5 Questions You Need Answers to Before Buying an Amazon FBA Business

There is no denying the fact that eCommerce is well past its days of infancy. Afterall, the current richest guy in the world amassed his hundred billion dollar fortune by connecting sellers and buyers online. Speaking of Jeff Bezos, Amazon continues to be the greatest platform for sellers all around the globe. While sellers do have the option to fulfill their own order by maintaining an inventory and arranging shipment, the FBA model offers a great solution for anyone who wants to utilize Amazon’s storage and shipment infrastructure to their advantage.

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This has also given rise to entrepreneurs who aim to develop an Amazon FBA business only to sell them to the highest bidders. Entrepreneurs who sell Amazon business, usually do it because they want to keep developing similar FBA accounts from the ground up and get a sizable payout for their efforts. Ideally, they should build a business that promises to remain profitable well past the handover.

However, we do not live in an ideal world. There are plenty of Amazon business owners who try and sell their operations because they can sense an impending downfall. They try to cash in while they still can, passing over the burden of managing an ill-fated business to someone else. Here are 5 questions you need to ask before buying an Amazon FBA business.

Do You Understand the Basics of How Amazon FBA Model Works?

FBA stands for Fulfilled by Amazon. As its name suggests, this program is geared towards sellers people who do not want to take care of the logistics. Sellers can just manufacture their products or source them from vendors and leave everything else to Amazon. Amazon takes care of the storage, packing, and shipment. While that’s the basic gist of it, you need to do detailed research on how everything works under the FBA model.

Do You Have the Skillset to Manage an FBA Business?

While on the surface, it looks like a pretty simple operation (in a lot of ways it actually is), the FBA model requires business owners to have certain skillsets. You need to have the knowledge to perform inventory management using Amazon’s interface. This involves tasks such as optimizing the on-page content for your products.

Is It Heavily Reliant on a Single Product?

Ideally, you should pick a business that gets its revenue by selling a long list of products. That gives the business stability and a better chance of surviving in the future. Checkout the entire product line of the business and find out how much each product contributes to the total revenue.

How Healthy is the Seller Profile?

The percentages of returns due to defective products, cancellation due to non-fulfillment, and late shipment are great metrics to judge the health of any seller on Amazon. Thankfully, these figures can easily be extracted from the seller profile.

Can the Featured Products be Sold All Year Round?

You don’t want to buy a business that sells a trending product. For example, fidget spinners were big a few years ago but no one really cares about them anymore. Therefore, any businesses that exclusively sold them are probably not doing so good right now, unless they moved on to other products. It’s always advisable to buy a business that has products that sell all year round.