It takes years to build a successful eCommerce business from the ground up. Countless hours of sweat, tears, and hair-pulling moments. You’ve trudged through all of the common hurdles to success, and now you’re the owner of a successful online business.
You’re ready to move on to bigger (and greater) things, and you’re looking to sell. Maybe you’re wondering how to sell an Amazon business. Maybe you built your own branded site, or sell on Etsy, or eBay, or any number of other marketplaces.
- Where should you start?
- How will you get an accurate appraisal?
- Should you hire a brokerage firm?
Don’t worry, we cover all of these questions (and more) in the below sections.
Determining the Value of Your Business
Without getting too technical, the total value of your eCommerce business is entirely dependent on how much profit it produces. The actual profit of your business is determined by taking your total sales figure (i.e. all the money you’ve made) and subtracting from it the cost of goods sold (as well as any expenses). The number that you’re left with is your actual profit.
How much money your Amazon/eCommerce business will actually sell for also depends on numerous factors; niche, industry, inventory, and the overall market landscape of your specific niche. In the current eCommerce market, it’s normal to see businesses sold for 1.5 to 3 times their profit value.
Increasing the Value of Your Business
If you’ve crunched the numbers and aren’t happy with the results, you can still increase the value of your business before selling. In order to sell your business for the price you want, you need to increase its ROI for the buyer.
One major way to increase the value of your Amazon business is by ensuring that it’s future-proof. Although this is easier said than done, the more concrete your business is, the higher the chance that a buyer will be willing to buy it for your target price.
Consider using the following strategies to increase the inherent value (and buyer’s ROI) of your business.
Diversify your inventory to increase your market share. If you only have a handful of products that constitute a large percentage of your sales, your sales valuation might suffer. This can easily be combated by selling a larger variety of products across multiple niches.
If your business isn’t branded (i.e. you’re selling drop-shipped products, or you don’t own a significant portion of the supply chain), then you might have a lower valuation. The reasoning behind this is simple; it’s harder to market products that aren’t unique or don’t have solid branding behind them (or aren’t fully controlled by the seller).
Although the above strategies might not be possible for your business (especially if you’re looking to sell as soon as possible), it’s definitely recommended to brainstorm other ideas of increasing the ROI of your business.
Remember that buyers want to purchase an eCommerce business that is sustainable. They don’t want a business that won’t exist in a few years. Keep that in mind when thinking about how to increase the value of your Amazon business.
#3. An Overview of the Selling Process
If you’re fully ready to sell your Amazon business, you’re probably wondering what the specific processes will entail. Although there are many different variables that can affect the selling process, the basic timeline is as follows:
- Make the decision to sell
- Receive a proper valuation of your entire business model
- Build a prospectus (a detailed report containing financial details and forecasts of your business)
- Locate buyers for your business (either independently or through a brokerage)
- Price negotiation
- Complete the sale
- Transfer of ownership
Marketplaces, Brokerages, and Buyers
The three main places to sell your Amazon business include small online marketplaces, eCommerce brokerages, and investment banks.
Small business marketplaces are typically only used for business generating under $500,000 per year in revenue (or valued under $500,000). Flippa.com is a good example of a small business marketplace.
eCommerce brokerages (such as websiteclosers.com) are usually used by businesses worth anywhere from 100,000 dollars all the way up to 20 million USD. Investment banks are reserved only for those businesses doing an extraordinary number of sales per year (over 20 million USD).
Using a Brokerage Service
Most Amazon businesses are sold using a brokerage service. The reason for this is because the brokerage has the industry connections, experience, and know-how to make the sales process simple (and more importantly – fast).
The brokerage recommended in this article has achieved over 750,000,000 in eCommerce/digital business sales. They offer free consultations/quotes, and are backed by countless years of experience (and an incredibly savvy team).