Without a proper FBA business valuation, many business owners can’t separate their emotional attachment from their business’ actual value. There are so many factors that determine what a buyer will pay when you’re selling your Amazon FBA business, so look at the facts, not the feelings.
Intrinsic has a proven track record of growing and scaling Amazon businesses in the consumer health space. So in this article, we’ll detail the most reliable ways for Amazon FBA sellers to know (and grow) the value of their business. We'll also provide some valuations tools that are most important for health and wellness brands.
Getting a baseline sale price with an business valuation
Before you think about how to increase the value of your eCommerce business, you need to know where your business stands. Getting an Amazon business valuation provides you with an estimate of the amount for which you can probably sell.
There are FBA business valuation calculators available over the web, but they are very generalized. If you’re serious, you want accuracy and the most accurate valuation requires some expert advice.
For health and wellness brands, Intrinsic offers a specialized free valuation that combines broad industry expertise from category veterans with deep Amazon knowledge. A session with an Intrinsic expert is extremely valuable even if you’re just starting to investigate selling your Amazon business. It’s a great way to better understand your street value, learn more about how you’re performing, and get advice on how you can improve. Once you have a true understanding of your current brand’s value, you can focus on how to increase it.
How to increase the value of your Amazon business
Maybe you’re planning to sell as soon as possible, or maybe you have a future target value to hit first. Either way, any business owner wants their business value to be as high as possible. There are a few things that any Amazon business can do to increase its value to potential buyers.
Focus on stable growth
Growth - any kind - can seem like a great thing for a business. But unstable growth trends can point to a lot of factors, and not all of them indicate a bright future. Your financial records are critical, and if you can show stable growth in your gross revenue (even with a few peaks or valleys along the way), it indicates a strong infrastructure, less risk, and potential for continued growth.
Bonus if you can maintain steady growth over the course of more than two years. That makes you especially attractive to a business broker.
Ensure a healthy supply chain
As a health and wellness business, you already have to adhere to more rigorous regulations than the average Amazon seller. Make sure you work only with reputable manufacturers and reliable suppliers.
If you’re going to sell your business, you will have to make some effort to prove the safety and reliability in your supply chain. If you haven’t taken a hard look at it recently, now’s a good time.
Build a strong reputation
Getting reviews on Amazon is probably the thing that keeps most Amazon brands up at night, more than anything else. Good reviews drive your organic rank, your reputation, and persuade more than one shopper to “Add to Cart”. Whether you’re using software to automate the requests, or working with product reviewers to do it, invest the time in soliciting your customers to add reviews to your products.
Invest in advertising - intelligently
You could research Amazon advertising strategies for months and never exhaust the number of available opinions. However, you will benefit from focusing on one or two tactics at a time until you find something that works well for your consumers. Understanding the mix of advertising options is important, but doing them all isn’t.
“It is so easy for brand owners to get wrapped up in search, advertising options, and ACoS. But what’s more important is deeply understanding your consumers. Talk to them. Understand why they buy, and how they find you. And focus on the advertising channels available that those buyers see.” - Chris Giacolone, VP of Brand Management at Intrinsic
Increase the value of a health and wellness brand
Amazon health and wellness products are a specialized niche, where industry knowledge and brand equity are king, but must be balanced against regulations. There are a few things that are very important for any Amazon seller providing health or wellness products.
Focus on brand strength
One thing most other incubators and brand acquirers will tell you to do is diversify and grow your SKUs list to increase your Amazon business value. But we won’t.
Instead, an Amazon FBA business should focus on a cohesive product catalog. Don’t diversify if it doesn’t add clear value to your customer experience.
For example, if you’re selling a small catalog of women’s health products, shortly before seeking to sell is not the time to introduce a men’s topical product. Instead, invest your extra energy in building out a strong brand across all of Amazon’s features.
Ensure you’re doing things like completing your enrollment on Amazon Brand Registry, building out your Amazon brand page, and optimizing your product listings with advanced content like videos, professional photography, and keyword-rich details.
Increase customer stickiness
This is especially important to health and wellness brands, particularly if your products are consumables. Your net profit will depend on repeat buyers, and you can prove value by the returning customers you have.
Many Amazon FBA sellers have found success using Amazon Subscribe & Save to encourage automated ordering and reduce attrition. Delivering a consistent, high-quality product is critical too and can help keep your cost to acquire a customer (CAC) down.
Increase Average Order Value (AOV)
Founders looking to increase the value of their Amazon business should focus on increasing average order values, according to Erum Hasnain, Intrinsic's VP of Acquisitions. There are many ways to do this, including:
- Providing larger product sizes
- Bundling products together, or as a multi-pack
- Providing Amazon coupons on just larger sizes or higher value products
- Investing in growing the organic Amazon rank of your higher value products through sponsored ad campaigns and reviews growth
Drive traffic to Amazon from external sources
Use all of the tools and channels available to you to drive search volume. When you have traffic seeking you out that comes from social media or search engines, it’s a great indicator of brand recognition outside of the Amazon channel. That brand awareness can have a huge impact on your Amazon FBA business valuation.
Driving traffic to Amazon from external advertising will also pay off for you in the short term, as it will improve organic ranking, and grow sales. Specifically, make sure you invest in at least one of these methods:
- Growing your own email list or social media community to promote any deals, coupons, or bundles you’re offering on Amazon.
- Cultivating new traffic to your Amazon listings through Facebook, Instagram, or other social media advertising.
- Advertising your Amazon listings to people searching on Google or Bing for products like yours.
So, Are You Interested in Selling Your Amazon Business? Here’s How to Start.
Intrinsic is here to help you take your next step towards selling your Amazon business. If you’re ready to get the details about what your Amazon business is worth, start by getting a business valuation. We can talk through your seller discretionary earnings, and guide you transparently about the right next steps for you.
Are you still wondering if you should sell your Amazon business? If so, schedule a consultation. We can help you understand the comprehensive process of selling, and guide you towards the factors that brand owners consider to help you make a choice.
Regardless of your mindset today, it’s always a great choice to think about the future. Learn more about the process to sell your Amazon business by connecting with Intrinsic.