Amazon FBA Buyer & Seller Case Study

I’m joined today by both Alan Peterson and Kurt Hansen, the buyer and seller of an Amazon FBA business that was sold on Flippa for $82,500 via Buy-it-Now.

This private label FBA personal care products business has 6 total products with a 4.7-star average review. The business generated $32,000 profit over the trailing twelve months and included the Amazon Seller Central Store, Amazon Vendor Central Store, and $25k of inventory at cost.

Kurt is among the first to sell his Amazon FBA business since we launched our dedicated Amazon FBA section on Flippa, and we were lucky enough to sit down with both him and Alan, the new owner.

What are your professional backgrounds and how did you both get started with online businesses?

Alan: I am an entrepreneur and have been my entire life. I have run a marketing agency, The Peterson Group for 27 years. I now own two online eCommerce businesses. I also coach entrepreneurs to help them grow their businesses, improve their leadership and create strategic plans that align and engage their teams.

Kurt: I have a Bachelors and Master’s Degree in Accounting and am a Certified Public Accountant. After working in public tax accounting for several years, my entrepreneurial drive drove me to spend full-time efforts on my other businesses. I’ve always had an entrepreneurial drive and have learned over the years how to identify markets and execute on growth opportunities. I love to march to the beat of my own drum and enjoy the benefits of my entrepreneurial lifestyle. My other businesses include a payments software company, concessions business and multiple online businesses in the health, beauty, and sporting goods industries.

How did you get started with Amazon FBA businesses?

Kurt: I started online with BigCommerce stores and then expanded to Ebay, then Amazon, and then Walmart. Some of my other businesses are FBA only, some are a combination of online marketplaces. The Amazon FBA model is very convenient once the infrastructure is set up and the business is on auto-pilot with very little effort required. The benefit and draw of Amazon is obviously the volume of buyers purchasing on Amazon and well as being able to leverage the fulfillment channel of Amazon. Some of the downfalls of Amazon I’ve experienced include the massive amounts of seller competition, the marketplace fees, and the limitation of products Amazon will allow to be sold on their marketplace.

How and when did you each discover Flippa?

Alan: I found it via surfing the Web when I started seeking businesses a year ago.

Kurt: Being an entrepreneur, it seems like I’ve always known about Flippa but have only casually watched the site and I prefer to grow my own businesses rather than buy. I recently re-engaged with Flippa to assist me in selling one of my FBA stores.

Why did you decide to sell your FBA business on Flippa?

Kurt: Flippa provides instant access to thousands of buyers. While I knew [Flippa’s] FBA section was new, I thought I would give it a try.

You were one of the first Amazon FBA businesses sold on Flippa since we launched our Amazon FBA section. What was the sales process like?

Kurt: I gathered the requested information for Flippa and they had the listing live in a matter of a couple days. I immediately started to get contacted and engaging with buyers. I didn’t disclose my reserve publicly but did give serious buyers the number I was looking for. I was very reasonable with my price in mind and had market comps and industry average multiples to back it up. This quickly weeded out the non-serious buyers. In the end, I had over 8k views, 500+ watchers and over 400 different people send me messages. I had several low ball offers that I did not accept. I ended up having about 5 pretty serious bidders that were private messaging me offers. I had several offers that were very close the final winning number that I almost accepted. In the end, one of the buyers offered the price I deemed fair and had in mind and we closed the deal 30 min before the auction ended.

How long did it take to transfer over all the business assets and what was the process?

Kurt: Transferring an Amazon business can be very difficult or fairly simple. The entire process can be accomplished in a day if you know what you’re doing. The main Amazon seller central user just needs to be handed over. We went ahead and allowed the buyer to update the email address of the main seller central user. This doesn’t change the account but simply changes the email address for logging in and subsequently allows them to reset the password and change it. All credit cards, addresses, etc. etc. will remain with the account. Also, Amazon users are the same throughout Amazon’s platforms. Meaning if you use the same user for your Amazon purchases and your seller central account, the buyer will now have access to your order history, credit cards, etc. Just something to be aware of as you prepare for a transition. Ideally, your seller central account is a different amazon account than what your spouse orders diapers with on your prime account. If it’s not, and you’re using the same account, you need to get the spouse set up with a different account and then delete out your personal info because you will have to give away your seller central account.

Once the buyer has access to the seller central account, they can simply update all the legal, bank and other information through the Amazon portal.

Other transition elements may include accounting for the current balance in the Amazon account, inventory not at FBA warehouses, and third party service provider accounts. Each transition will be different depending on the seller’s infrastructure.

You also had the opportunity to work with our account management team. Can you tell me what that was like?

Kurt: The Flippa sales team was very quick to respond and provide feedback and answer questions. Also, they helped me get a game plan for responding to the many inquiries and weeding out the serious vs non-serious buyers. Especially for a higher dollar transaction like my recent one. I would suggest to Flippa that they provide more information about the whole process (what Flippa does and does not do/assist with) up front so there wouldn’t be so many questions from me/sellers.

What tips would you give anyone looking to sell their Amazon FBA business?

Kurt: If you are a serious seller, you will find a serious buyer. Do your homework on a FAIR price and go get it. Too many people think their business is worth way more than the market is paying. Also, make sure you understand how to transition all the aspects of the business including third party vendors. Make sure you’ve positioned the business for success. You never know how long it will take to sell a business (it’s a lot of hard work), so you should continue to operate it as if you weren’t selling it.

What was the process like for buying an FBA business on Flippa?

Alan: The process can be very easy and professional. However, from my experience, that has been dependent on the quality of the buyer, and the seller. In this case, Kurt and I are both very professional so the process was seamless. Kurt, the Seller of this business, was a “10” in respects to professionalism and support.

As the buyer, what steps did you have to take to receive full control of the business? 

Alan: The Seller and I came to our agreement and memorialized the Agreement in our Asset Purchase Agreement. We executed the Agreement, and then I coordinated a non-escrow, wire transfer with the seller so that we would work together on timing of the escrow and transfer of Amazon account information. We did this while I was at the bank via a video webcast, so that we could work with each other on the Bank Transfer (and the Seller could verify the transfer taking place), and via the webcast I was able to work with the Seller and verify the transfer of the Amazon and other account information. Essentially, within an hour, we both executed the wired monies and account information and I took control of my new company.

Is this your first FBA business you’ve operated and/or bought?

Alan: Yes. My other company sells on Amazon, our BigCommerce website, and eBay.

What do you plan to do with the business?

Alan: Grow it significantly! I will enhance marketing, launch a website, and add additional products.

If someone was looking to purchase an FBA business, what tips would you have for the buying and due diligence processes?

Alan: Do your homework. Understand what a fair price is for the company. I look at EBIT/Net Income, what growth opportunity is there, and evaluate accordingly. If it’s too good to be true, it probably is. And conversely, many Sellers think their company is worth more. I look for companies that are genuinely a “deal” – assuming I am willing to do the work, turn the company around, and bring synergies to the deal that ensure it’s a deal I only work with professional Sellers. If their communication is suspect, poor, non-responsive, then it’s too much of a risk for me to engage in that deal and I pass. I also look for deals where the Seller wants to move quickly, to ensure that the deal will move quickly. On Flippa, I encourage buyers to “beware” and be very careful with the quality of the Seller. I have had multiple conversations with other Sellers who have been “suspect,” unprofessional, change the terms or snooze their auction, or don’t communicate well or professionally. It’s important to be able to assess: Is the Seller professional, does he/she have integrity and is the representation of what is being sold honest and accurate.

How can our readers learn more about your projects or get in touch with each of you?

Alan: Please contact me via LinkedIn if you have any questions, or I can support you in anyway: https://www.linkedin.com/in/alanpeterson/

Kurt: I love to connect with fellow business owners and entrepreneurs. You can reach out and message me via LinkedIn: https://www.linkedin.com/in/kurt-hansen-cpa-38055b88/

I want to thank both Kurt and Alan for taking time out of their schedule to talk about this transaction with me. If you have any questions on Amazon FBA businesses or this deal, in particular, drop a comment below!

Also, if you’re interested in buying or selling an Amazon FBA business, take a look at what’s for sale on Flippa here, or get a free business valuation here.