The Amazon marketplace is the world’s biggest and the most powerful tool to break down for sellers for accessing millions of customers across the globe and for customers to find products they desire. Amazon has evolved incredibly in the last two decades from an ambitious bookseller to an online retail giant. It has transformed how e-commerce operates. Since Fulfillment by Amazon has launched, it has allowed sellers to take advantage of the marketplace’s global network of over 100 fulfillment centers to efficiently offer products to customers all across the globe, while taking an indirect approach to the physical operations of their Amazon business. This gives sellers favorable access to Amazon’s customers in more than 180 countries.

This guide is all about building a sellable brand on Amazon. We assume that you are thinking about building an Amazon brand or are in the process of developing your Amazon business. Whatever it is, this guide will help you understand what it is required to build a sellable brand, get insight into exit strategies, and optimizing operations.

Starting with the end in mind will force you to focus on what matters – to create an effective and efficient machine.

Even if you don’t plan on selling your Amazon FBA business, it is still useful to know how much your Amazon business is worth in case you change your mind.

What are the Different Types of Amazon FBA Business? 

Amazon offers sellers with three broad categories to do business in – private label, reseller (retail arbitrage), and own brand/proprietary product. Let’s discuss these categories in detail.

RESELLER 

Reselling involves finding profitable products offline or online, and sell them on Amazon. This is the simplest type of Amazon FBA business you can build and develop.

Pros and Cons associated with his type –

Pros:

  • Low startup costs and easy to develop
  • You can determine how well the products are selling long before you buy them

Cons:

  • Unlimited competition
  • Reliable supply of products can be a problem

How sellable is this type of FBA business?

Retail arbitrage is a challenging business to sell, doesn’t matter if you are making substantial profits. You are basically competing for the buy box, and it requires adding actual value to the customer. Considering the fact that there are extremely low barriers to entry, which increases the competition, profitable products can easily become unprofitable. So buyers are taking a lot of risks buying a reseller business.

products that are generic in nature
establishing your brand and winning the Buy Box   

PRIVATE LABEL

A private label business involves finding a profitable product (with low competition) and adding your brand to it. There are manufacturers and suppliers that offer white label products to sellers where they can re-brand the products according to their own requirements.

• Amazon Product private label guidelines
• critical parts of private label selling
• obligations of Amazon

Pros and Cons associated with his type –

Pros:

  • Allows you to diversify your seller portfolio under the same brand
  • Allows you to add value and increase customer trust

Cons:

  • Cash intensive – constant prototyping and stocking lots of products do have a real cost
  • Susceptible to third-party risks – unless you offer the same product on other platforms

How sellable is this type of FBA business?

How sellable is your private label FBA business depends on the goodwill of your brand. If your brand has repeat customers, strong Best Seller Rank (BSR), and lots of great reviews, this will naturally enhance the attractiveness of your private label brand. Moreover, how diversified your product portfolio is will also play a part.

OWN BRAND 

Building your own brand or proprietary product is the most challenging thing to do as compared to private label selling and retail arbitrage. However, this creates a more lasting value that is difficult for the competition to replicate. It involves creating something unique and offering it in a way that enhances its attractiveness to the targeted customer base.

Pros and Cons associated with his type –

Pros:

  • Your brand is independent of Amazon
  • Less susceptibility to competition

Cons:

  • Takes a long time to create a trusted brand
  • Choosing the wrong niche means you cannot change your business focus

How sellable is this type of FBA business?

Recognized, established, and proprietary products add far more value than the previous two types of FBA business. If done right, this type of FBA business has a reliable staying power with a horde of loyal customers. The saleability of this type of FBA business depends on how well-established the brand is, and how much of the revenue is directly influenced by the web traffic, market share, margins, and digital assets outside of Amazon.

How Can I Increase the Value of my Amazon FBA Business? 

You would want your FBA business to be worth more, whether or not you are looking to sell. This is essential for any Amazon FBA business owner.

Here are some ways using which you can build a sellable brand on Amazon.

#1 Clarify who your target audience is

You cannot sell your product to everybody. Each product has its own set of audiences from different diversities, age groups, and regions. Hence, you need to focus on your target group. This is how you will build your brand. The product(s) you sell should be focused on pleasing the targeted customer base. While Amazon started its e-com journey with books, it sells millions of products today, grouped under different categories. Since Amazon continues to expand, more products are added to its inventory regularly. And you need to understand that each product has its own set of audience. So, you need to clarify who your target buyers are so that you can build the brand accordingly.

The more consumer information you have at your disposal, the better. You can develop a website dedicated to highlighting your brand and products and building a dialogue with clients through social media. Sales generated from Amazon doesn’t tend to provide much information about the customers. If you want to create a sellable Amazon FB brand, you need to develop a presence outside of Amazon. This will allow you to gather valuable information about your targeted customer base, which can be later used for marketing efforts.

However, before you take on this strategy, you need to carefully review the potential risks, benefits, and workload that this strategy might entail. The combination of social media and happy customers is a gold-mine for word of mouth promotion.

Target the audience
• make buyers believe that this is the product
• primary keywords and LSI keywords

#2 Register your brand with Amazon Brand Registry  

Amazon Brand Registry is a program started by Amazon that gives Amazon sellers the control over their products sold on the marketplace. This is one of the key aspects of building a sellable brand on Amazon. It protects your product listings from other sellers while reducing the potential issues causing from other sellers changing information related to your products and brand. Moreover, brand registry increases your product sales as Amazon eliminates fraudulent listings and prioritizes details from your business. It proactively works on boosting the sales and maximizing the conversion rates. Further, it helps you in expanding your ad options, which can allow you to promote up to three products at the same time. Lastly, with the Amazon brand registry, you can control your brand’s representation, which allows you to increase the value of your Amazon FBA business

#3 Diversify your product portfolio 

Product diversification is the strategy implemented by many successful Amazon FBA sellers to increase profitability and accomplish higher sales volume from new products. You can diversify your product portfolio at any stage of your FBA business. Diversification could breathe a new life into your FBA business. Diversification works in many different forms. You can grow your Amazon FBA business through various ways of marketing a product or by adopting your existing product to appeal to a new customer base. How you diversify your product will play a significant role in making your FBA brand sellable. You can expand your product line in many different ways. For starters, you can offer another product to your existing customers. You can also adapt your existing product to appeal to a new customer or a different market. You can experiment a little by offering a hobbyist version of your product as well.

#4 Web Traffic 

If you own a website, pursuing a quality SEO campaign will lead to new customers and immense gains. However, you need to understand that search engine optimization requires planning, effort, and a lot of time investment. But if done right, you can emerge as one of the most successful brands on Amazon. It will not only pay serious dividends but will also help solidify your brand as an established name with customers. If you own a brand website, you can put in links to products, which can help you earn affiliate income. It will help you with brand exposure and will allow you to target more users on the digital platform.

#5 Play special attention to the manufacturers and suppliers 

Suppliers play a critical role in how good the products turn out to be. If possible, convince your manufacturer or supplier to sing exclusive contracts to ensure that nobody can access your products, except you. While these contracts aren’t strictly followed, they represent a barrier to entry for competitors and provide value to prospective buyers. For your popular products, make sure to maintain the exclusivity with the manufacturer or supplier so that you get high-quality products.

#6 Age of your FBA business

For how long you have been running your FBA business will help determine the value of it. The older your business, the more value the buyers will show. For example, if your FBA business is older than three years, it will show great value. If your business is over one or two years, it is valued as good. However, if your business is under one year, no buyer will show any interest in buying it. Older business means it has established itself in the competitive marketplace.

The trajectory looks something like this: 

The first year of the FBA business is focused on discovering and finding what works. You will spend the second and third year of business investing in the brand’s growth. The fourth year is dedicated to utilizing net profit for sale.

What is my Amazon FBA Business Worth? 

Once you find that your FBA business is sellable, you need to determine what it can sell for. However, finding the true value of your FBA business is difficult to estimate until someone buys it.

But there are several ways to determine the worth of your FBA business. When you are estimating the worth of your FBA business, it benefits to look at historical sale trades for comparing market trends.

Reviewing the last couple of years’ data, we found that in the year 2017, 174 FBA businesses were reported as sold for an estimate of $329 million in list price value with the median multiple valuing at 3.25 times SDE. In 2018, around 69 FBA businesses were reported as sold at an estimate of $127, with a median multiple valuing at 3.1 times SDE. The data for 2019 is still disclosed.

Hence, there are several factors to consider when estimating the selling price of your FBA business. The general rule of thumb says multiplying your annual net profit or SDE by two.

For example, if your annual net profit is $500,000, your Amazon FBA business could be worth around $1.6 million.

That is,

Annual net profit X 3.2 median multiple

$500,000 X 3.2 = $1,600,00 estimated price list

When estimating the value of your FBA business, you need to keep in mind that a customer will buy your inventory at cost, on top of the selling price that includes the cost of getting the inventory into the Amazon warehouses.

Conclusion 

Building a sellable FBA brand is all about investing the time and money in the right place. From finding the right products to planning the marketing campaigns, you need to build a strong presence of your brand in front of your customer base.

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