What You Should Know Before Buying an Amazon FBA Business
16 October 2024
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Amazon has one of the best fulfilment services in the world. Fulfilment by Amazon (FBA) can help you reach new customers, maximise sales, and scale your business to new heights.
In 2021, Amazon sellers sold more than 3.6 billion products and each seller generated an average of $200,000 in Amazon sales revenue - Amazon Small Business Empowerment Report 2021.
If you’re considering buying an Amazon FBA business, you’ve come to the right place! We’ve put this blog together to tell you everything you need to know about FBA businesses in 2023.
Why should I buy an Amazon FBA business?
Buying an Amazon FBA business can be a fantastic opportunity for an individual or company looking to start or expand an eCommerce business.
It allows you to skip the time-consuming startup stage and take control of a business that is already established in the market.
What do I get when I buy an Amazon FBA business?
It’s first important to understand what you’re actually getting when you buy an Amazon FBA business: an established Amazon seller account, as well as inventory and sometimes a website and brand.
What things should I consider when buying an existing Amazon FBA business?
Acquiring an FBA business is fairly straightforward but you’ll need to keep a few things in mind before making a purchase.
Accounting records
You must always review the accounting records in detail before buying an Amazon FBA business. It is also important to check that the business is sales tax compliant.
Read Amazon FBA Sales Tax Guide for more information.
Supplier agreements
Partnering with efficient and reliable suppliers is essential to running a successful FBA business. Check what supplier agreements are in place and read through the terms and conditions carefully.
Seller account health
Maintaining good Amazon account health is crucial if you want to run a successful FBA business. If the metrics fall below a certain level, your seller account may be suspended or removed.
You can review your account health metrics by visiting the dedicated page on the Seller Central account.
Product(s)
Another deciding factor to take into account is the product(s) being sold by the business. It’s useful to research the market and understand the inventory management within the business, including how products are being sourced and replenished.
It’s also important to look into the current product reviews. 84% of shoppers trust online reviews as much as a personal recommendation and 93% of consumers read reviews before buying online.
Reading customer ratings and reviews will give you valuable insight into the public’s perception of the business.
Competition
You must do research and gain a thorough understanding of your competitors. Ideally, you should look for an FBA business that has a USP (unique selling proposition) and is part of a profitable niche.
What factors affect the value of Amazon FBA businesses?
Along with the above, keep in mind that these factors can influence the value of Amazon FBA businesses:
The type of business
The age of the business
The business’s net profit
The founder’s involvement
Suggested reading: How Do Buyers Value Amazon FBA Business?
How do I buy an Amazon FBA business?
Privately: Buying an existing Amazon FBA business privately is the cheapest option, but it requires a lot of time and effort. You will have to reach out to current FBA owners and carry out thorough due diligence checks to verify the information that the seller has provided. Failure to perform due diligence correctly can have serious consequences. This is why most buyers seek the advice of an M&A specialist.
Through a broker: A broker will use their experience and connections to help you find the right FBA business. They will also handle all of the negotiations and due diligence while ensuring the transaction runs smoothly. The downside of using a broker is that they typically charge high fees.
Through a marketplace: Signing up to an acquisition platform is another easy way to find FBA businesses for sale. At Foundy, we have created an all-in-one marketplace that will connect you with credible sellers, saving you valuable time and effort. Acquiring an FBA business through a marketplace is typically much cheaper than going through a broker.
Ready to Become an Amazon FBA Owner?
Amazon FBA has revolutionised eCommerce, enabling millions of businesses to maximise sales and achieve long-term growth objectives. Whether you’re looking to buy or sell an Amazon FBA business, Foundy can help you navigate the complex world of mergers and acquisitions with ease.
Join Foundy today to search for hundreds of scalable, high-potential businesses for sale. As part of our comprehensive services, Foundy offers M&A advisory support across a wide range of industries. Our M&A brokerage platform simplifies your acquisition journey by streamlining the entire process from start to finish, all within a single, user-friendly portal. Whether you're working with an M&A broker, business broker, or business transfer agent, Foundy provides the insights and tools you need for success.
If you're aiming to sell your business or preparing for a funding round, Foundy’s unique approach starts with a free business valuation. This initial step helps you and our M&A advisors assess your company’s current position and identify the necessary actions to maximise value for a successful sale. Foundy provides clients with our proven Triangular Model, which factors in over 29 key elements that contribute to your business valuation. By leveraging data-driven insights and expert advice, we ensure you receive a comprehensive and accurate assessment.
We have access to over 1.1 million transactions, giving us the knowledge and experience needed to guide you in acquiring a high-value business or optimising your own for sale. For those looking to buy an Amazon FBA business, our platform offers tailored solutions, while our step-by-step expert support ensures you navigate the acquisition process smoothly and efficiently.
If you’re wondering how to get started with purchasing an Amazon FBA business, reach out to our friendly team at Foundy. We're always happy to provide M&A advisory support and help you find the right opportunity to fit your investment goals.
Ready to Discover Your Business's Value?
Running a business and managing the decision to buy or sell another can feel like juggling two full-time jobs. While some business owners thrive on the thrill of handling it all themselves, many—myself included—find tremendous value in working with M&A advisors who bring sector-specific experience. However, it’s important to note that working with M&A brokers or an investment bank isn’t always the perfect solution for everyone. This is why we’ve developed Foundy’s advanced portal and Find An Advisor programme. These tools are designed to empower business owners with the resources, education, and relevant expert support they need to navigate the end-to-end process and secure a higher valuation.
For those looking to understand the potential value of their business, our free valuation calculator on our pricing page can provide a clear view of how Foundy’s services can add six to seven figures in additional share value. Whether you’re buying, selling, or growing your business, Foundy is here to assist you in every phase of your journey.
No matter where you are on your business path, connect with Foundy to access the tools and M&A advisory expertise needed for a smoother, more successful acquisition or sale process. Learn more at Foundy.com.