Are you looking to sell an Amazon FBA store? What about an eCommerce business with multiple sales channels — one being Amazon? Ever wondered how to sell and transfer an Amazon FBA store, and if it’s allowed?
Here at Flippa we encounter these questions on a daily basis. For this reason, we’ve prepared the following guidance note.
Once you’ve listed your asset/s for sale on Flippa, found a buyer and negotiated a great price, the logical next step is for you to begin transferring them to your buyer. If you’ve sold a blog or app before on Flippa, you’ll agree that the process can be pretty straightforward. It might take just minutes and be as simple as swiftly transferring your domain name and hosting accounts to your buyer. When it comes to selling your Amazon FBA store or eCommerce business however, the process can be a bit more involved and time consuming.
Be aware that your buyer will generally be entitled to any revenue generated by your Amazon FBA store from the completion date. The completion date will be stipulated in the contract of sale. It can be varied by agreement but is generally the date on which the sale proceeds are deposited into escrow.
It can take anywhere between 1-3 months to complete the transfer process for an Amazon FBA. For this reason, as a seller, you must continue to run and operate the business with due care and skill until the transfer process is complete and the buyer has full ownership and control of the assets. Your buyer will be entitled to receive revenue accrued during this time.
The length of the transfer process will vary depending on the volume of listings and the method chosen. You can transfer (a) the legal entity which owns the store, (b) the Amazon Seller Central Account or (c) the product listings to your buyer.
Here’s a run-down on each method.
1) Transfer the legal entity
The easiest way to transition an ASCA is to sell the legal entity which owns the account. This should be done under the guidance of an accounting or legal professional as it involves the sale of shares and can have tax implications. Not everyone however wants to hand over their established legal entity. For example, that entity may hold some different assets like property or other businesses. An asset sale is therefore required and you will need to use one of the following two options.
2) Transfer your ASCA*
Transferring your ASCA is less complex and can take between 1-2 months to complete.
Here’s how to do it.
Step 1. Buyer and seller tell Amazon — You and your buyer need to tell Amazon that you intend to change your ASCA details. If your buyer already has an account, they will need to let Amazon know that they would like to set up a new one.
Step 2. Seller changes account details — Once approved, you need to then replace your details in your ASCA with your buyers. You will need to change the email address, phone number, bank account details, credit card details, secondary phone number and any authentication details. If your buyer already has an existing ASCA, they will need to create/use a legal entity with its own bank account.
Step 3. Seller transfers any other assets — Once the ASCA details have changed, you should begin transferring all ancillary business assets to your buyer. For example, subscriptions, social media accounts and trademarks. The USPTO provides guidance on the trademark transfer process here.
Step 4. Buyer gets to inspect — Depending what you and your buyer have agreed and/or documented in a binding sale contract (always recommended), your buyer may be entitled to an inspection period. It may be 7-14 days. During the inspection period, your buyer has the right to monitor account performance to ensure sales volume/revenue aligns with what you originally represented.
Step 5. Flippa releases funds to seller — If your buyer is satisfied at the end of the inspection period, Flippa will release the funds from escrow to you at your buyer’s request, less any fees.
*Please be mindful that in some markets outside the US, Amazon expressly prohibits the transfer of ASCAs.
3) Transfer your product listings
If you want to keep your ASCA and not transfer it to your buyer, you will need to instead transfer the product listings to them. This is somewhat more complex, involves a few more steps and can take up to 3 months to complete.
Here’s how to do it.
Step 1. Buyer sets up an ASCA — Your buyer will need to open a new ASCA. If they already have one, they will need to inform Amazon that they intend to establish a new one. A new legal entity must be used for the new account.
Step 2. Seller provides inventory forecasts — You will need to provide your buyer with data on inventory levels, warehouse locations and sales predications. You will need to keep on hand or otherwise replenish 3-4 weeks of inventory in your storage facility or at least enough to sustain sales through the listing transfer process.
Step 3. Buyer sets up third party logistics (3PL) service — Your buyer will need to establish their own 3PL to receive the left over inventory, and provide you with these account details.
Step 4. Seller ships removal order inventory to buyer — You should now send left over, or removal order inventory to your buyer’s 3PL. That is, anything over and above the 3-4 weeks’ worth you are required to hold onto. To do so, you will need to create and submit a “removal order” by navigating to the “Manage Inventory” page from your dashboard and selecting the inventory that you wish to remove. Be mindful that Amazon charges removal fees per item removed.
Step 5. Buyer sets up an Amazon Brand Registry Account — Your buyer will need to apply for an Amazon Brand Registry Account, if applicable. They should use the same email as the email used for the business. You will need to add your buyer’s new store ID to your existing Brand Registry Account and give them the highest-level permissions/access.
Step 6. Seller transfers listing information — You will need to transfer your listings to your buyer’s Brand Registry Account. All reviews and rankings will remain with the listing as they are fixed to the listing, not the account. Your buyer can now access listings on their account.
Step 7. Seller gives buyer shipping information — You will need to provide your buyer with shipping/logistics information. For example, “ship from” address, label sizes, carton quantity and dimensions and any other information your buyer will need to relabel the goods. Your buyer can then update their Brand Registry Account with the new details and generate new FNSKUs for the products, that is, fulfilment network stock keeping units. This will link the listing ID to their account, rather than yours.
Step 8. Buyer relabels goods — Your buyer’s inventory will now need to be relabelled with the updated details. Your buyer can now start sending newly relabelled inventory to Amazon’s fulfilment centre for storage.
Step 9. Seller sends PPC ad campaign information to buyer — Once your buyer has transferred your listing ASINs to their Brand Registry Account and relabelled inventory for Amazon’s warehouse, you will need to start sending over details of your PPC accounts. The buyer can then replicate these on their new account.
Step 10. Buyer activates ASCA — Finally, your buyer can activate their ASCA and begin selling goods. You should now raise the price of the products in your ASCA by at least $10 to ensure your buyer’s listings prevail in search.
Step 11. Buyer gets to inspect — Once their ASCA is activated, your buyer’s inspection period can begin. During the inspection period, your buyer has the opportunity to monitor and assess sales volume and revenue to ensure it aligns with what you told them. The length of the inspection period can be shortened by agreement.
Step 12. Listing transfer process completes — At the end of the inspection period, provided your buyer is happy, you should now ship all remaining inventory to your buyer. The buyer now has full ownership of all assets.
While the steps above may seem complex and a bit daunting, following them will ensure your Amazon FBA business can find a new home with ease. If you have any questions about the processes described above, please get in touch here [email protected].