Buying a Fulfillment by Amazon (FBA) business is one of many ways to become the owner of a profitable business. However, acquiring the right FBA business requires the same due diligence as for any other business purchase.

Knowing what questions to ask and what aspects of the business to analyze can help you uncover the opportunities and risks involved before investing in an FBA. This article offers a how to guide and includes a simple checklist for evaluating potential investments in an Amazon business. Keep reading!

What is an Amazon FBA business?

Amazon's FBA program is a type of business model where a company stores and ships products for other businesses on the Amazon website. It helps these companies get their items to customers around the world quickly and easily. In exchange for this service, the company charges a fee and receives a portion of the sales.

An Amazon FBA business is relatively easy to start. You only need to register an account with Amazon and select which products you would like to store and ship on behalf of others. Once registered, you can begin marketing your services to companies looking to expand their reach.

Regardless of how easy it is to kick off, maintaining and turning an FBA into a successful business is as challenging as any other type of business.

Are Amazon FBAs profitable businesses?

One advantage of buying an FBA business is that you get access to Amazon's 310 million active users. However, like any other industry or sector, its profitability depends on various factors.

Online business marketplaces save you time and effort when answering this question by doing the due diligence for you, showcasing profitable options, and connecting serious sellers with pre-vetted potential buyers.

Step-by-step: Buying an existing Amazon FBA business

Once you have a budget and maybe a type of business in mind, the hardest task is finding the right business to buy. Here are the basic steps to do it right.

1. Browse online marketplaces

Look for options at online marketplaces or broker websites. Boopos, Flippa and Acquire are some of the options out there.

2. Analyze the business

At first, marketplaces provide the most basic data, and once you prove you are qualified to buy the business, they unlock more detailed information.

Some of the data points you have access to before pre-qualifying are:

• Financial data (TTM Revenue & TTM Profit)
• An overview of the business (type of products and age)

Depending on the marketplace methodology, you can also get some insights into the existing FBA business, such as a health score, advertising cost ratio, seasonality, and revenue growth, to name a few metrics.

Although you can find established Amazon FBA businesses on marketplaces, conducting your own due diligence is also recommended to learn more about the business you will buy.

In Boopos' case, every approved business boasts a solid revenue track record of at least 18 months and LTM (Last Twelve Months) revenue of $100,000 or more.

3. Get personalized support

Online business marketplaces offer advisors who guide you through every step, from choosing the right Amazon FBA business to closing the deal.

Amazon FBA business due diligence checklist

The road to becoming a successful business owner means doing your due diligence. Usually, this process consists of an extensive review covering at least the following topics:

• Commercial due diligence: Looks at how well the business is performing compared to competitors.
• ‍Legal due diligence: Checks that all documents are up-to-date and compliant with regulations.‍
• Tax due diligence: Ensures that taxes have been filed properly and tax information is up to date.‍
• Financial due diligence: Examines accounting records to identify any discrepancies.‍
• Labor due diligence: Evaluates wage compliance as well as working conditions within the organization.

By examining each aspect carefully, investors can gain insight into potential risks they could face if they decide to buy an Amazon FBA business. The information gathered during the due diligence process can make or break the sale or acquisition of an Amazon FBA business.

Buying an Amazon FBA business due diligence cchecklist

1. Understand the basics of the Amazon FBA business model

• Don't go blind and deep-dive into how Fulfillment by Amazon works.
• Understand the fees, logistics, and the overall FBA model.
• Ask other business owners or explore online forums to get un-biased reviews.

2. Explore online business marketplaces

• Although obviously, we recommend exploring Boopo's pre-vetted Amazon FBA businesses we suggest you also look at Flippa, Acquire, and Quietlight, among others, to make the best choice possible.

3. Do the financial due diligence

• Review financials to understand the business’s revenue and expenses.
• Analyze sales channels and customer acquisition costs.
• Evaluate product quality and lifecycle.
• Check supplier reliability and inventory levels.

4. Perform a legal and account health check

• Ensure the business complies with laws and Amazon policies.
• Review the Amazon Seller Central account for feedback and rankings.

5. Prepare your post-purchase strategy

• Plan for the transition and growth of the business.
• Set up proper financial management and accounting practices.

6. Seek professional advice in wherever area you need

• Consult with legal advisors and accountants familiar with ecommerce.
• If possible, consider getting insights from an Amazon FBA consultant or contact Boopos advisors.

7. Negotiate and make the offer

• Prepare your offer based on the business valuation.
• Negotiate terms, including price and transition support.

8. Close the deal!

• Finalize the purchase agreement.
• Start the asset transfer process, including accounts and inventory.

Find the Amazon FBA business you are looking for

Are you interested in acquiring your first Amazon FBA business? Explore our selection of profitable companies, get our support throughout your buyer journey, and close your purchase.

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