Maximizing Your Business Income & Valuation

When the time comes to sell an Amazon e-commerce store, the single most important step to ensure the best possible outcome is to make sure that the business has records that have been meticulously kept. Too many businesses fail at maintaining an account of their successes and challenges. Intelligent selling utilizes technology that gives accurate documentation of how well the business performs; this demonstrates the businesses value for potential buyers.

Automation throughout the sales process creates greater efficiency and provides the necessary data to track and tweak performance in real time. E-commerce remains data driven. Software amasses and stores accurate, objective information that outlines the successes and challenges an Amazon seller experiences during the growth of their business. It tells the story of just how the business generated its fortune. Brokers that sell Amazon businesses harness the data to showcase the sustainable, repeatable, and high growth earning a potential of an Amazon sellers business.

We recommend tracking of key performance indicators (KPI). With sellerboard all of your important data is in one place. A sudden shift upward could be because you got several positive product reviews, the buy box or may indicate buzz on social media or a particularly successful ad campaign. Amazon requires sellers to measure certain key performance indicators such as order defect rate, pre-fulfillment cancel rate, and late shipment rate in order to maintain the ability to sell on Amazon. While the list of possible KPIs can and should be tailored to one’s specific business needs, we recommend that sellers at least track revenue, cost of goods sold, advertising cost of sale, and net profit.

Revenue amounts to the gross income the seller brings in during the measurement period. This figure should be adjusted for any discounts, rebates, and refunds. This gross income boils down to how much was sold the day before. The importance of tracking this number is obvious as it shows how much money is coming into the business. Revenue does not paint a complete picture of how well an Amazon store is performing on its own. In order to truly determine whether growth is occurring, other indicators must also be considered.

Expenses must be tracked to gauge any product’s profitability. The primary expenses an online store incurs are the cost of goods sold (COGS) and advertising costs. To paraphrase the cliché, money must be spent to be made. Whatever is being sold incurs some cost to create. This is true even for digital items. There is a well-known formula for calculating COGS. How much stock one has at the start of measurement period plus the price of the inventory equals the rate of the remaining goods minus what inventory is left at end of a measurement period.

Advertising cost of sale (ACOS), tracks the effectiveness of advertising dollars. Warehouse management software ensures that accurate stock levels are maintained and communicated. Order fulfillment platforms can ensure that shipping costs remain low. They reduce overall operating costs. Multi-platform systems integrate tracking, fulfillment, warehouse management, shipping, customer service aspects like returns and refunds. These platforms keep the seller and customer up to date on stock levels.

Refunds and returns also get managed more efficiently through the use of software solutions. Chat-bots such as Amazon Lex, provide front-line customer assistance. Establishing a sane return and refund policy does a great deal to ensure customer satisfaction and customer retention. Though it seems contrary to common sense, allowing for a somewhat lenient return policy encourages customer experimentation and retention. Customers tend to spend more where they feel that their needs will be met.

While data can be tracked manually, by oneself, an employee or outsourced labor, a variety of software solutions exist. Sellers that automate their Amazon business set themselves apart and save hundreds of hours per year. Software like AMZControl proves invaluable. Software often costs far less than outsourcing and is much more reliable. The ability and willingness to engage technology demonstrate a tangible commitment to increasing business value. Automation frees up human capital to be used for innovation and creativity rather than tedious back-end calculations.  One of the top Amazon business brokers looks at a businesses automation and dependability when determining its value.  In the past, they have rated sellerboard one of the most reliable software companies at raising the value of Amazon businesses.

When buyers of Amazon businesses approach brokers and sellers, the first step is to examine the business records of the past twelve to twenty four months. We cannot overstate the importance of having dependable digital records that can be audited.  An additional benefit that sellerboard gives Amazon sellers is that it makes the keeping of business information a simple process.  All of the pertinent business information and KPI’s are in the same dashboard.  This makes the business much cleaner and more desirable to buyers, putting more money in your pocket when it comes time to sell.