More than half of Amazon’s $10B in sales come through third-party sellers.
Now, thanks to the Amazon’s fulfillment program (which gives sellers a better chance at being a seller in the “add to cart” button), these vendors are being bought and sold for millions, for as much as 23x their monthly profits.
This ecommerce “gold rush” has created a thriving cottage industry of companies whose sole purpose is broker these deals — like Flippa, an eBay-esque marketplace that allows buyers to bid on businesses, and sees nearly 150 business sales a day (from which it takes a 15% cut).
Who are these people?
Much like a real estate agent, these brokers will evaluate the business based on sales, customer reviews, and product selection, then present owners with a number of offers from buyers.
The most valuable Amazon vendors are 3-5 years old, have an established brand, have their own exclusive products and, of course, ship through Amazon.
Empire Flippers, for example, brokered 58 deals last quarter — including the sale of an athletic company for $1.7m.
Only one hitch
Amazon’s not making it easy for businesses to change hands.
Transferring Amazon seller accounts is prohibited, meaning the new owner has to establish a new seller account and start from scratch by earning good ratings and reviews.
Now that these big-ticket sales are becoming more common, Amazon has agreed to review transfers on a case-by-case basis.
Not to mention, they’re putting all of their eggs in one basket
Albeit, a very large, successful one.
As some brokers acknowledge, it’s pretty risky to buy and flip businesses that rely completely on a single platform that could change its policies at the drop of the hat and leave them high and dry.