FBA (Fulfillment by Amazon) business requires hard work, vision, determination and a sprinkling of innovation. Although it might seem counterintuitive to think about selling an FBA business after all that effort, there are many good reasons to consider cashing out.
Millions of reasons, potentially. (Yes, we’re talking about a seven-figure buyout deal).
A new breed of business called “Amazon FBA aggregators” are increasingly buying successful brands.
So while you’re building your eCommerce business, it pays to think ahead to your exit strategy. With the proper preparation and a clear growth strategy, your FBA brand could end up attracting a life-changing offer from an aggregator.
First things first: What is an Amazon FBA aggregator?
FBA aggregators buy and grow eCommerce brands.
Some aggregators white-label their acquisitions, rebranding to align the products with existing operations.
Others, like London-based FBA aggregator Heroes, seek out brands with high growth potential in lucrative niches. Usually, these sellers are seeking to build new projects or have scaled the brands to their best ability. For the seller, this collaborative approach not only means the brand continues thriving, but it often results in higher long-term returns.
Why sell a successful FBA business?
Amazon’s FBA program enables small businesses and solo entrepreneurs to build a successful online brand. But at some point, the demands of running a growing business exceed the limited resources available.
Whether you started an Amazon FBA business for financial freedom, to be your own boss, or because you noticed an untapped niche, there comes a time when you need to decide: grow or sell?
- Grow: Invest resources into diversifying your eCommerce business. This could mean launching in new online marketplaces, marketing in different languages, expanding your operations team, or all of the above.
- Sell: Partner with an Amazon FBA aggregator to sell your business (and brand) for a rewarding payday*.
*Cashing out is only one potential exit strategy – more on that a little later.
What Amazon FBA aggregators look for
As your FBA business grows, customer needs should always come first. But it doesn’t hurt to consider your exit plan in strategic growth decisions.
To do that, you need to know some of the common signals that make an FBA business attractive to an aggregator:
- Strong sales record
- Stable supply chain
- High growth potential
- Well-documented operations
- Customer loyalty
All these factors point to a stable, successful business that’s ready to grow. Of course, it’s worth noting that every FBA aggregator assesses sellers against unique criteria.
With that in mind, let’s look at how you can build an FBA business that sells.
4 practical tips for building an Amazon FBA business that sells
1. Plan your exit strategy early
Whether you plan to snowball and sell within 12-24 months or run your business for years, at some point, you will need to hand over the reins to reach its maximum potential.
Before you launch, consider how you will exit the business. This will help to define a “north star” that informs every strategic decision you make during the exciting (though often unpredictable) eCommerce journey.
Let’s assume you plan to sell to an aggregator. Structuring your business with a view to future growth might look like:
- Identifying high-potential niche products
- Reaching underserved audiences
- Selling products that can expand into new markets
- Competing in market segments with proven returns
Garden tools, baby products, sports equipment and pet products are some of the most popular niches on Amazon. But don’t let that limit your product catalogue. If you see an opportunity that you believe will build a sellable business, go after it.
2. Keep your business organised
Although this is a tip for preparing your business for sale, it’s also good practice in general. For example, Amazon’s Seller Central provides a range of data and analytics tied to the platform. Beyond Amazon, you should be able to prove your business is in good shape, financially and operationally.
Up-to-date financial records are a good start.
Tracking web analytics like visitor demographics, acquisition cost, conversion rates, email and marketing campaign data, and social media following will present a cohesive picture of your brand’s value.
And finally, a well-documented supply chain will demonstrate your business’ strength in terms of stable supplier relationships.
3. Know your business inside out
What’s the average age of your customer? What motivates them to buy from you? What happens when a global pandemic interrupts your regular supply lines? What is your social media presence?
FBA aggregators don’t determine sale terms on profit potential alone. All these questions – and many more besides – contribute to the offer you receive.
Keeping your business organised will help determine your business’s value on paper. FBA aggregators consider 12-month profit performance, but equally the infrastructure around a business that enables growth. So with your north star in mind (see point #1), consider how strategic decisions will grow your brand’s value in the buyer’s eyes. But go further: build personal relationships with suppliers, customers, and partners, so you understand your business from every angle.
Especially if you plan to sell for a stake in future profits, a deep understanding of growth potential is your biggest strength at the negotiating table.
4. Consider all your exit options
We mentioned earlier in this article that a cash buyout is not the only option. Exit strategies take many forms. The right approach for you depends on your financial goals, lifestyle, personal situation, and aspirations for the brand you’ve built.
Cash buyout: Simple, straightforward and satisfying, but not necessarily the highest possible return.
Stake in future profits: Delaying the big payday in favour of tranches based on the brand’s future performance. If you believe in the business you started (and sell to an aggregator with the capabilities to grow it), accepting slightly less cash at closing for a stake in future profits is often more lucrative.
In most cases, selling your FBA business will mean handing over the reins. So you need to be sure the aggregator you sell to has your best interests at heart. The best way to do that (we believe) is to strike up an in-person relationship.
Thinking of selling your Amazon FBA business?
Stories abound of sellers who start with a single product and within a year have six or seven-figure sales from a catalogue that appeals to a previously untapped niche.
And a new chapter is being added to those stories. It’s one where FBA brands and aggregators like Heroes collaborate to grow the business beyond what the entrepreneur’s capabilities.
From lucrative long-term returns to a flourishing brand, the payoff is worth the investment. The Heroes team are happy to discuss your exit strategy any time, even if you’re still in the early planning stages.