If you’re contemplating selling your Amazon FBA store, you’re probably also wondering how much you could sell it for. Although no valuations are perfect, we have a pretty good idea of what Amazon FBA stores will go for in the marketplace. Here we share a few of our tips for valuing and optimising your store for the market.
First things first. Can I even sell my Amazon FBA business?
Absolutely. While Amazon does not actively promote the transfer of Amazon FBA accounts, the process is fairly simple once you get started. With the help of Flippa account managers, the entire process can take between 10-21 days. Actual handovers can be done within a single day.
How much is my Amazon FBA online business worth?
The value of your Amazon FBA store is the largest sum any one individual is willing to pay for it. If you’re thinking that’s not very helpful, we’re not finished yet! Please read on.
#1 Valuation Type – Multiply Monthly Profit
Basic Valuation: 12x-48x your monthly profit
There’s one very important number to look at when analysing your financials for an Amazon FBA business sale – Net Profit. By subtracting costs from revenue, you’ll come up with your average monthly profit. Take this number and multiply it by 12… or 48. This is a good starting place for where you should be pricing your store.
Why the wide range? The “multiple” varies widely depending on a range of factors. These will include:
Growth trajectory – If your business has grown consistently and is still on an upward trajectory – meaning it has plenty of opportunities for future growth – you can expect a higher multiple
Recurring revenue – The more consistent your revenue stream is, the higher multiple you can expect. Subscription-based products and services that produce recurring, predictable revenue are more attractive to potential buyers
Number of products sold – Having one product that makes up 80% of your sales is a risk to buyers. Businesses that have a diversified portfolio can expect to see a higher multiple
Competition – If you operate in a competitive market, your multiple will be on the lower end of the range; conversely, niche markets are very attractive to buyers and can set a higher multiple
Amount of effort – If your business runs on auto-pilot, or close to it, buyers will pay more. Business models that require less operational effort can expect a higher multiple than average
These are just a few of the factors that go into valuing what an online business is worth. Others include account vs. brand, reliability of suppliers, maturity of company and more. The most accurate valuation of your business will come from experienced account managers who analyse your business in detail prior to listing.
#2 Valuation Type
Another way to value your business is to compare it to sales of similar stores on the marketplace.
However, the trick here is how to define “similar.” The same factors that affect calculating your net profit multiple also apply here – growth trajectory, competition, amount of effort, etc. Therefore, it’s important to include these factors in your criteria of “similar” when viewing recently sold listings.
Remember – every business is different. While these two valuation types are the most common approaches used in the marketplace, they are not a guarantee. At the end of the day, the true value of your Amazon FBA store is the largest sum any one individual is willing to pay for it.
How can I optimise my Amazon FBA sale for success?
While you may not be able to influence your net cash flow or competitive positioning, there are several things you can do ahead of time to optimise your store for a higher sale.
Buyers buy on trust. So, the more information you can provide about your business up front, the better. Back up all of your claims (revenue, costs, and profit) with evidence. If you have had a bad few months from a profit point of view, be honest. Tell the buyers what happened, what you have learnt from it, and how they can avoid the same situation.
The most important thing to remember is do not mislead. This never ends well. In the end, the buyer will find out and it is likely that you will end up not selling.
Additionally, the more detailed you can be in presenting your standard operating procedures, the better. The new buyer should be able to pick up and move forward with your business without any disruption. Detail everything – current strategy, marketing processes, systems used, daily traffic & conversions, daily operating processes, future plans & more. Buyers are attracted to easy, so making the takeover appear as quick & painless as possible is important.
How do I prepare for an exit?
Now that you’ve done your research and have a loose idea of what your business may be worth, it’s time to go to the marketplace.
Choosing where to sell your store can be a stab in the dark if you’re new to selling online businesses. However, here at Flippa, we’re biased towards our own for a few reasons.
Flippa is the #1 marketplace for buying and selling online businesses. We’ve been in the market for several years now and get more than one million visits each month. A good listing gets snapped up quickly, making our sellers and buyers very happy!
Most importantly, every Amazon FBA store on Flippa is personally managed by one of our experts. Our account managers handle the listing step-by-step to ensure the best outcome for both buyer and seller. This includes everything from accurately valuing your business, writing the listing, marketing the listing to high potential buyers, handling negotiations with serious buyers, and managing the payment & handover. They’re also available 24/7 to answer any questions you have throughout the auction process and are always happy to help.
For more information on how selling your Amazon FBA store on Flippa works, check out how the marketplace works here.
Guest post by Whitney Hesmer of Flippa.com