One of the main ways that sellers can realize a return on their investment in their Amazon business is to work to build the brand up to the point that they are able to sell the business to someone else. If your strategy to realize a profit with your Amazon investment is to sell, there are a lot of areas to consider.
NOTE: If you’re looking for a broker or a company to do financial due diligence – that is not us! We are here to help buyers and sellers stay on top of their risks on Amazon, and you’ll have to locate your own broker and accountant to evaluate the financial health of the business.
Amazon doesn’t permit you to sell your account. I've included the relevant portion of the Help pages here.
Seller accounts generally are not transferable. Seller accounts provide access to the tools and resources that sellers use to list their products and manage their orders. Seller accounts also include account activity history and buyer feedback. Every seller on Amazon must have a seller account and an agreement with Amazon that establishes the terms under which the seller lists and sells their products.
If the ownership of a business changes for any reason, the new owner needs to establish a new seller account.
If the ownership of a business isn’t changing, but the individuals responsible for managing the seller account have changed, you can add users to the account.
You must therefore think about how to track sales on the account as well as sales history to see if you are meeting your YoY goals. You’ll need to get copies of nearly everything from the buyer’s account for your records.
You may ask, what is the real risk of making changes? Realistically, Amazon is paying attention any time something like a bank account or a primary name or Tax ID changes – this can cause turmoil in the sale, and can potentially result in a verification shutdown where the account is unavailable while being investigated; or worse, you start working on the account, change things and Amazon thinks your account has been compromised and shuts you down for days while they investigate.
Because Amazon doesn’t permit you to sell the account, you have a few options - some of which may make sense for you, others may not
- You can risk it – I obviously don’t recommend this path, it’s always better to stay on Amazon’s good side.
- You can sell off assets only – the trademarks, the patents, the inventory, pictures, etc., with all of the Amazon data and add the listings to the new Amazon account **PREFERRED OPTION for sellers wanting to establish ownership of the brand and products**
- You can sell off the legal entity itself, and add the new owner as a user on their new business since nothing would be changing – bank account, Tax ID, business name, etc. **This won’t work for most sellers but is perfect for when the business is acquired outright and everyone who worked there including the owner was remaining, just the business was now owned by someone new. **
And don’t forget your inventory! You don’t want to be out of stock and risk losing ranking for the products, so you’ll need a plan to handle the inventory switchover. Particularly for FBA inventory, this is tricky, since of course, Amazon won’t resticker items at the Fulfilment Centers already – you’ll have to have those removed and restickered, and sent in again under the new account.
Then let’s add in the complexity of brand registry and gated categories
Brand Registry adds a whole layer of complexity, because you need to get the listings from one account to another and establish editorial control over them on the new account.
And don’t forget – if you got Brand Registry under the old rules, you may not be eligible under the new rules.
Then what if you’re buying a supplements business? Getting ungated in dietary supplements is now a lot harder than just getting ungated in the category and you’re good to go – now you have to prove your product is actually produced in compliance with FDA guidelines and regulations – plus it’s $3k to even apply! Multiple other subcategories have this huge ungating fee as well, such as some baby care subcategories, as well as other FDA regulated subcategories.
And finally, what kind of performance issues are you inheriting by buying someone’s Amazon business? What kind of liability might you be taking on?
This is one that I know a lot of folks don’t think about when they’re buying an Amazon business, but it’s a critical area of concern for me – since I’m always focused on policy and compliance.
Areas of due diligence that you want to verify:
- How many performance notifications have they received? For what reason? If they’re product policy related, rather than the seller’s poor management of their Amazon account, you could be buying a passel of inventory that you will struggle to sell and get good reviews on.
- Have there been serious complaints on the products through returns history or seller feedback? You can of course always see the product reviews, but once you open a new account, all that history of defects is gone for good.
- Are the listings in compliance? Are you running a risk taking on product listings that make unauthorized claims, don’t clearly lay out required warnings, or violate Amazon image policies?
- Is the product even legal to sell? If it’s something that requires registration, does the seller have it? Are you taking on a lawsuit risk?
If you’re struggling with Amazon Policy & Performance due diligence on an Amazon business sale, please reach out – we do a focused evaluation just of the issues that affect an account sale, and present those to you and to your broker to evaluate and fix. If you’re a buyer, and you want to protect your investment, we are happy to evaluate the seller’s account and product documentation for you.
I want to buy or sell an Amazon business, and I need help!
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