Katie Melissa Shares Her Secrets To Buying A Profitable Amazon Store

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Katie Melissa-Ecom Expert January 02, 2023
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Katie Melissa Shares Her Secrets To Buying A Profitable Amazon Store
Katie Melissa Shares Her Secrets To Buying A Profitable Amazon Store
As an Amazon seller of nearly eight years, I have had both students & clients ask for either a valuation of their current eCommerce store, or where they can purchase an already-established store.

To purchase an established Amazon store with cash flows in place, you can start by searching online marketplaces that specialize in selling eCommerce businesses like Flippa or Empire Flippers. You can also try searching on social media groups or forums related to eCommerce or Amazon FBA (fulfillment by Amazon) to see if anyone is selling their store. 

Before buying a profit-generating Amazon store, it's important to do your due diligence to ensure the store is legitimate and is, in fact, profitable. Here are some things you should consider throughout your acquisition journey:

1. Financial performance: Review the store's financial statements, including profit & loss (P&L) statements to get an idea of the store's overall performance. Keep an eye on year over year financial trends.

2. Customer reviews: Check the store's ratings & reviews to see if there are any negative patterns or recurring issues.

3. Product sourcing: Make sure that the store's product sourcing is legal & ethical. 

Product sourcing means finding & acquiring the products that a business will sell. It's important to ensure that the products being sold are being sourced legally & ethically. This means that the products should be sourced from reputable suppliers who aren't engaging in unethical practices like counterfeiting or using child labor. It should go without saying, but many people (including myself) have been trusting of vendors in the past too easily. Not everyone operates in the same ways. Take time & conduct sufficient due diligence here.

One way to research the store's product sourcing is to ask the seller for information about their suppliers & the products they sell. You can also try to verify this information independently by contacting the suppliers directly or by doing online research. It's also a good idea to review the store's customer reviews to see if there have been any issues related to the quality or authenticity of the products.

If you're not able to verify the store's product sourcing or if you have concerns about it, it's probably best to avoid purchasing the store.

4. Traffic and sales: Look at the store's traffic & sales trends to get an idea of its performance. Keep in mind, when you're acquiring an Amazon FBA business that's generating profits already, Amazon will have detailed sales and traffic pages & analytics internally. Feel free to ask the seller of the store to take screenshots of these stats.

5. Competition: Research the store's competition to see if it's well-positioned in the market. For Amazon sellers, there are several third-party product research programs that assign products a competition score. 

6. Growth potential: Consider the store's growth potential & whether it has room for expansion. All of these factor into an Amazon business's valuation.  It's also a good idea to consult with a lawyer to make sure the purchase process is smooth & to protect your interests. 

As you move forward in the acquisition process for a profit-generating Amazon store, you will likely have several interviews with the seller/owner of the store where you have a chance to ask all the remaining questions you have. At this point, depending on the platform, you may be asked to provide proof of funds to show you are a serious buyer. 

If you do end up acquiring the established Amazon business, your funds will most likely be held in Escrow until the transaction is completed & you mark the business and all of its assets as received from the seller. 

In summary, no matter which route you choose, it's important to do thorough due diligence on the store you're considering purchasing or acquiring. This includes reviewing the store's financials, customer reviews & overall performance to ensure it's a good investment. An alternative route an investor could take is buying into an Amazon FBA automation business model, where a management provider builds them an Amazon store from scratch. 

Photo Credit: Katie Melissa.

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