Life After Exiting 2 Brands on Amazon

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Dan Little is with us talking through the exiting process of selling an Amazon business. What to consider when setting up the business, the accounts and sales data, making sure a structure exists, the sales process itself and what to expect.

First Business – 2014

  • Started in Aug 2014
  • Single product selling across 5 x European marketplaces
  • Allowed Dan and Family to quit their day jobs
  • Sold it in Apr 2016

Selling an Amazon Business

  • Hadn’t thought about selling it – FBA High Rollers (Manny Coates) or FBA All Stars (Matt)
  • Was talking about selling his business via Empire Flippers
  • Shocked at 15% cut they wanted
  • Started a 2nd Business with a Partner
  • Had overlap with this new business which was now 3 products and twice the size of the previous
  • Wanted to sell the first business to realise some cash from the business

Brokers take 15%

  • Looked around and found other brokers, not just Empire Flippers
  • They all seemed to be around the 15% mark
  • Not wanting to go it alone, Dan went with them

Information you Provide

  • On-boarding process
  • Submit really basic form to get a feel for valuation
  • Turnover, profit margin, costs, etc
  • Got a multiple on your net profit earning each month
  • You got your bottom line and the multiple on top
  • Listed for a 28 multiple
  • A bit more risky as it was a single product business
  • Then they send you a spreadsheet to complete covering from the start of your sales
  • On the new business they have automated this process step

For Sale Sign is up

  • Once it’s on the marketplace
  • They do a video of you the seller that asks questions through the numbers
  • A really good idea to enable the answers to obvious questions to be done
  • This removes questions from the closure call to speed up the closing
  • Had 10 Calls then 2-3 people put offers in and closed

Selling Business No. 2

  • Aimed at 3-5 years to sell the business
  • One year before the sale, cut back on unnecessary subscriptions and costs
  • More structured accounts a year before sale
  • Made the process of selling so much easier
  • Anything > $1,000 in a month had to be broken down by product and marketplace
  • Things like showing FB ads costs per product

Empire Flippers again

  • Used Empire Flippers again for this second business
  • Had 4 x Products in European Market and 2 x Products in the US market
  • Nov 2015 started and sold in Oct 2018 – almost 3 years
  • All under 3 x brands and 50 variations and 20 x SKUs total
  • So 3 x Brands, 6 x Products, 20 different variations across EU and US

Sales Profile

  • Most prominent 70% Europe and 30% in US profit breakdown
  • Started in Europe and then expanded into US
  • Took products doing well in the UK and then moved them to US
  • Really high earning products
  • Some products were doing 100+ units per day

Product Launches

  • Used the same approach to launches across the 15 x Launches
  • Was FB ads to a landing page with an 80% discount coupon code send them via the storefront URL link and in 3 days you were ranked
  • Then started using longer tail keywords and once reviews were on you’d use the shorter keywords
  • Then tried ZonBlast and took 14 days and was very expensive
  • Latest is Internal Amazon ads – sponsored products with some external Facebook traffic with 20-30% off

Learning from the Misses

  • Out of 6 products, had 15 x Launches
  • Everyone has hits and misses
  • Had some infringement issues
  • So avoided patent or trademark infringements
  • Most products on ’trend’ will come up and drop down again
  • A lot of Dan’s products. Started at 25-26% profit but in a down-tail on trend so cut these back

Sales Process for the Second Business

  • Explained the hits and misses to the prospective buyers
  • Took less than a month to sell the second business
  • Q4 was coming and started talking in Sept and wanted to move it in October to capitalise on Q4 earnings
  • Made a lot of sense for them to close early
  • Dan was very organised and Empire Flippers had all the info
  • It was a good business and straightforward to take over

The Exiting Arrangements

  • When exiting you can get the payment up-front mainly for smaller businesses 100% up front or 14 days after, etc after payment held in Escrow
  • Or another way is Earn out: Get a % up-front and then 2-3 payments over 6-12-18 months
    • You want to get as much up-front and as short a period after to get the money into your pocket

Life After the Exit

  • Started the next business 6m before exiting the second business to have the overlap
  • Not an Amazon Business this time
  • A software as a Service Business linked to Amazon
  • It’s a tool to help sell businesses and exit
  • The software takes all the Amazon sales data and arranges it into a structure to import into Xero
  • There is other software that does a similar thing but was more complicated to setup and use

New Business – Software as a Service (SaaS)