FBA / Drop Shipping Site Question

searcher profile

June 16, 2020

by a searcher from University of Pennsylvania - The Wharton School in Dallas, TX, USA

Does anyone know of searchers who have acquired FBA / Drop Shipping business, or investors & banks who have backed such an acquisition? I see them on some of the SearchFunder emails, but not in broker channels. Curious if anyone has thoughts about how this category meshes with traditional search fund criteria, and if it's worthy of attention during search. Thanks.

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commentor profile
Reply by a searcher
from Indiana University at Bloomington in Bloomington, IN, USA
One caveat with FBA is that I've heard (but this is not confirmed to be true) that sellers often find that once they have a good selling profitable product, suddenly Amazon creates a virtually identical offering of their own, and tags it with Amazon Recommends. And poof, there goes your FBA business volume. Sucked away by your new "partner" Amazon. I wonder if Amazon is using 3rd party sellers as a source of market testing? Marketing testing that not only doesn't cost them money, but actually pays them money. Seems like a very shaky foundation on which to build a business. BUT to be fair, I haven't dug in deeply on FBA model, so take my comment with a grain of salt. There may be ways to prevent this or avoid it. Interested to hear comments and thoughts from those with experience in the space.
commentor profile
Reply by a searcher
from The University of Chicago in Dallas, TX, USA
These businesses typically sell to specific buyer types and are thus represented by speciality brokers. WebsiteClosers & QuietLIght are two of the larger ones...

They are worthy of attention, but come with many hazards and are thus bought by those with specific knowledge and skill sets required for such a business type... if you dont know how or why a business is ranking for a term on Amazon, then you should probably not be acquiring a business where 90% or more of sales might be driven by just 2 or 3 search rankings...
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