Look no further for the best checklist when buying an Amazon FBA business. Learn about due diligence, business acquisition, and more.
Buying a Fulfillment by Amazon (FBA) business is one of many ways to become the owner of a profitable business. However, acquiring the right FBA business requires the same due diligence as for any other business purchase.
Knowing what questions to ask and what aspects of the business to analyze can help you uncover the opportunities and risks involved before investing in an FBA. This article offers a how to guide and includes a simple checklist for evaluating potential investments in an Amazon business. Keep reading!
Amazon's FBA program is a type of business model where a company stores and ships products for other businesses on the Amazon website. It helps these companies get their items to customers around the world quickly and easily. In exchange for this service, the company charges a fee and receives a portion of the sales.
An Amazon FBA business is relatively easy to start. You only need to register an account with Amazon and select which products you would like to store and ship on behalf of others. Once registered, you can begin marketing your services to companies looking to expand their reach.
Regardless of how easy it is to kick off, maintaining and turning an FBA into a successful business is as challenging as any other type of business.
One advantage of buying an FBA business is that you get access to Amazon's 310 million active users. However, like any other industry or sector, its profitability depends on various factors.
Online business marketplaces save you time and effort when answering this question by doing the due diligence for you, showcasing profitable options, and connecting serious sellers with pre-vetted potential buyers.
Once you have a budget and maybe a type of business in mind, the hardest task is finding the right business to buy. Here are the basic steps to do it right.
Look for options at online marketplaces or broker websites. Boopos, Flippa and Acquire are some of the options out there.
At first, marketplaces provide the most basic data, and once you prove you are qualified to buy the business, they unlock more detailed information.
Some of the data points you have access to before pre-qualifying are:
Depending on the marketplace methodology, you can also get some insights into the existing FBA business, such as a health score, advertising cost ratio, seasonality, and revenue growth, to name a few metrics.
Although you can find established Amazon FBA businesses on marketplaces, conducting your own due diligence is also recommended to learn more about the business you will buy.
In Boopos' case, every approved business boasts a solid revenue track record of at least 18 months and LTM (Last Twelve Months) revenue of $100,000 or more.
As we mentioned before, getting pre-qualified gives you access to more information about the businesses for sale. At Boopos, specifically, it also allows you to get embedded financing to make the purchase of a SaaS business.
You also receive an Interest Letter as proof you have the funds available to make a purchase.
Online business marketplaces offer advisors who guide you through every step, from choosing the right Amazon FBA business to closing the deal.
The road to becoming a successful business owner means doing your due diligence. Usually, this process consists of an extensive review covering at least the following topics:
By examining each aspect carefully, investors can gain insight into potential risks they could face if they decide to buy an Amazon FBA business. The information gathered during the due diligence process can make or break the sale or acquisition of an Amazon FBA business.
Are you interested in acquiring your first Amazon FBA business? Explore our selection of profitable companies, get our support throughout your buyer journey, and obtain financing to close your purchase.
