Emanuel Ruiz explains what he looks for when buying Amazon FBA businesses: a price tag between $150,000 and $500,000, at least 30% profit margins, minimal ad spend, and ideally just a few products to manage. He avoids deals that would turn him into an employee rather than a business owner.
The inefficiencies that I look for, or my parameters that I look for, is pretty simple. Number one, what is their profit margin? If it's anything below 30%, I usually look the other way. The reason for this is because I'm buying businesses that are valued between $150,000 to $500,000. And usually in those price points, they're brand new sellers, they're running their business really efficiently, and I'm in there to try and scale this business out, which is going to require a lot more capital and lower profit margins. So if it's anything below 30, I usually look the other way. Number 2, how much do they rely on Amazon PPC, which is called TACoS, right? The higher the TACoS, the lower that I'm interested in going ahead and purchasing this business because I do what I do best, which is Amazon PPC and scaling a business that way. And number 3, how many SKUs does this actual item have? If it has a lot of different SKUs, that means that I'm buying myself a job. I have to go ahead and make sure that none of these items run out of stock, continuously reorder. So think about like shoes, right? Like I don't want to have to worry about a size 1 through 15 in this shoe size because I really have to go ahead and figure out how much do I have to order in one type of size as opposed to the other type of size, which again, it gives me a headache already and I'm not trying to go ahead and buy myself a job. So again, there's other things. Do they airship these items? What are their COGS percentages? But those are primarily as far as what I'm looking for when I'm purchasing an Amazon FBA business.
