Do you want to be proactive and think ahead in order to create a highly viable business? I like the way you think. You can make your business far more appealing and profitable in your exit by increasing your business’s current value to be above your competitors. The more preparation that is done in advance, the more likely you will have a successful transition and higher payout.
There are certain factors that Amazon aggregators look for, and if you want to get the highest payout possible, it’s important to know what they value most.
Amazon aggregators generally look for category leaders. They want to see that you are worth their investment, have a great potential for growth and are killing it in the sales department. If you would like to get some additional background on Amazon aggregators, see our first post here.
Even if you aren’t necessarily ready to sell today, it’s never too early to explore what it takes to make a significant exit that can deliver a life-changing payout.
It’s never too early to explore what it takes to make a significant exit that can deliver a life-changing payout.Meny Hoffman
Increasing the value of your eCommerce business can help you acquire more profits both before and after the sale of your business.
Stand out from the pack and find ways to better improve your current business. Let’s explore 8 factors that make businesses the most appealing to a potential Amazon aggregator.
What are your margins and profits? How have your profits grown over the past 12 months?
This is where knowing your numbers come in handy. The majority of Amazon aggregators are looking for at least $200k annual net profit and usually around 10-15% net margins. They want to see profitable FBA brands with healthy margins.
P.S. make sure your financials and records are up to par so that you can present a clear picture of your business earnings and dealings to a potential buyer.
2. Registered Brands
Is your brand registered and trademarked?
If you have a unique product, trademark it. While the process can be a bit cumbersome, the benefits greatly outweigh the challenges. Competitors won’t be able to duplicate your product, so you’ll have a distinct advantage in your market sector.
Aggregators are mainly looking for sellers that have their own branded merchandise. Owning a patent, utility, or design singles you out from the rest.
3. Product Quality
What are you selling?
Having a strong brand and a high-quality product is indispensable and ensures your product/s won’t go out of fashion. Amazon aggregators want to invest in products that will continue to be in high demand and not just a seasonal fad.
4. Fulfilled By Amazon
Amazon FBA businesses are easier to manage, even after being transferred to a different owner because all the logistics are already set with a dependable provider. They don’t want to deal with all the hassle of packaging, shipping, and returns. FBA is a well-established system and doesn’t need tweaking once they buy off a business, which is highly attractive to an Amazon aggregator.
5. Customer Loyalty & Reviews
What is your organic ranking? Do you have a review moat? (i.e. do you have more reviews and a higher star rating than your competitors?)
One sure way of standing out above the others is having an average rating of 4 stars or more, and a competitive search rank in their niche. In a business, the amount of loyal and happy customers plays a significant role in the growth direction of the brand. Some practical ways of achieving this are: creating a strong social media following, driving up your reviews, and through top-notch 1:1 customer outreach.
6. Growth Potential
Is your business on the upward? Could you use a 3rd party seller to improve your business to the next level?
If your company had a quick summer fling, then investors aren’t going to be so keen on buying you out. However, do you have an exceptional product, that continues to sell and excel? If you do, you are talking their language.
What gives your product an edge? How competitive is the niche?
Maximize your profits by finding a profitable niche. Additionally, each aggregator has different niches that are looking for. Most aggregators target a specific market and are searching for niche products within that sector.
8. Build SKU Density
Differentiate your products. More is not necessarily the better when it comes to SKUs. Having a few winning products proves to be more effective and desirable to a buyer.
Aggregators would much rather see $1 million in generated revenue from a few SKUs, than $1 million generated through 80 SKU’s.
Above all Amazon aggregators are looking to see that the business is profitable, the business is growing, and that the business has strong positive feedback.
They want to see that you are worth their investment, have a great potential for growth, and are killing it in the sales department.
And if there’s only one thing you remember from reading this:
The stronger your business is, the better it will appear to your buyer. Once you decide to sell and explore your options, don’t slack on business operations. If anything, you want to use all your efforts to grow bigger and get stronger as a brand.
The more promising your business looks to a buyer, the more profitable and better of a deal you will make. It will be worth all your hard work once you get that amazing payout in your bank account.