Acquisitions of Amazon businesses are at record highs. Learn why entrepreneurs sell their businesses and what types of buyers you should consider.
You have put so much into your Amazon brand - hours, emotions, sweat equity - and possibly your entire savings. However, many business owners reach a point where they consider life after the business. Have you ever considered what your next chapter looks like? Are you drawn to other ideas and interests, without the time to pursue them? Does selling your Amazon business feel like a huge lift?
It doesn’t have to be. In fact, with the right plan, it can be exciting and truly rewarding. Deciding if you should sell your Amazon business is a decision that only you can make, but at Intrinsic, we’ve seen a lot of founders do just that. In this article, we’ll explore the decision-making process to help you make a choice.
Entrepreneurship is a lonely journey. And the more successful you become, the more difficult it can be to find mentors who can help guide you to improve your position even further. Do you find yourself struggling with the endless Amazon nuances? Where do you turn when you need help dealing with black hat competitors or advice on handling your inventory load?
Amazon is an incredibly complex place to manage a business. At some point, you may find yourself without the experience you need to move to the next level. This realization brings many Amazon sellers to the negotiating table, looking to sell, or to offload some ownership in return for specialized expertise.
Many of the entrepreneurs that build health and wellness businesses launch products because of a personal struggle, or because they’re an expert in the industry. Many pour everything they have to grow their business as far as they can… but reach a point where any more growth requires additional capital, and different resources. Incremental gains are no longer enough. Do you have the extra money to invest in growth? If not, selling to someone who does have those resources can be a great move.
Sellers who have reached the end of their resource capacity can seek funding for Amazon business growth through various means. And one of those is selling part or all of the business to an incubator, which provides a lot of benefit. For one, it’s fast access to capital. But just as important, it’s access to other non-financial resources like reliable suppliers, automation, and specialized Amazon expertise that isn’t accessible to most Amazon sellers. Especially if your next step is moving from incremental growth to true scale, selling the business unlocks a lot of opportunity for the brand’s future.
Amazon may be a very different place today than when you started your brand’s journey. With the complexities that now exist across Amazon organic search optimization, PPC, digital content, and overseas competition - it would be forgivable to feel overwhelmed. For some, consolidating in your industry and merging with other companies can be an attractive way to outmaneuver your competitors. However, it can be difficult to plot a clear path for merging on your own. Finding a suitable company to acquire or merge with on your own will be a huge undertaking. You’ll need experts to help you analyze and assess whether the opportunities are worth your commitment. And if you succeed in executing a merger - you could find your competitors still hot on your heels doing the same. If the cutthroat Amazon competition is weighing heavily on you, it may be time to offload so you can get back to the type of work that you enjoy most.
There are many personal reasons that Amazon brand owners give us for selling their Amazon businesses, and all of them are valid. Perhaps you’re feeling pressure because your family is growing, or because of loss, or because you need to move your resources to support a family member. Perhaps you’re ready to cash out so you can achieve a personal goal or help someone you love to do so. Or perhaps the time you’re spending to run your business keeps you from pursuing other interests, hobbies, or ideas you have. Regardless of the reason, selling your Amazon business can be the right step that creates stability when you need it.
This is probably the most common reason business owners give for selling an Amazon business, especially a profitable one. Whether you want to spend more time with loved ones, you want to concentrate on a new interest, or get a major payoff to invest in the next big idea, your heart may not be in the business anymore.
“Founders work with Intrinsic for a lot of reasons, but they frequently say it’s because we provide access to like-minded individuals and resources specific to the unique risks and demands of health and wellness consumer goods. They value that network for their next big idea - they want to take what they’ve earned from the business, and use it as funding for their next business. We’re with them at the next step, introducing them to partners, mentors, and opportunities to build better.” - Erum Hasnain, VP of Acquisitions at Intrinsic
Acquisitions of Amazon businesses are at record highs, and it’s a great time to sell because of the buzz around both Amazon FBA and FBM business. There are many kinds of buyers out there, depending on the size of your business.
If you want to sell a small Amazon business (think under $500K in revenue per year), you may want to consider waiting until you grow larger. You'll get a higher multiple, and you'll be able to sell to more well established acquirers. That doesn’t mean you can’t start the research process now, though. In fact, you may want to establish a relationship with an acquirer now, in order to be in a position to sell to them later. Intrinsic experts often forge connections with smaller consumer health brands well before the founder is ready to buy. Connecting early means you can get an assessment of your business, and what it could be worth down the road.
If you've made up your mind to sell now, you'll be best served to sell to an individual buyer. The most common buyers you’ll encounter at that size are experienced Amazon sellers who want to expand their portfolio with limited extra work, or new entrepreneurs who want to make the jump to Amazon selling with an already-established business. In either scenario, the buyer will probably use a loan or some other type of funding to buy your Amazon business. This does introduce an additional risk - so be sure you are prepared in case financing falls through. Like selling a house, the transaction can have numerous hiccups along the way.
The news headlines seem to trumpet larger and larger paydays for some of the big Amazon acquirers out there. These companies snap up Amazon businesses and then churn them through their internal process, consolidating and refining. General aggregators often target just Amazon FBA businesses, and operate across the entirety of the consumer goods market. It could be a quick sale for you, if you’re looking to cash out, but consider your priorities. Do you still have a vision for your business? Do you hope to see it scale further into a household name? If so, you should consider working with a more specialized type of Amazon incubator for consumer health brands.
The health and wellness industry has unique risks and requirements, and these have impacts on every building block of your brand. It can be difficult to bridge that gap with investors who don’t understand those nuances. Likewise, selling an Amazon business to a business incubator with limited Amazon experience can backfire. Intrinsic is a boutique brand acquisition company that balances decades of experience from big health and wellness brands with the expertise and agility that Amazon requires today.
“We specialize in consumer health brands, and there’s a lot of functional efficiency when you specialize. You know the consumers better. You hire differently. You know what strategies work so you can recognize a good brand, and then turn it into a great brand.” - Chris Giacolone, VP of Brand Management at Intrinsic
These unique strategies can surface in many ways - it may be experience in navigating product claims, in de-risking your business, or in tackling many of the unique challenges that come with selling products that go on or inside the body.
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 specific situation, and guide you transparently about the right next steps for you. If you’re interested but need more time, schedule a consultation. We can help you navigate the next months - or years - with target milestones in mind. During your free consultation, we’ll discuss your vision and your goals, as well as the concrete steps you can take in the coming months to increase your consumer health brand value.
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.