You’ve been working hard at building your FBA business, but have you thought of your exit strategy? Even though the end game is not always a top priority when you are trying to grow your business, it is something that you should think about. The two most common exit strategies are simply closing up shop and selling. Fortunately, closing up an FBA business isn’t as expensive as a traditional brick-and-mortar, but what if you could actually make profit from your exit strategy? Since 2020, selling FBA businesses has become very lucrative for some business owners.
Who is Buying FBA Businesses?
The worldwide COVID-19 pandemic really pushed online sales to new levels. In the past couple of years, FBA businesses have boomed. Now there are potential buyers who are interested in jumping in, but they don’t want to start from scratch. They want pre-established brands with loyal customers. Some buyers are individuals while others are brand aggregators who are amassing large portfolios of businesses. Either way, all the hard work that you have put into your business could pay off in a big way.
How Much is Your Business Worth?
Before you decide if now is the time to sell, you need to figure out how much your business is worth. The value of any business is much more than just the annual profit. While profit is definitely important, longevity also matters to a potential buyer. That’s why several factors must be considered when determining a business’ overall value. Marketplace diversity, customer ratings, age of the business and SKU stats are all scrutinized by potential buyers.
- Marketplace Diversity – Many potential buyers prefer to purchase FBA businesses that generate sales through a number of channels. Amazon sales are important, but so are other online marketplaces that broaden the reach of the brand.
- Customer Ratings and Reviews – High quality reviews and ratings show how well your business is doing in the marketplace. As you know, reputation matters and reviews directly affect your sales. Any organization who is interested in buying your FBA business will be much more interested in paying top dollar if your ratings have held strong for multiple months or years.
- Age of Your Business – In general, older FBA businesses are worth more than newer ones because they have had the time to increase customer loyalty, brand awareness, and move up the ranks in SEO. Most of the time, experienced FBA sellers run smoother, more efficiently, and are more lucrative businesses than those who are new to the business.
- SKU Stats – Finding the right number of SKUs to sell is tricky for many FBA sellers. The best balance is to have a small number (two or three) that are highly profitable.
Increasing the Value
If you think it might be time to look into selling your FBA business, take some time to consider ways that you can increase the value. At Wizards of Ecom, we offer a wide range of useful resources that can help you run a profitable business that makes you money and looks great to potential buyers. We work with top sellers in the industry to produce useful blogs, podcasts, and workshops that are designed to help you build a valuable FBA business. If you want to know more about selling your Amazon business, read Smoothly Sell Your Amazon Business with These Exit Strategies written by Sourcing Monster founder, Tomer David.