Amazon’s Terms of Service strictly prohibit the sale of Seller Central accounts, but it is legal to sell an Amazon business.
If you are looking to buy or sell an Amazon Seller Central account, be careful! Detection of selling of these accounts will result in a ban from operating on their platform. This means that even if the account gets shut down, you cannot create a new account because Amazon has your identity blacklisted from selling.
It sounds really confusing because we hear about people who make a lot of money from selling their Amazon FBA business! How does that work?
This blog post will explain how to get around Amazon accounts for sale problems and educate readers on what they can do about this issue.
Why Are We Prohibited from Selling A Seller Central Account?
It all comes down to protecting you and your platform. Amazon wants to prevent any unauthorized access to accounts because there are chances that unapproved people getting access to Amazon could be hackers and fraudsters.
If it’s stated on Amazon’s website that it’s not allowed, you may be wondering how people are able to get through this. We will explain how in this blog, but we need to emphasize that you should take a lot of caution in any business decision.
Why Do Some People Buy Amazon Accounts?
Although an account seller decided that they’re moving on to different things, some don’t want to close their Amazon seller account without finding a way to profit from it. Because they have made progress on their account through seller feedback, ratings, and the account has an overall good standing on Amazon’s systems. Accounts are usually sold between hundreds and thousands of dollars, so you can’t blame sellers for wanting to try!
As for why people buy Amazon accounts? It has been getting increasingly harder to get approved as a seller on Amazon, which is why people want to just buy their account. Alternatively, they already have an active Amazon account but would like to have backup accounts in case something goes wrong. Amazon has a reputation for suspending accounts for reasons that many don’t understand. If this were to happen, by having a backup account, sellers can transfer their information and continue selling. They would have to transfer to another account because Amazon only allows one lifetime approval per seller.
Factors to Consider Before Selling an Amazon Account
- First things first: Always get legal advice from a business attorney
- If your Amazon account has been suspended, received a lot of negative feedback, and received a lot of negative performance notifications in the past, there is not much value to selling it
- Consider selling your actual business instead through a business broker, because you can sell it for more than two times of the net earnings while the business was still active. You may earn more by selling the business rather than just selling the account.
- Be informed that when you sell a legal business entity, you are also selling the entity. This means that you will not be able to sell through this business anymore on any platform (such as Etsy, eBay, Wish, and others)
How Much Can My FBA Business Be Sold For?
You can earn 2.5 to 4.5 times EBITDA by selling your FBA business and not have to worry about running it anymore if you’re ready to move on. We recommend first and foremost that you work with a reputable business broker that specializes in this industry through the entire process. They will most likely have more success finding a trustworthy buyer than if you searched for one on your own.
There are several metrics to help determine the business’s worth, such as:
- Seller Discretionary Earnings (SDE)
- The number of hours you invest in managing the business
- The age of the business
- The nature of the Amazon business that you own
- Your business’s net profit EBITDA
What is Seller Discretionary Earnings (SDE)?
SDE = Revenue – Cost of Goods (COGS) – Operating Expenses + Owner Compensation
How much time have you spent building your business?
A buyer wants to feel confident that the money they spent on buying an established business is fair in comparison to how well the founder built and grew the business in the first place. They want to also be confident that the systems set in place and established by its original owner will remain. This way, the buyer won’t have to stress out too much about operations and can take their time in learning the ways of working without the business going under.
How long has your business been around?
If you’ve only been on Amazon for a couple years or even less, you may look like a risky business decision, and as a result, be less valuable. So, logically, the longer your Amazon has been around makes your brand all the more appealing to buyers. They want to see that they can still profit from your brand after acquisition, and will be looking at your reviews and rankings to determine this.
After all that, you may be wondering how much your business is actually worth. Take all of the above factors into consideration and use them in Empire Flippers’ free valuation tool to get an estimate. However, we suggest that rely on your conversations with your business broker to get a more accurate estimate.
What kind of business are you operating?
Casual Amazon customers don’t often think about this, but sellers can choose from several different kinds of business models when starting their operations. Namely a private label, retail arbitrage, dropshipping, and wholesale. What we can tell you, though, is that potential buyers prefer private labels because they will also take charge of branding and assets.
What are your net profits?
To prove your value to buyers, it’s important to be transparent about where you stand financially. The more money your business nets every month, the more money it’ll be worth to a buyer. In this day and age, it’s not enough to have a successful business. You need to be consistent as well, and it won’t be very attractive to buyers if you only experience high sales velocity in certain seasons.
If you feel that your Amazon journey is coming to an end, selling Seller Central accounts may not always be the best solution when there is another option available like selling your FBA business. Selling an Amazon FBA business is a new trend in the eCommerce world!
Remember that selling an FBA business is only an option if you do not have any plans to continue running your business through other methods.
We wish you the best of luck in whatever decision you make!
After all this time spent reading this blog post, hopefully, it has given you some clarity. For more Amazon content, read the Sourcing Monster blog!
In no event shall Sourcing Monster hold any responsibility or be liable for any account penalties, suspensions, closures, or bans experienced by a seller as a result of actions taken after reading this article. This article is strictly for informative purposes only and individuals are responsible for practicing their own due diligence in making business decisions.