Are you in? Amazon FBA is here to stay

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Want to buy an Amazon FBA business? Now’s the time to dive in. Amazon businesses are raking in fat cash, and Amazon FBA should be every entrepreneur’s new BFF. Get insider tips from Carlos Chapman, the CEO of Thras.io who’s bought and sold businesses for millions. Learn how to spot your FBA goldmine and how to win against the Amazon overlords.

Should I buy an Amazon FBA business?

Amazon’s competitors are only catching up, not competing

The serial entrepreneur awakens

Why Amazon, of all things?

How Thras.io identifies winning Amazon FBAs

Become a lean, mean Amazon machine

How to stand out on Amazon

Find your unicorn

Five years ago, you would have been put in the nuthouse for spending money to buy an Amazon FBA business.

And yes, once upon a time, it seemed risky to buy an Amazon business.

But in 2019, it’s a whole different ball game.

Quiet Light founder Mark jokes, “There are people a lot smarter than us who have raised $10 to $30 million to buy up Amazon businesses and build a portfolio.”

Why are people doing this?

Just look at the cold, hard numbers:

Amazon’s third party services raked in $229 billion (yes, with a ‘b’) in 2018.

Over one million new sellers joined Amazon FBA in 2018. That’s 3,000 people a day.

Amazon earns so much that its 2017 earnings eclipsed the GDP of Algeria. That’s a lot of cheddar, folks.

Quote from podcast: “Amazon is trying to become the eCommerce internet.”

Given Amazon’s meteoric rise to eCommerce domination, it’s no surprise that some entrepreneurs want to buy an Amazon FBA business.

But other buyers aren’t so sure.

They discount Amazon-only businesses because of channel risk. After all, how long will the Amazon gold rush last?

Well, we’re betting money that the Amazon transformation is going to keep coming.

But what will that look like? What does the future hold for businesses that only sell on Amazon?

And more importantly, how safe is it to get your slice of the Amazon pie? How can you buy an Amazon FBA business that won’t bite you in the ass?

We sat down with CEO of Thras.io, Carlos Chapman, to chat about the future of Amazon FBA.

Learn how Carlos built a kingdom buying Amazon FBA businesses, and how you can replicate his process in your own business.

Carlos Cashman

Should I buy an Amazon FBA business?

The quick answer is yes, you stand to gain a lot when you buy an Amazon FBA business.

Entrepreneurs want an investment that’s going to last a long time.

That’s why many people choose to overlook Amazon FBA businesses; they think Amazon FBA is a fad that will go away.

But that’s not the case.

Spoiler alert: Amazon is going all-in on FBA.

The Quiet Light Podcast

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This blog post is based on a podcast episode that we recently recorded. Listen to the full episode here:

It’s one of Amazon’s three biggest sources of revenue, actually. They aren’t going to kill a cash cow.

“Jeff Bezos has always had a vision for building a platform and a marketplace. He’s not going to destroy one of the main pillars of his business,” Carlos says.

When you buy an Amazon FBA business, you get a piece of Amazon’s 49% share of the eCommerce market.

Of the 10% of retail sales that happen on eCommerce, Amazon owns 5%.

That’s a small percentage, but when you look at the dollar signs, it’s enough to make you drool.

These stats put Amazon sellers in a very good position.

If you’ve ever dreamed about taking a bath in a vat of money, you could finally do that with an FBA biz.

Quote from the podcast: “Third-party sellers are one of the largest profit centers that Amazon has.”

Amazon’s competitors are only catching up, not competing

Amazon has “competitors” in the Walmarts and Targets of the world.

But in reality, these businesses are only offering free delivery and shipping to catch up to Amazon. Amazon is still in the lead.

Why?

Because they’ve become the de facto way of ordering products online.

If you want to sell products with these retailers, the sales aren’t going to come as easily.

Screenshot of Walmart.com

Walmart.com just doesn’t have the same draw with customers as Amazon.com, y’know?

So where should you put your money as a business owner? We think there’s a space for Amazon FBA in your portfolio.

Quiet Light admittedly had bleak hopes for Amazon five years ago, but after seeing the numbers, Amazon is more sure of an investment than we previously thought.

Entrepreneurs’ Amazon aversion is dying out and making way for increased confidence in Amazon as a business channel.

Now that you know Amazon is safe, find out why Carlos believes Amazon is the future of eCommerce.

The serial entrepreneur awakens

Carlos identifies himself as a serial entrepreneur, and we’d say that’s pretty accurate.

He’s started over a dozen companies, eight of which were multi-million dollar companies.

Carlos has done everything from taking companies public to selling businesses for nine figures. Dude’s been around the block.

He has a background in tech and performance marketing, but today he’s the CEO of Thras.io.

Screenshot of Thras.io

We dare you to try saying their name ten times fast—it’s a toughie.

Along with cofounder Josh Silberstein, Carlos named Thras.io after the ancient Greek word thrasos, which means boldness or confidence.

Incidentally, it’s also the name of a mythological Amazon warrior queen. “If I’m really bored I’m going to go out and procrastinate by researching Amazon queens,” Carlos admits.

We’d say that’s fitting, considering Thras.io’s business model. The company consolidates multiple Amazon businesses under one umbrella to run a lean, clean Amazon machine.

But Thras.io isn’t gobbling up FBA businesses willy nilly; it’s their strategic approach that makes them so unique.

Carlos and Josh kept their company vertical-agnostic so they could flex with the market.

Benefits of working with Thras.io

Their focus is on great businesses and products, not arbitrarily sticking to a product niche.

After all, do you really need 15 specialty spatula products in your portfolio? Nah. Carlos says the key is diversity.

Oh, and selling on Amazon.

Why Amazon, of all things?

Like many entrepreneurs, Carlos didn’t set out to dominate Amazon.

At the time, he was doing performance marketing on Facebook for eCommerce clients in need of lead gen.

As a result, he had his hand on the pulse of eCommerce. And Carlos noted that eCommerce companies were getting smaller, especially as Amazon gained prominence.

He figured, “Hey, I can roll up these small companies and do what I do best. I’ll use performance marketing to boost their sales and add value.”

Quote from the podcast: “We believe in the fundamental transformation that Amazon has brought on. They’ve changed how we do eCommerce.”

 

Thras.io started as an eCommerce rollup company.

However, after seeing eye-popping results, the company soon fell primarily into the Amazon channel.

Carlos knew Thras.io could make better deals and move more quickly on Amazon.

 

How Thras.io identifies winning Amazon FBAs

After many, many successful rollups with Thras.io, Carlos and Josh learned what it takes to avoid the duds and find diamonds in the rough.

If you’re out to buy an Amazon FBA business, learn how to spot winners and how to see through the clutter.

For example, you don’t need to put a ton of stock in a business’s email list as a selling point.

This is a secondary metric. Sure, it shows people are interested in the product, but that won’t pay your bills.

What matters most is how a product performs and is positioned on Amazon.

Focus on these five elements to locate the perfect FBA.

Concentrate SKUs

“More” isn’t always best when you buy an Amazon FBA business.

Look for quality first.

It might be exciting to buy a biz with dozens and dozens of products, but what if the products are garbage?

That’s why Carlos looks for concentrated SKUs.

Barcode

“Businesses are attractive to us because it’s concentrated, even if it’s a strange collection of products,” he says.

It’s easier to take on concentrated SKUs because you don’t have to deal with a gigantic inventory.

Target a business with a handful of great products. It’ll be easier to manage and dedicate your focus.

Don’t buy fad products

Fidget spinners were cool for, like, a hot minute. Now they’re clogging our landfills.

Don’t waste your time with fad products.

Carlos targets products that have a stable demand. Do the same for your business for consistent cash flow.

You don’t want to be footing the bill once fidget spinners (or ShakeWeights or pet rocks or Beanie Babies) fall out of favor.

Build a suite of products

Don’t just buy one Amazon FBA biz.

You want enough high-quality SKUs under your belt that you don’t have to worry about individual product performance.

This way, your portfolio is large enough that it balances itself out.

Essentially, instead of buying up every business that you can get your hands on, evaluate the strengths of the business’s products.

Quote from the podcast: “We’re not concerned about individual performance because we have hundreds and hundreds of others.”

Let’s break it down.

Say you’ve found a business with a real “unicorn” of a product.

It sells well, has great reviews, and has margins out the wazoo.

Most entrepreneurs would still think it’s risky to invest $2 million in buying that unicorn product.

But caution is not what Carlos recommends here. “Let’s not bid on one winner. Let’s win on a lot of potential winners,” he says.

Sparkly unicorn

Instead, Carlos says you need to buy enough unicorn products that you minimize your risk. Think of it as creating unicorn herd immunity for your finances.

Building a suite of awesome products is the right approach.

Sell pot holders, humidifiers, potted plants—whatever high-margin products you can find.

They don’t have to be related products, after all.

Amazon shoppers aren’t going to flip through your FBA profile to find products; they’re using the search bar.

People don’t say “I bought that humidifier from John’s Humidifiers.” They just say, “Yeah, I got it on Amazon.”

Don’t pigeonhole yourself. Product diversity is good.

Stacked Amazon boxes

Pull the plug on bad products

But hey, sometimes a unicorn actually ends up being a donkey.

And you’re the one left feeling like an ass.

It happens.

How do you deal with buying a bad product?

Well, if you’re growing the business right and you did your homework before buying the biz, it might not be that your product sucks.

All it takes is having one nasty competitor on Amazon to ruin your day.

One false complaint can still shut down your account or slow down sales.

This means you really need to do your homework before you buy an Amazon FBA business. Don’t inherit problems like scum competitors.

That said, if you find yourself on the wrong end of a bad product, Carlos has some simple advice: dump it and don’t look back.

“Know when to cut your losses and do it fast. And don’t get emotional about it. We cut the losers from day one,” Carlos says.

In fact, if Carlos is buying a business, he won’t buy certain SKUs if they suck.

“I’m not going to pay for these products if we won’t make money on them,” He says.

“Look at products dispassionately when it comes to capital allocation.”

And don’t let your emotions rule you here.

If, for some reason, you feel really invested in low-performing bunny pajamas, let them go. Have a financial-first mindset.

Structure your investments right

Investors are important to any business, but you can’t let them have free rein.

Carlos structures his business as a Social Partners Vehicle, or SPV. Carlos uses this to cross-collateralize investors in Thras.io.

“We have great investors, but they’re not very involved in the individual deals we’re doing,” he says.

What this means is that Carlos doesn’t have to run to investors for input on every little decision.

There’s no agonizing over SKUs with investors, which frees him and Josh up to make faster, better decisions.

Try structuring your business to have more freedom while delivering better results to investors.

Make it clear what kind of deal it is, though. You don’t want to have a pissed off investor.

Millennials working

Become a lean, mean Amazon machine

After building a business with Amazon FBA products, it’s time to optimize.

This is similar to what you might do when you buy a traditional business; you look for efficiencies to make everything run smoother.

But optimizing Amazon FBA businesses is different. You aren’t buying a traditional company.

Traditionally, you would buy a business and take cost-cutting measures, dissolving redundant roles and consolidating products.

This isn’t as big of a deal in the Amazon ecosystem.

“Amazon has created millions of solopreneurs. The interaction is so simplified that a single person can run a $5 million business,” Carlos says.

Amazon FBA businesses are less complex. You might add a VA to save some time on email, but that’s about it.

“You’re not going to be as good at an Amazon business as my team. I have a leader who ran a $2 billion supply chain in 140 countries.”

Consolidation companies like Thras.io work more efficiently than solopreneur businesses, too.

That streamlines sales even more, freeing up more time to scale.

Negotiate better shipping logistics and score volume discounts for manufacturing by consolidating Amazon FBA businesses.

“We can do it better than the little guys, and as a result, get more profit from these products,” Carlos says.

How to stand out on Amazon

Amazon is a marketplace.

It’s not enough to sell stuff on the platform and cross your fingers that people will buy from you.

“I don’t think there’s any one magic bullet,” Carlos says. Success comes from a few factors.

Here are Carlos’s tips for succeeding on a crowded eCommerce platform.

Badass customer experience

Customer service is so, so, so important.

So many people ask us how they can stand out against cheap Amazon sellers overseas, and this is how.

Right here.

Product questions and answers on Amazon

Not only does good customer service mean people will stay with you and refer you, but it also means they’ll spend more money.

Reply promptly to customer questions.

Fill out FAQ, answer your email, and go the extra mile.

Do free returns, replacements, and anything else that helps the customer feel like a king.

Follow the rules, you rebel

Entrepreneurs are known for being rebellious.

We say go crazy. Rebel in aaaall kinds of ways.

Get a mohawk, work naked, walk backward all day—whatever.

But don’t be a rebel when you sell on Amazon. Carlos says this is one of those times that you need to follow the rules.

“I have longevity on platforms by following the rules, being a good actor in the ecosystem, and understanding what they’re looking for,” he says.

Quote from the podcast: “You’re subject to the mercy and whims of Amazon.”

Amazon’s seller guidelines will tell you what to do.

Have a great product, treat customers like human beings, and answer your damn email. If your ratings go down, fix the problem.

Break the rules and Amazon will make you pay dearly, so be a rebel elsewhere.

Don’t compete on price

Selling on Amazon often feels like a race to the bottom.

But you don’t need to slash prices to be competitive on Amazon.

Remember, customers will pay more money for a better experience. Amazon is a crowded space, so having a product on the platform isn’t enough to get sales.

You need to stand out for making a good product, not for making the cheapest product.

Look at your offerings and think, “How can I be more innovative?” That’s the key to success, not shaving fifty cents off your price tag.

Find your unicorn

Thraso, the mythological Amazon queen and Thras.io’s namesake, is a warrior.

Greek legends mention her briefly, but she’s known for her decorative shield.

As you head off into your own Amazon battle, take up your shield.

Quote from the podcast: “This year, to date, we’ve seen multiples on Amazon businesses at levels we haven’t seen in the past.”

Find your unicorn products, optimize your consolidated businesses, and be a good actor in the Amazon ecosystem.

Thraso was a myth, but your success doesn’t have to be.

Now’s the time to get in on Amazon. Are you in?

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