There are 3 broad categories that FBA businesses tend to fall into: reseller (otherwise known as retail arbitrage), private label and own brand/proprietary product. The following diagram provides a high-level summary of these types of businesses, which is developed in more detail below:
Reselling involves finding products (online or in person) that you can sell on Amazon for a profit. This is the most simple type of FBA business to build. It is basically trading - buy wholesale, sell retail.
This type of business tends to be very hard to sell, even if you are making substantial profits. The true value added (for the consumer) is convenience. You are essentially "competing for the buy box". Due to the issues listed above, buyers are potentially taking on a lot of risk when purchasing a reseller business.
Operating a private label Amazon business involves taking existing products and adding your own brand to them. Lots of manufacturers offer "white label" products whereby you can re-brand their product to your own requirements. Here's a detailed guide on developing private label products for sale on Amazon: Designing logo for amazon private label products
In many ways, the saleability of a private label business depends on the goodwill of the brand. If there are lots of great reviews, the business has a strong Best Seller Rank (discussed in the next section) and repeat customers, this will naturally increase the attractiveness of the brand. Some key factors influencing the saleability of a private label business include how long the account has been in existence, how diversified the product mix is (and how concentrated revenues are towards specific products), level of owner involvement and growth trends for sales and profit. As we will discuss in the next chapter, digital assets outside of the Amazon platform such as a social media presence, an online 'standalone' store and customer mailing lists can improve the saleability (and value) of the business.
As far as FBA businesses go, this is the holy grail. Although it is much harder to succeed compared to building a reseller or private label business, it creates more lasting value which is difficult for competition to replicate. This involves creating something unique (for example, improving upon a popular product such as a more effective mouse trap, or a new
health supplement formula), or taking an existing product and augmenting the offering in some way that increases its attractiveness to consumers. This differs from a private label brand in that a private label is simply adding your brand to an existing product. For this type of business, the brand is more than just a store on Amazon.
Established, recognized brands and proprietary products add far more value than the former two types of business. They have a strong 'staying power' in the market, and if done right, attract loyal customers. From the perspective of a potential buyer, this is highly valuable and can demand a significant premium. Factors that affect the saleability of this type of business are more centered around how established the business is, how much of the earnings are directly influenced by the owner, margins, market share, web traffic and digital assets outside of Amazon (such as social media presence, customer mailing lists, standalone online stores, and automated systems).