Top 4 reasons Amazon Private Label brand owners sell their business
Updated: Jan 25, 2021
Why do Amazon FBA Private Label business owners sell?
If you've built a successful Amazon FBA business from the ground up, you might have entertained the idea that one day you might sell your business. But how do you know when the right time is and why you would do it?
In my role as the head of acquisitions for Perch, I've spoken with dozens if not hundreds of Sellers, and here are the top 4 reasons I've seen people cite why they personally have decided to sell:
They loved STARTING a business, but don't want to RUN the business forever Most Sellers I've spoken with loved building the business; doing the research to identify an opportunity in the market, fighting your way to the top spot against your competitors, and even building out some processes to run things efficiently. At a certain point though, almost no one I've spoken with is in love with running their Seller Central account day-in-day-out and facing the new-every-day headaches that come with running a global, highly competitive business. If you're not getting the same energy from running the business that you did in the early days, you might consider selling.
They feel like they've taken it far enough You may be viewing the next stage of growth as launching in new international markets, which requires mind-numbing paperwork to get the appropriate legal documentation in order. Or the next avenue for growth may be taking a bet on some new products where you're not sure yet that the payout will be there for your investment. It's common to reach a point of diminishing returns where the new effort you're going to put in for that next bit of growth just isn't worth it to you as an individual. Some people choose to sell because they know that someone else is better positioned to take those next steps needed for growth (e.g., drown themselves in paperwork required to expand internationally).
They want to free up some cash This one is obvious - there's a huge payday to look forward to! Most Amazon sellers realize the majority of the financial benefit they'll get from owning the business comes only once they sell. You've been growing the business, and with that growth you've poured a lot of your profits into inventory and advertising - when you actually sell you get a big paycheck and for the first time you don't need to plow a big chunk back into the business. Some people have a near-term cash need, others have an exciting new investment, others just want to see their bank account hold more digits than it ever has before - in any case, this is an obvious reason people sell!
They want to pursue something new And the single most common thing I've seen in the entrepreneurs selling their business to us (or otherwise) is that they're excited about moving on to try something new. The kinds of people that build 7-figure Amazon businesses are usually excited by the hustle of it all, and aren't just going to go sit on a beach (okay, maybe for a few weeks at least). Almost without fail, the owners who have sold their businesses to Perch are using that newfound time, energy, and capital that they receive from selling their business to ultimately go pour that into an exciting new venture where they can do what they've done best - build a something from the ground up!
If any or all of these describe how you're feeling or you’re just curious to learn more about what it looks like to sell your business, you should fill out our interest form or reach out to me directly - I'm always happy to talk with Sellers who are thinking about whether and when to sell their Amazon Private Label business.
And even if you realize that some or all of the factors above describe your situation, many Sellers can agonize over WHEN to sell. After all, your business is valued off of historical profits, so if I keep growing it forever isn't it always better to wait a little longer?
That's a topic unto itself so we'll talk about that in our next blog post - look out for that to come soon.