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  • Interest in buying and selling Amazon’s third-party seller businesses is on the rise.
  • The deal size and frequencies are growing, as more people are expected to shop online and on Amazon, following COVID-19.
  • The average deal size is around $5 million, according to brokers, but the largest deal pending in May was worth over $30 million.
  • There are now a whole industry of buyers and brokers who are solely interested in deals for Amazon’s third-party merchants.
  • Visit Business Insider’s homepage for more stories.

Idan Barzilay, an Amazon seller based in Tel Aviv, was disappointed when a potential buyer for his business walked away from a deal in late February, citing uncertainty and risks associated with COVID-19.

But things completely flipped in the next three months. 

Barzilay, who had sold VR headsets and kids’ bubble blowers on Amazon since 2018, saw his sales nearly quadruple during March and April, as COVID-19 spurred more people to shop online while sheltered at home. The sales spike increased the perceived value of his business, and in late April, a new buyer came forward with a better offer. Six weeks later, Barzilay sold his business of four employees for more than $2 million — in a much faster sales process than the typical two-to-three-month procedure.

“I’ve never seen this level of interest in buying Amazon sellers,” said Barzilay, who declined to share the exact financial terms of the deal. “And the coronavirus is accelerating it.”

Barzilay is part of a growing trend that’s seeing a boost amid the COVID-19 pandemic. As more people are expected to shop online following the coronavirus outbreak — and Amazon is likely to be the main beneficiary of that shift — demand for acquiring third-party Amazon sellers is growing at an unprecedented rate, leading to higher deal prices and frequencies.

While some sellers on Amazon have struggled due to the coronavirus-related restrictions, those selling in certain categories, like toys or health, are thriving. These third-party merchants, who sell their own products or resell for other brands, have grown their pie on Amazon in recent years, and now account for over half of all products sold on the site (the rest is sold by Amazon itself). Amazon owns roughly 40% of the US e-commerce market.

Yael Cabilly, cofounder of Fortunet, an investment firm that specializes in e-commerce M&A, said the number of deals for Amazon sellers has nearly tripled over the past three months compared to previous years. Since the COVID-19 outbreak, buyers have become more aggressive, in some cases putting 20% to 30% premiums on their offers, as they look to take advantage of the secular shift to e-commerce, she said. 

The average deal sizes are still relatively small, at around $5 million, but they can lead to lucrative outcomes because most of the Amazon merchants are small businesses run by only a handful of employees.

“It’s becoming a seller’s market,” Cabilly said. “People are understanding that e-commerce is here to stay.” 

The increased number of deals comes from buyers ranging from traditional investors, including private equity firms, to family offices and even Fortune 500 retailers, who are specifically looking to buy a bunch of Amazon sellers, Cabilly said.

It’s also leading to the creation of new companies with a sole purpose of buying up Amazon sellers and growing them under a unified operation.

‘Messy’ market

Perch is one of those companies that’s almost entirely focused on buying and managing a portfolio of Amazon sellers. Its CEO Chris Bell said Perch typically buys sellers with an annual revenue in the range of $500,000 to $5 million, and most deals are between $1 million to $7 million. The company does roughly 20 deals per year, but Bell said he’s planning to double down this year because he believes Amazon’s marketplace will continue to expand during the pandemic.

Perch’s model of acquiring and growing Amazon sellers has many advantages, Bell said. Having scale on Amazon’s marketplace lets it run each of the merchant businesses it owns more efficiently by giving access to more capital and better pricing structures. It also provides more professional marketing and supply chain strategies, among other things, he said. In April, Perch raised $8 million in a round led by Spark Capital. 

“We think this is going to be a winning strategy for a long time,” Bell said.

But some buyers caution the market has become more challenging due to COVID-19. Josh Silberstein, co-founder of, a company that bought 45 Amazon third-party sellers in the past two years, said the gap in expectations between buyers and sellers have widened as the pandemic has caused more uncertainty. 

For example, sellers that have seen a spike in sales in the past three months are almost irrationally excited about their business prospects, asking for higher-than-usual prices, Silberstein said. Those struggling, however, don’t want to sell based on their current sales, believing the dip is temporary. To solve the difference, Silberstein said he’s created deal structures that are fair to everyone, such as additional clauses for future profit splits or bonus payouts if certain business goals are reached.

“It’s a messy market — you see people uncertain on all sides,” Silberstein said. 

Still, according to Barzilay, the Tel Aviv-based seller who sold his company in May, there’s never been a better time to have a successful Amazon business. For him, the acquisition presented not just a massive liquidity event, but also a chance to consider opportunities he didn’t have the time to in the past. Now, he’s looking for new ventures, like selling more high-end products or potentially launching a new consumer brand.

“You can reboot faster and do things bigger with your know-how,” he said.

$30 million deal

Coran Woodmass, the CEO of The FBA Broker, a brokerage firm specializing in the sale of Amazon sellers, said the industry started gaining traction in the last two to three years. When he first started in 2016, the average value of Amazon sellers being sold was around $300,000. Now, that figure has jumped to around $2 million he said, spawning a whole industry of buyers and brokers specializing in Amazon merchant sales, he said.

Industry data is sparse because many deals take place privately, but Woodmass has been publishing a monthly report about the market based on publicly available listings. According to his report, there were 134 listings worth over $500,000 in May, up from the 81 total listings two years ago. In May, 15 deals were signed, the highest number for any month since 2017. The median earnings multiple for pending deals also jumped to 3.7X in May, from March’s 3.1X, and the 2.7X from May 2018.

Amazon chart 3p sellers

Ruobing Su/Business Insider

One of the most expensive deals in May that’s currently pending was worth more than $30 million, Woodmass said. The listing for that deal says the seller has only 4 employees and generated $6.2 million in cash flow last year, with 95% of its business coming from Amazon’s marketplace.

“When COVID-19 first started, our team wasn’t sure of what was going to happen,” Woodmass said. “Now we’re busier than ever.”

Amazon’s spokesperson declined to comment on the growing interest in buying Amazon sellers. Instead, the spokesperson said that Amazon sellers in general had a “record-breaking year” in 2019. In the US, more than 15,000 sellers had over $1 million in sales and roughly 25,000 merchants surpassed $500,000 in sales last year. Nearly 225,000 businesses worldwide had more than $100,000 in sales on Amazon during the same period.

“Third-party sellers continue to see strong growth in our stores and the growth of physical merchandise sold by third-party sellers has continued to outpace that of our first party sales,” Amazon’s spokesperson said in an email.

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