30 times the monthly net profit acquisition! The Amazon store acquisition boom has arrived, but are there hidden risks behind it?

Recently, more and more Amazon sellers in China have received calls or emails from capital companies about acquiring their stores. For a while, it seems that there is a trend of store acquisitions. In fact, the Amazon store trading market has long been prosperous. How is the store trading market now? What kind of stores are most popular with capital? What risks should be avoided in store trading? Let's take a deeper look.

Amazon's store acquisition boom has arrived

Since the beginning of 2021, Amazon store transactions have entered a relatively active period , and foreign capital has begun to target high-quality Amazon stores, including domestic brands. According to Marketplace data, there are currently 77 acquisition companies with nearly $10 billion (about 64.5 billion yuan) to purchase high-quality stores in bulk, and hundreds of acquisition plans have been made this year. Most of these companies have been established for less than a year, and 24 of them have raised more than $100 million in financing.

In addition, according to a June survey by Marketplace Pulse, as many acquisition companies have raised more funds this year, they are expected to acquire Amazon's third-party brands at an unprecedented rate next year. The number of acquisitions is estimated to exceed 1,000, and many acquisition companies have stated that there is no upper limit on the acquisition price!

According to analysis by industry insiders, store transactions are currently in a bonus period, and investors are spending generously and seem determined to acquire their favorite brands.

It is understood that there was an Amazon store in the United States that sold for more than 10 million US dollars ! There was also an Amazon seller whose store had an average monthly gross profit of 40,000 US dollars, who eventually sold his store for 1.2 million US dollars . In other words, the seller received about 30 times the monthly gross profit in cash by selling the store .

As the store acquisition market becomes increasingly hot , the valuation of Amazon stores has doubled compared to last year. Those high-quality Amazon stores are now more valuable.

2. Uncover the most popular store portraits

Faced with the generous conditions offered by capital , it is hard for sellers who receive acquisition inquiries not to be tempted. Especially after the epidemic dividend faded, sellers who have experienced the platform’s account suspension wave and logistics difficulties are inevitably shaken, "It is better to take the money and be safe than to work hard and persevere."

Christmas has passed at the end of the year and sales are bound to start to decline. At this point, if an acquisition company offers you an olive branch, would you choose to sell your store?

It is understood that sellers have various reasons for selling their Amazon stores . Some want to exit the current product category and explore another category with greater potential. Some small and medium-sized sellers also sell their stores because they face financing difficulties. Selling stores can achieve financing efficiently and conveniently.

Some overseas capital counterparts have reported that they prefer to look for small and medium-sized sellers, because big sellers will not easily sell their brands. This is undoubtedly good news for small and medium-sized sellers.

So which brand stores do investors prefer? What are the characteristics of these stores? Let's use a table to help you understand.

Although the store acquisition market is frenzied, and there are even cases where several capital institutions compete for a store at the same time, the success of a store sale ultimately depends on the store's overall strength. In addition, there are hidden pitfalls behind store acquisitions , and if you are not careful, it may affect the smooth progress of store transactions.

3. These "pitfalls" are hidden behind store acquisitions

Based on past actual cases , we have summarized these "pitfalls" behind store acquisitions :

1. Improper handling of store transfers may result in risks

This is a very important issue for sellers . Amazon does not explicitly allow direct changes to the store backend entity, and sellers are even more worried that unauthorized changes to the backend store entity may trigger KYC review . Failure to complete a transaction is a small matter, but causing irreversible damage to the store is a big deal.

Buyers in the market are almost always very secretive about this issue. Some experienced buyers will simply tell sellers they are dealing with for the first time that they have official communication channels and that changes have been made in all previous cases. However, we understand that the facts may be more complicated. In some cases, Amazon officials directly inquired during the transaction, which affected the transaction.

2. The complex arrangement of staged payments is difficult to understand

Currently, almost no store transaction can be done in one-time payment. Some buyers even only pay 50% of the first payment . But is it really better to pay as much as possible in the first payment? Is it reasonable to arrange the subsequent payment in accordance with the net profit growth rate when the original seller is no longer responsible for the operation? The design of these professional terms may also trouble sellers and hinder the smooth progress of transactions to a certain extent.

3. Poor communication can easily lead to losses

In cross-border transactions, due to language differences , poor communication, misunderstanding of contract terms, and inadequate control of key matters in the transaction process, losses can easily occur. For example, payment arrangements, delivery terms, inventory value calculation terms , listing/account security during due diligence , and whether the confidentiality agreement terms are targeted , etc., all of which need to be fully considered by sellers .

In addition, sellers may suffer losses due to lack of familiarity with market conditions and inability to accurately assess the value of a store ; when faced with multiple offers, they may not know how to analyze transaction conditions and the buyer's background and strength, leading to misjudgment; poor communication may lead to delayed due diligence and affect the normal pace of operations, etc. These are all pitfalls that sellers may encounter in store transactions.

4. To avoid pitfalls in store transactions, you need to choose a professional team

4KMILES became an Amazon SPN service provider in 2018 and an Amazon DSP advertising partner in 2019. In order to facilitate domestic Amazon brand sellers to better meet store acquisition needs, 4KMILES provides sellers with full-process services from consultation to store evaluation to help sellers maximize their interests!

Choose 4KMILES as your store selling agent to help you avoid various "pitfalls" in store transactions and assist you in completing Amazon store transactions efficiently, safely and smoothly .

4KMILES promises to provide one-stop service. You provide your intention, and 4KMILES will be responsible for the entire process from finding the buyer to completing the transaction. 4KMILES will charge after the transaction is completed, providing escort for your store transaction throughout the entire process !

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