Common seller tricks in e-commerce or Amazon FBA
Sellers often sell the trailing twelve months, not the run rate, and treat a brand and a set of reviews as more durable than Amazon’s rules allow.
- A trailing twelve-month revenue that hides a sharp drop in the last 90 days.
- Account health, IP, or review issues that are not in the data room.
- Inventory that is aged, stranded, or concentrated in a few ASINs.
- A single SKU, supplier, or ad campaign as most of the profit.
- PPC or promotion spend that was turned down just long enough to dress up the margin.
Which numbers to verify
Ask for monthly sales, ads, fees, returns, and net, for at least 24 months, plus a last-90-days cut. Reconcile payouts to the bank. Split channels (Amazon, Shopify, wholesale). Inventory should be aged, with FBA fees and long-term storage in view. Recast any owner-operator time in customer service and ads. If one ASIN is most of the profit, model it disappearing.
Licensing and key-person risk
There may be trademarks, brand-registry status, and supplier agreements. Amazon and other marketplaces have their own terms; account standing is not a license you fully control. Confirm who owns the brand, the domain, the seller account, and the creative, and whether a change of ownership is even allowed without a formal process.
Equipment and condition
The ‘plant’ is inventory, packaging, and software (and sometimes a 3PL). Count inventory at a realistic net realizable value, not at a hopeful cost. FBA inventory you cannot inspect easily still has to be believed with reports, not photos. Ad accounts and email lists should be in the company’s name.
Seasonality and the calendar
Prime Day, holidays, and Q4 can be the year. A trailing twelve months that includes one outsized holiday and a weak recent quarter is a trap. Use a full two years if you can, and a current run rate, not just the best twelve months.
Customer concentration
SKU concentration, supplier concentration, and channel concentration (Amazon only) are the usual three. A single supplier in one country is a disruption risk. A single marketplace is a policy risk. Both should be in the model, not just in a risk appendix.
Questions to ask before you make an offer
- Please provide monthly sales, ads, fees, returns, and net for 24 months, plus a last-90-days view, reconciled to payouts.
- May I review account-health, IP, and review history, including any warnings or suspensions?
- What is the inventory age, including FBA stranded or long-term storage, and how was it valued?
- What share of profit sits in the top ASINs or SKUs, and in a single supplier?
- Who owns the brand, trademarks, domain, seller account, and creative, and what is the transfer process?
- What happened to ad spend and promotions in the months before the listing went live?
- How concentrated is the business in one marketplace versus owned channels?
- What customer-service load does the owner still handle?
- Are there unpaid ad bills, chargebacks, or supplier deposits at risk?
- After an LOI, may I speak with your accountant and get read-only access to the channel reports?