Over 2 Million people sell on Amazon via their Seller Central platform, making each one of those accounts an asset that has value, and that can be sold. As with the sale and valuation of any business, it is essential that Ownership have an accurate understanding of the current and future value of that company so that an exit strategy can be considered at some point down the road. In small business transactions, earnings remain a primary factor in getting maximum value from a sale. Having a high gross sales number doesn’t always equal a large sale price — profit is generally king, and the higher the profit, the better the purchase price multiple.
But profit isn’t everything when it comes to putting a valuation on an Internet Company, and certainly, selling a successful Amazon Seller Central Account is no different. There are a number of factors to consider. The process can begin by asking some of the basic, yet important, questions about the business at hand. For an Amazon company, here’s a few things that we believe can accelerate a sale and cause a higher valuation multiple:
1. How does the business rank within Amazon’s A9 and search algorithms?
2. How many products are top sellers, and in what categories?
3. Is the business in a closed category that now requires Amazon approval?
4. Does the business sell its own brand of products, or others – or a mix of both?
5. What is the growth rate of the company on Amazon?
6. How many years has the company been active and successful on the Amazon platform?
7. Does the company sell any products via FBA / Prime?
8. Number of Product and Company Ratings
This last one is one of the most important of all. If a company has thousands of product and company ratings and is a 5 Star Seller, then her company demands a much higher multiple than industry norm. The reason for this is simple: it would take a new seller years to achieve the same number of ratings and reviews, but by buying a company with them already in place, you erase the period of time necessary for growth. Additionally, for the Amazon platform, ratings and reviews play a large part in your ability to win a buy box or otherwise outrank another seller (or even Amazon) on a particular SKU. This gives much added value to an Amazon company and makes it highly enticing to buying entities.
There are a great deal of other attributes that go into putting a value on an Amazon company, so your best bet is to begin talking with an Internet Business Broker once you believe it’s time to starting thinking about selling. A broker that focuses on selling and financing companies in the Internet Sector (especially Amazon companies) like WebsiteClosers.com, can be a great step in the right direction to achieving the highest multiple and highest cash at the closing table. And what’s more, everything we do is success-based – so you pay nothing until we’ve closed your company.
Give us a call at (800) 251.1559 or email us at [email protected] to learn more about our process. You’ll be glad you did.