SBM 055 : Should You Sell Your FBA Business with Coran Woodmass

Today’s Guest

I caught up with Coran and realized that his new business is blowing up.

Coran Woodmass  joins the 55th session of Smart Brand Marketing.

This is a very interesting story. He went from selling his own business to working for a different broker and then finding a very hot niche where he could make his mark.

It’s a good episode.


  • How Coran found this opportunity
  • Coming up with the brand
  • The initial marketing and sales
  • What got them 400 leads on day one
  • Where Amazon is heading in 2018 and beyond
  • Why most people shouldn’t sell
  • Is it still worth it to get into Amazon
  • What makes a business interesting
  • The process of selling an FBA business
  • Why networking has the best ROI



Should You Sell Your FBA Business?

Amazon has created one of the most sustainable fulfillment networks right now and connecting with them has proved to be very beneficial for many business owners in the past years. A Fulfillment by Amazon (FBA) Business’s concept is pretty simple: You store products in any of Amazon’s fulfillment centers and Amazon will do the rest of the packing, shipping, and delivery of those products to customers.

However, there might come a time when you might want to see a return of your investment and will consider selling the entire business. The question is: Should You?

The answer to that, as always, is “it depends”. To come up with one that truly reflects your business, you should take a look at several important aspects first.

Where is Amazon Heading?

Before you can even take a look at your own business. You should take a closer look at the current state and future of the parent company: Amazon. Fortunately, Amazon is not one to shy away from discussing its future with its shareholders and other industry folk as they have laid out a possible direction that the company is going to take in a number of areas.

  1. 1. Infinite Computing Power

    Amazon’s newest computing program, Alexa, is envisioned to be this constantly present tool that can help businesses and sellers attend to their every need while possessing a near-infinite amount of resources to serve people efficiently. It’s also envisioned to possess unlimited storage capacity and will be completely free from bandwidth limitation, resulting in a completely self-reliant AI system for the business.

    Alexa is still in its most basic form right now but Amazon has promised that it will become this fully capable AI System that can recognize different accents and voice commands while also possessing a robust predicting capabilities if faced with an incomplete or complicated orders from FBAs. Basically, Amazon wants Alexa to be like the real-world version HAL 9000 from 2001: A Space Odyssey (minus the nihilism, of course).

    What this means is that FBAs should be able to enjoy from an AI support system that could streamline their operations which should increase efficiency and reliability. The system’s proposed self-learning ability should also help with repeat customers as Alexa can recognize customers based on buying patterns and predict what they might like, resulting in better recommendations for other products to buy.

  2. 2. Outsourcing

    For any other business, the term “outsourcing” is taboo. This is entirely different for Amazon who see outsourcing and crowdsourcing as a major source of opportunities and have launched several services that take full advantage of them.

    Take, for example, their Amazon Flex service which employs everyday people to send various packages across several locations in the world. This Lyft-like service allows Amazon to cut costs and removes the need to retain too many employees. On the flip side, those that do enroll in the program get to earn $18.00 to $25.00 per hour as contract employees.

    Another service is the Mechanical Turk, a program that employs people to perform Human Intelligence Tasks i.e. those tasks that Amazon’s AI has yet to master. This includes reading and writing reviews, translating articles. And finding image-based information.

  3. 3. Disruptive Tech

    Unlike many other companies, Amazon plans to embrace newer disruptive tech like smartphones, tablets, and social media as they did with the PC and Graphics User Interface in the past decade. By creating a digital front, Amazon was able to cut down on costs and, in turn, usher in a new form of industry within the Internet.

    Amazon is expected to introduce newer services in the future that will take full advantage of new forms of Technology. Their Amazon Prime Video, for example, has been performing rather well against Netflix while their Alexa AI, a response to Apple’s Siri AI, is showing great potential.

    Basically, Amazon is expected to be the first to try out new tech and, as a result, start trends that other companies will follow.

These are just some of the advancements that Amazon is expected to introduce some time later on but it does tell us what direction it is going to take for the future. As an FBA business owner, you might want to consider closely whether or not you want to continue to be part of this expanding network of businesses or not given that Amazon has still a lot of potential for growth.

Should I Really Want to Sell My FBA Business?

Selling your FBA business is a decision that you should never take lightly. After all, Amazon is still the world’s largest online marketplace right now which means that there is still a lot of money to be earned here.

If you are still on the fence on whether or not to sell your FBA business, you should ask yourself a few questions.

  • Am I working on some other project that needs more of my time and effort?
  • Is running my FBA business becoming stressful to me?
  • Will the money I earn from selling my FBA be enough a capital to support my new venture?
  • Is my FBA Business not performing well in the market?

If you’re general answer to these questions is a “yes”, then you might want to consider selling your FBA in the market. However, always remember that selling a business in decline can only attract 1 kind of seller: low ballers. This means that you would get offers from sellers who want to buy your business at the cheapest possible price.

If you think that your FBA is still worth saving, then it’s recommend that you hold on to it, fix whatever issue it has, and find a way to ensure that it generates the income multiple you have projected for it.

If, of course, all of your answers to the questions is a “no”, then holding on to the FBA should be the most sensible move.

How Do I Sell it?

Assuming that you have decided to sell your business, the question now is if it can actually be sold at a price that satisfies both you and the seller. Not all FBA businesses have the same model which only means that they won’t have the same prices when sold in the market.

However, you can determine its value by looking at 3 areas:

  1. 1. Type of Business

    An FBA Business always comes in 3 types.

    • Resellers – These businesses buy wholesale and make their earning selling retail on Amazon. In most cases, resellers are the hardest FBA businesses to sell since they are highly volatile since there are more than a handful of competition for this type of business, supplying for it can be a problem, and there is nothing proprietary about this business model.

      However, you can make this easier on your part if you can establish contacts with wholesalers in Amazon beforehand as it makes the offer more attractive to buyers.

    • Private Labels – This is basically your own brand of business but your product line is consisted of items that can be found in other sellers. However, this type of business has some kind of leverage in the market as it can be attractive to the right kind of buyer.
    • Proprietary Product Sellers – To put it simply, this type of business is YOU. It consists of your own brand and selling your own products. Since you are selling your own items, this type of business is the most profitable to sell in the market. Buyers will even pay for more than what you offer under the right conditions.
  2. 2. Age

    When you offer your FBA to a buyer, they would want to know how long it has been in operation. The reason for this is simple: they want to have an idea as to how long it would take them to get their investment back.

    Simply put: the longer your business has been in operation, the better the offer will be. If your business has only been in operation for a year, the buyer might not want to purchase it at your recommended price.

  3. 3. Annual Net Profit

    Of course, you need to know how your business is performing financially. Find out how much your business has earned before interest, tax, depreciation, and amortization in order to come up with an offer that best reflects the performance of your business.

    Just keep this in mind: buyers are looking for trends in your profit and loss statements. Is your business following an upwards trend? Are there spikes during certain months? Are the products you are offering seasonally performing or are they top-performers regardless of the month? The more your stable your business performs financially, the less risky it will be for potential buyers as an investment.

Even if you have come up with a value that reflects your business’s status in these 3 areas, there is still no assurance that buyers would flock to your offer. However, it does tell you how competitive your business is in the market.

Improving Your Business’s Value

Even if you don’t have any intention to sell your FBA, there is still an advantage to be had from making your business more valuable to prospective buyers. To do this, you must consider the first 3 factors in determining your business’s value along with 3 news ones which are as follows:

  1. 1. Defensibility

    Simply put, how certain will it be that your would-be buyer can enter into the market using your business without some other businesses affecting its performance? Defensibility does not exactly mean that there are little to no competition for your business in the market. It only means that its position in the market is somewhat secured that a change of management would not cause it to drop in rank or its sales to go down overnight.

    In most cases, the most defensible businesses are proprietary product sellers since they are offering something unique in the market. If you don’t have something unique in the market, then perhaps improving your services and pricing can make your FBA more defensible for the buyer.

  2. 2. Diversification

    A diversified business tend to have better value in the market than those that are not. Buyers are always afraid of 2 things in Amazon: getting suspended or losing rank. On the other hand, a diversified FBA will give them the assurance that the business can continue someplace even if the main channel is terminated or performing poorly in Amazon’s rankings.
    To diversify your FBA, you must:

    1. a) Add other sources of traffic outside of Amazon. This can include traffic from your main website, social media profiles, and even your email lists.
    2. b) Not make your business’s profit reliant on a few products. 70% of your income must not come from one product type.
    3. c) Find niches and introduce multiple products in them.
    4. d) Consider paid traffic within Amazon if only to boost your presence there.
  3. 3. Competition

    Are there any other FBA businesses out there that are vying for the same target market as yours? Having too much competition over the same market can scare off buyers as this can affect the business’s ranking as well as its potential for earning income.

    This is why you need to expand your products and services as having a small product library means that you can quickly lose rank when a new competitor comes in the market. Diversifying your products, on the other hand, can somewhat limit the effects of a strong competition in the market.

To Wrap Things Up…

So, should you really sell your FBA Business? That really depends on you. You have to weigh the pros and cons of holding on to this kind of investment or just cash everything out and start a new venture.

If it’s any comfort to you, just know that whatever path you take for your FBA business will open new opportunities for you. Whatever your decision will be, always remember that Amazon will always come up with a new offer or program that might just pique your interests and keep you engaged in the market for as long as possible.

Have you tried running your own FBA business? What other potential advantages do you know to selling or holding on to it? The comments section below is open for discussions.





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If you enjoyed this episode you may also love listening to:

Part 1: Buying Back Time

Part 2: Multiple Income Streams

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