It’s a great time to be in the Amazon FBA space. If you’ve been selling on Amazon for a while and are now looking to grow and scale your business, there are many things you can do to take your business to the next level and add value to it.
Alternatively, if you’re looking to sell your Amazon storefront outright because you feel like you’ve made the most of it, you’ll want to make sure you’re adding as much value to it as possible so you can sell it for a good price. price when the time comes.
For more information about the Amazon store, click here.
How to calculate the value of an Amazon FBA business?
A very important part of increasing the value of your business is first knowing how much it is worth so that you can plan your course of action accordingly. Some of the crucial metrics that will be used during your business valuation are SDE (Seller Discretionary Earnings) and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization).
SDE is critical to calculating net income and therefore critical to business valuation. Expenses under SDE include Amazon fees, cost of goods, shipping costs, advertising costs, etc. However, it can only be used when revenue is in the range of $5-$10 Mn or less.
SDE = Income – Expenses + Add-backs
EBITDA is used for the valuation of businesses whose revenues exceed $5-$10 Mn. It is based on your sales revenue and future business projections, as long as your business grows at its current rate. The value of your Amazon FBA business can also be measured by looking at net assets, excluding liabilities, and by looking at cash flows, excluding any risks.
You can calculate the valuation of your business using this basic formula:
Amazon FBA Account Value = Annual Profit X (multiple of 3-4) + Inventory Cost
Ways to increase the value of your Amazon FBA business
Eliminate underperforming products
Take a look at your product catalog and analyze it to see how each SKU is performing. This is important because it allows you to decide which products to keep and continue to sell and which to discontinue.
At valuation time, a buyer looking to buy your business will be interested in looking at a few high-revenue-generating SKUs rather than a large product portfolio.
If there is a certain amount of stock that you find difficult to get rid of when it comes time to sell your business, it could act as a roadblock to the process. Therefore, it is important to get rid of all the products that are underperforming and hire the ones that only bring you good profits, as this is key to increasing the value of your FBA business.
Expansion
Expanding your product catalog by adding new products works great to increase the value of your FB business. However, adding each and every product is not going to help, you have to choose the new ones very carefully.
When adding new products, they don’t necessarily have to be new types of products. They should be the ones that are right for the audience you are already serving as it puts you in a good vantage point.
You must sell products that are subcategories of your main category or that are complementary or related to your main product line. Also, look for products that are in good demand throughout the year. Demand and supply are important factors and you should focus on expanding your catalog with those products that are capable of constantly increasing your profits. This undoubtedly increases the value of your business.
Formulate solid marketing strategies to add value to your brand and business
Promoting your brand in the right way is important to enhance your business value. Effective marketing of your brand works to improve brand loyalty among customers as well as increase your customer base.
When we talk about marketing, we do not mean only on-site marketing with the help of sponsored ads. Sellers need to use all the different platforms available for marketing, including YouTube, Facebook, etc., so that a good brand presence is established on and off Amazon. It will help you get more customers and build a sense of loyalty among your customers while adding value to your FBA business.
Branding, Exclusivity and High Quality Products
If your company offers unique products to customers, it gives you an advantage over your competitors, which in turn also gives you an advantage with buyers.
Unique products can become Amazon best sellers and the best way to increase the value of your business is to expand your product portfolio to include unique, high-quality products.
Besides selling unique products, another thing you can do is build your brand. We have already discussed earlier in this article that marketing your brand aggressively on different platforms gives a boost to its value.
If you are a brand owner, another method is to register your brand with the Amazon Brand Registry, as this increases your credibility and protects your brand and products from scammers who make copies of your products. This type of protection and consolidation triples the value of your company.
Watch this video to learn about Amazon brand registration:
Conclusion:
There are several things you can do to push your FBA business value to the highest possible mark. Whether it’s selling your business or simply scaling and expanding, data is key and you need to analyze all the possible ways you can grow your business and then select the best one.
Do enough research, do the right amount of product research before launching new products, develop good marketing strategies, and constantly monitor your business performance. It’s the only way to stay on course and make sure you’re climbing the right way.
Author bio:
Arishekar N, Senior Director of Marketing and Growth at SellerApp, specializes in digital marketing as well as website keyword optimization for search engines. His areas of expertise include improving the organic and paid ranking of web pages in search engines with innovative SEO and SEM strategies and online promotions.
Categories: Technology
Source: SCHOOL TRANG DAI
