Build the Right Amazon FBA Exit Strategy

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Build the Right Amazon FBA Exit Strategy

Whether you want to sell your Amazon FBA business or not, you must have a foolproof exit strategy in place!

Many people sold their Amazon FBA business for more than what they expected. But how do you sell your business for a huge profit? All you need is an Amazon FBA business exit strategy.

A good strategy will not only boost your company’s worth but it will also help you find the right buyer.

In this article, I’ll share a tried-and-tested strategy for selling an FBA business. Also, I provided several recommendations below that will help you multiply the sales numbers and earn a great return on your investment.

Let’s begin.

Get an Accurate FBA Business Valuation

Do you know your Amazon FBA business value? Guessing won’t do here; you need a close estimate of your company’s value.

Ecom Brokers can help you value your FBA business because they have extensive experience in both buying and selling FBA businesses. Also, a simple formula can determine a company’s value:

Valuation of FBA business = Inventory at Cost + (Net profit X Multiple)

What is the cost of inventory?

Cost of inventory is the total cost of the inventory, including shipping and packaging.

Having a lot of merchandise stockpiled in Amazon’s warehouse limits your chances of getting a huge profit from Amazon FBA. A vast stock will scare any potential buyer.

Contrarily, empty supply will also affect you in selling your business because buyers aren’t interested in enterprises that are close to running out of goods.

Try to manage your inventory properly if you want to sell your FBA business for a huge profit.

What is monthly net profit?

You may know how to calculate monthly net profit if you are running a successful Amazon FBA business. Usually, the monthly net profit is based on a twelve-month average.

However, sometimes brokers use a three-to-six-month average depending on the specifics of the business. Make sure you cut employee wages and other costs when calculating monthly net profit.

It is vital to get a professional to do this for you so they can properly calculate the true profit by adjusting and adding back costs that a new owner won’t take on

What is a multiple?

Multiples in ecommerce currently range from from 2x to 7x. It depends on factors such as your company’s age, profitability, revenue, uniqueness, IP, automation, systems and brand reputation. To name a few.

Other elements that affect your company’s value include the following:

Social networking

Everyone wants to buy a company with a strong social media following. You can get a larger multiple if you have a strong social media presence.

Before selling your Amazon FBA business, focus on your social media following and communicate with them to attract possible buyers.

Owner participation

It’s a good idea to position your Amazon FBA business so that it creates a lot of passive revenue with little work. This way a potential buyer will pay a larger price.

Typically, buyers avoid enterprises that they assume will need extensive engagement. Therefore, a business with automation and simple processes is attractive.

A mature tree is worth more than a seedling.

That said, even if your business isn’t too old, if it has a huge social media following and a broad visitor base – this will help you quickly sell your Amazon FBA business.

It is an essential part of creating a profitable Amazon FBA exit strategy.

How Can You Boost Your Amazon FBA Business Value?

So you’ve assessed your company’s value using the previous tips and you think it’s not worth it to sell it now?

The FBA exit strategy includes upscaling your company’s value. Investing millions of dollars in your company won’t help unless you use a specific strategy.

This is what you could do to enhance the worth of your Amazon FBA business, so you can sell it:

A Robust Supply Chain

The supplier network is critical to any Amazon FBA firm. You will attract buyers if you can quickly sell most of your products.

A weak supply network can deter potential buyers. Waiting for one to two months for restocking might be a costly mistake for a corporation.

Maintain a robust supply network to avoid potential buyers noticing inventory concerns when looking for a negotiation scope.

The Bestsellers List

Amazon customers tend to buy best-selling items. Customer experience is one of the variables that decide the Amazon Best Sellers Rank. Also, the algorithms favour best-selling items.

Interact with the crowd and answer questions to gain greater sales. With the Best Sellers Rank, you’ll get a huge profit when exiting FBA.

Customer Feedback

It is unnecessary to explain the benefits of positive customer feedback. The more reviews you have, the more likely you are to sell your FBA business.

Several programs exist to assist you in automating the review process. It asks for feedback on the product and their experience.

FBA Account Health

A well-maintained Amazon FBA account is more valuable. Contrarily, a poor health account will be tough to sell for the price you want.

But how do you determine if your account is healthy or it requires improvement? Accounts must meet specific criteria.

Order fault rate should not exceed 1%. The late shipment rate should not exceed 4%.

The pre fulfillment cancellation rate should not exceed 2.5%. These metrics can let you rapidly examine your account’s health.

It should be sold on the appropriate platform.

Selling your Amazon FBA business on the appropriate site is also an essential part of the exit strategy.

Your firm is performing well, and you’re ready to sell, but picking the incorrect platform could backfire.

You can sell your FBA business on the following platforms:

Auction

An auction looks to be one of the easiest methods. List your FBA business and people will bid on your company! But this isn’t the case.

It’s not easy to register for an auction. You must also pay the auction fee, which varies depending on the sale.

The paperwork can often be daunting. If you are familiar with auctions, you can choose this option.

A Direct Approach

A direct approach can help you get a good sum for selling your Amazon FBA business. But it takes time and effort to find the ideal buyer who understands your FBA business and pays the greatest price.

Brokerage

If you are too busy looking for a buyer to pay the auction fee, hire a reliable broker. The broker will find a buyer and help you close the deal.

Find a fair broker with a reasonable commission rate and sell your firm for a good profit.

Ecom Brokers knows the market and has experience on all sides (seller, buyer, broker, accountant). We know what it takes to close a deal with a prudent buyer.

Marketplace

List your Amazon FBA business on a marketplace to reach a broad audience. Also, listing your company in a respected market is inexpensive and increases your chances of selling it.

Yet you must respond to inquiries and send non-disclosure agreements to the buyers.

Await the selling season!

So, you’re ready to sell your Amazon FBA business. But is it the right time to sell your FBA business?

The selling season is the best time to buy. If your firm is new and earning fewer sales, then it is not the time to sell it.

But if your company is old, profitable, and has good reviews, now may be the time to sell.

Finally, some ideas!

Selling your Amazon FBA business can be a rewarding deal in exchange for a huge profit. Use this strategy to exit gracefully.

Evaluating a business can be hard, it is advised that you contact a trusted broker. The broker will help you calculate your SDE or profit before you advertise your business for sale.

It’s also important to improve the process such as maintaining the records to ensure a smooth ownership transfer to the buyer.

Finally, having the correct Amazon FBA exit strategy will help you restore a floundering business.


Ready to sell your business for the best possible price? Click below to get started. No obligation, no hard sell. Just solid, professional advice.

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