14
Dec

Amazon Company Valuations

From WebsiteClosers:

WebsiteClosers.com, together with its sister Middle Market firm, ValleyBiggs, are boutique brokerages that focus on representing Owners of Technology & Internet Companies looking to sell their companies. We have represented hundreds of Amazon companies at market.

An Amazon Company can come in many shapes and sizes. Some companies only sell on Amazon; others use Amazon as one sales channel, but also sell on other marketplaces, on their own website, etc. Different valuation models are used depending on the makeup of a particular, overall business. This article will be focused on putting a value on a company that primarily sells third party via an Amazon Seller Central Account.

As with the sale and valuation of any business, it’s essential that Ownership have an accurate understanding of the company’s current and future value. In small business transactions, earnings and growth remain primary factors in getting maximum value from a sale. Having a high gross sales number doesn’t always equal a large sale price — profit is king.

But profit isn’t everything when it comes to putting a valuation on an Internet Company, and certainly, selling a successful Amazon company is no different. There are a number of factors to consider. The process can begin by asking a few basic questions about the business at hand.  For an Amazon company, here are a few things we focus on during the valuation stage:

  1. How do the company’s ASINs rank for their associated keywords?
  2. How many products are Best Sellers, and in what categories?
  3. Is the business in a closed category?
  4. Does the business sell its own brand of products, others or a mix of both?
  5. Does the business have multiple brands and/or sell within multiple verticals / categories?
  6. What is the company’s growth rate (annually and monthly)?
  7. How long has the company been active on the Amazon platform?
  8. Does the company sell any products via FBA / Prime?
  9. Number of Product and Company Ratings
  10. Does the company utilize Vendor Central and its additional advertising mechanisms?
  11. Does the company have other sales channels?
  12. Does the company utilize the FBA program to sell internationally?

An existing, highly successful Amazon company is an opportunity for strategic buyers and budding entrepreneurs because if a company has thousands of product and company ratings and is a 5 Star Seller, it would take a new seller years to achieve the same historical value on the algorithm, but by buying a company with these values 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 ASIN (if you sell brands owned by others).  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, 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 is success-based – so you pay nothing until closing.

Our brokerage will be available at the Prosper Show for one-on-one meetings – please feel free to contact us directly at info@websiteclosers.com to set up in-person meetings, or just stop by our booth any time. Looking forward to meeting you all in Vegas!

website closers