It’s one of the most controversial topics surrounding Merch By Amazon — the sale of a Merch account.
It’s a scenario that plays out every few days in the POD groups and pages we frequent: an account holder looking to sell, or an account-less buyer looking for a seller.
To be totally unequivocal about this practice, social media is not the proper venue to transact sales of Merch accounts. But there are appropriate, safe, and totally acceptable (in the eyes of Amazon) ways to sell or purchase a Merch By Amazon account.
So to help clarify some longstanding rumors and answer the most burning questions at hand, we spoke with someone who understands the buying and selling of Merch By Amazon accounts better than anyone else — Thomas Smale, founder of FE International. An online business entrepreneur and expert, Smale’s company is a leading player in the buying and selling of online businesses, a growing number of which are Amazon-based.
If selling an account is part of your long term plan, here’s a great start to learning more about the process that may await you.
Q: You and your company FE International, Inc. are increasingly well known in the Amazon community. Can you tell us why so many Amazon sellers are looking you up these days?
Thomas: We have sold over 500 businesses and done hundreds of millions of dollars in sales. Over time we have developed and fine-tuned a formulaic approach to the best way to value, increase the valuation and eventually sell a business. We are asked to sell a lot of different types of businesses in the SaaS, e-commerce, and content industries and our method works for them all. With the spike in popularity of Merch businesses we have taken our expertise and applied it to the Merch industry and they are proving popular with buyers already. We have a 95% success rate and we sell 80% of businesses in 60 days. This is not the common standard in the M&A advisory industry, which is one of the reasons we have become so well trusted in the industry.
Q: There are some commonplace misunderstandings with regard to selling Amazon-based businesses and Merch By Amazon accounts. Can you speak to some of the myths that should be cleared up?
Thomas: The first myth is that many people don’t believe that you can sell an Amazon Merch account, but you can! The key is asking for permission from Amazon when transferring the account, not just doing it and hoping they don’t notice. This is where people tend to have issues.
Another myth is that you need to be making millions in order to sell your business. That’s not true. There are lots of buyers looking for businesses making more than $1000 a month. You just have to know where to sell them!
Q: If a Merch By Amazon designer is thinking of selling their account, is that decision best put off until after the start of the new year or is Q4 an optimal time to sell?
Thomas: It depends on if it is a good time of year for your business. One of the questions we always tell owners to ask themselves before they decided to sell is ‘is this the right time?’ You don’t want to sell your business when revenue is decreasing – it doesn’t make it impossible but buyers will want a significant discount versus a business that is steadily growing.
With a platform like Merch, uncertainty is always a consideration. Whilst Q4 is the strongest quarter for most designers, there are other changes going on like new products such as long sleeves (good) and freezing uploads (bad). It’s generally best to sell before the seasonal high – that way buyers are incentivized to move faster in the process as they can benefit from good sales right after the acquisition.
Q: What factors go into valuing a Merch account and what factors are most important in that consideration from a potential buyer’s perspective?
Thomas: We recently wrote a post about this for MerchInformer. Essentially, among the aspects we consider, and that will give your Merch by Amazon business a higher valuation would having the following aspects. These are not essential but will help:
• Team of designers and/or plenty of designs in place ready to go
• Diversity of sites you sell your merch on other than MBA
• Automating the logistics of running the business/having standard SOPs in place
• Consistent sales that don’t depend on one seasonal trend/design
• Sustainable marketing strategy, with research done and in place
• Business one-year old or more is ideal. The 3+ year mark for a successful business is where you can see a higher multiple for your business if you were to sell
Q: If someone has a business on Amazon and they want to sell it, what are the first steps they should take?
Thomas: We have a series of questions we ask owners who are interested in selling their business but you can click here to get a free valuation – once you’ve gone through this step it’s much easier to establish what to do next. It may be you are ready to sell right away or it may be that it will take some time to build up the business to the level you are happy to sell at. The valuation process is completely free with no obligation, so always worth doing!