As with most acquisitions, FBA business comes with their own set of challenges and potential deal-breakers for potential buyers.
- It’s a jungle in there
Every FBA business is fighting for survival and prominence in a complex ecosystem ruled by Amazon’s own Buy Box algorithm. FBA businesses receive greater prominence than non-FBA businesses in Amazon’s model, but that’s still no guarantee of survivability or even profitability.
The company’s main product is, after all, information, and it leverages data – data it does not share — with ruthless efficiency to decide where, when and how products will appear to consumers. It will also track the popularity and pricing flow of items, and use this information to produce its own competing products in an effort to supplant third-party businesses as sales leaders for those products.
- You might need to be more hands-on than you think
You’ll need a working knowledge of Amazon’s marketplace and the performance metrics it uses to gauge success and failure.
You’ll probably also want to keep a close eye on competition, which can wildly surge (as can the performance and profitability of all the items in the business), to have real-time information on your best performers in the short and long term.
- You’ll need a game plan for growth
In addition to negotiating the perilous waters of Amazon’s Darwinist marketplace, you’ll need to keep a sharp eye out for growth opportunities at every turn.
The same expanding competition and market saturation that eat into your profits will work against you inside the closed walls of Amazon’s ecosystem, so be prepared to pursue multi-channel opportunities if you’re keen on serious growth.