Looking to Sell? The Most Surprising Details Buyers Look for in Your FBA Business
The list of incentives motivating FBA sellers to sell their business is never in short supply from never ending competition, to frequent Amazon policy changes and more. As sellers increasingly look to buyers such as ecommerce aggregators as both a solution and source of opportunity, buyers are simultaneously looking back at FBA brands to find out if the interest is mutual. This often leaves FBA sellers wondering: What exactly are buyers looking for in the first place?
While each buyer may take a slightly different approach in their acquisition process, the more knowledge sellers are equipped with will undoubtedly translate into better positioning for their brands as they approach the negotiating table.
This list below aims to compile six unique factors that experienced buyers consider before making an offer for an FBA brand.
1) Financials
Undoubtedly, any experienced buyer or Amazon aggregator will be looking at your financials. However, there’s no need to panic, and no cause for alarm. With dozens of Amazon ecommerce aggregators with funding running into hundreds of millions in the space today and thousands of small scale investors, each buyer will prioritize varying indicators in their valuation such as: ability to turn a quick profit, year after year growth, or general growth trends over time.
2) Category
Similarly to many experienced sellers, some Amazon business buyers operate with a category agnostic approach, while others focus strictly on acquiring brands within specific domains. This strategy extends further into seasonal and fad products, which catch the attention of some buyers, while failing to grab the interest of others. Understanding the focus areas and expertise of each operator can help sellers understand which buyers might not only be interested in their brand, but best equipped to potentially absorb their operation.
3) Product
Is your product unique? an your products be easily varied? Is your existing brand prime for new product launches? Does your product require advanced technical know-how to produce? CAll of these factors pose great points of conversation during initial discovery calls with buyers. Discussing these specific opportunities has the potential to catch the interest of operators, while also illuminating which buyers maintain the know-how to take your brand to the next level.
4) Expansion
When evaluating your brand, operators might be interested to see if your product(s) are omnichannel friendly, compatible with brick and mortar settings, or desirable within a global e-commerce context. While these factors will depend on the operator’s post-acquisition strategy, they’re nonetheless important to keep in mind.
5) Buying Trends
In addition to general growth trends and profitability timelines, it’s worth examining the buying trends of your customers. Does your brand boast a significant percentage of return buyers? How do you track your customer loyalty? While it is difficult to calculate this precisely due to Amazon’s own data ownership, it’s worthwhile to note if your brand is positioned for “subscribe and save” or general re-ordering behavior.
6) Existing Relationships
While it can’t be stressed enough, each Amazon business operator will be looking for slightly different qualities tied to your brand. Having an open conversation with the buyer will provide you with the best insight into 1) How to position your brand, and 2) Clarity relating to which operator is best suited to achieve your specific goals. The last points worth discussing with prospective buyers are the relationships and individuals tied to your brand, in addition to your objectives for managing these relations post-acquisition.
Some operators might look to hire business owners post-acquisition as they aggregate both talent and brands. Other operators might already have a complete and experienced staff, and prefer not to maintain talent following the acquisition. Operators might also be curious to see if your brand boasts a robust staff, or is skillfully managed with a one or two person team.
Secondly, it’s worth providing an overview of your existing supplier relations. Do you maintain strong and reliable suppliers, or are you looking for an operator with extensive relationships that can override any logistical challenges you have been experiencing? Either way, there’s an operator out there best suited for you.