Home / Selling Your Amazon Business / Dictionary for When You Sell Your Amazon FBA Business

Dictionary for When You Sell Your Amazon FBA Business

Selling Your Amazon Business

Posted on November 6, 2021
by Benedict Dohmen

Acronyms and abbreviations are very common things in the business world and Amazon isn’t an excuse. Through your time as an Amazon seller you have encountered many of them and probably used quite a few.

However, you have decided to sell your Amazon FBA business and now there are even more unknown words that are added to the list.

Don’t fret, we have compiled a comprehensive guide on every term you may encounter on your journey so you glide as easily as possible throughout the entire sale process.

Account Health

Refers to your selling account’s compliance with performance targets and required policies for selling on Amazon.

ACoS – Advertising Cost of Sale

Refers to the amount of money spent on advertising per dollar of revenue made. Also refers to the ratio of ad spend vs. target sales. The formula is ACoS = Total Ad Spend/Total Sales

Add-Backs

Add backs are business expenses on the financial statements will be removed once the handover process is complete and the business switches hands.

This can take the form of salaries paid to non-working staff, such as an ex-owner’s family members, or a loan interest that is the ex-owner’s responsibility.

Ad Impressions

Refer to when an ad is fetched from the source and is therefore countable. Each fetch (not necessarily click) is considered as one impression.

Ad Orders

Contain high-level information regarding an ad campaign, such as advertisers or buyers involved, and the people responsible for the ad campaign.

Ad Sales

Refers to the sale of ad space on different platforms – such as TV, internet, and print media – to various businesses for the promotion of their products and services.

Ad Spend

The amount of money spent on ad campaigns. Can be measured through actual spending are on ad placements, costs for ad agency fees, personnel, and the like.

Ad Targeting

A form of advertising targeted directly toward an audience with a specific set of traits. The target audience usually depends on the product that the advertiser is promoting.

ASIN – Amazon Standard Info Number

A ten-digit code that identifies products on the platform. Each ASIN is alphanumeric and is unique to each product created within the Amazon catalog.

BB – Buy Box

The BB is the white box located on the right-hand side of your Amazon product detail page; it’s where customers can add items to their cart for purchasing.

Brand Analytics

A feature on Amazon Seller Central; contains helpful insights for Brand Owners regarding their products and marketing and ad activities.

Brand Registry

A program that identifies brand owners and helps them protect their intellectual property rights as well as all product content available on Amazon.

Brand Store

A free feature on Amazon that allows vendors/sellers to create a branded online store on the platform where they can showcase their products and highlight their branding.

Broker

A person or firm that acts as an intermediary – helping buyers and sellers through the transaction process for a fee.

CCR – Counterfeit Complaint Rate

The rate at which counterfeit complaints are made; Counterfeit complaints are issued against brands that may be selling counterfeits.

Child ASIN

Child products related to a parent listing may vary in shape, color, or size.

COGs – Cost of Goods Sold

Refers to the costs of producing goods being sold by a company, including the cost of materials and labor. Distribution and sales force costs are excluded.

CPC – Cost Per Click

An ad campaign pricing model where you are paying for each click made on your ads. Also known as ‘pay per click’, or PPC.

CPS – Costs Per Shipment

Also known as ‘cost per order’ or CPO, it’s used to calculate the average cost spent on marketing per sale.

CTR – Click Through Rate

The ratio of users clicking on a link to the total number of users viewing a page, ad, or email.

Due Diligence

The many investigations and processes an acquiring firm does before buying out a company. Likely to include detailed analysis and auditing of the business, its assets, and overall performance.

Earnout

An earnout is a financial arrangement where a buyer pays a certain portion of the purchase price of a business – and once in ownership, pays off the remaining amount for a predetermined number of months or years.

This is usually done to speed up the selling process, and can greatly benefit a seller if the earnout clause requires certain performance benchmarks or interest payments as part of the deal.

Global SKU

Refers to stock available across all marketplaces through an inventory pool.

GTIN – Global Trade Item Number

Numbers are used to identify each product being sold on Amazon. Can be found on a product’s cover or packaging.

Landed Cost

The total cost needed to manufacture and ship a product to an end-user.

Lead Magnet

Refers to free content, gifts, and services that a person receives upon willingly sharing their contact details (i.e. email, phone, or location).

LOI - Letter of Intent

An LOI is a document that states the primary commitments between one business party and another, such as the major terms of a deal. Commonly used in all important business transactions.

Marketplace

Amazon Marketplace; an e-commerce platform operated by Amazon that allows third-party sellers to sell products (new or used) at a fixed price.

MAP – Minimum Advertised Price

A restriction is implemented by a manufacturer (or Amazon) regarding the advertised price of products.

MCF – Multi-Channel Fulfillment

Fulfills orders at the same rate as FBA; Amazon handles storing, packing, and shipping products sold on various online platforms.

Non-Compete

A legal agreement or clause within a contract that forbids an employee from working with the employer’s competitors for a certain period, both during and after the employment period.

Generally, it also legally bars an employee from sharing inside information with a competing company or other entities.

OA – Online Arbitrage

Sourcing products via arbitrage and reselling them on Amazon.

ODR – Order Defect Rate

A rating of the seller’s performance concerning customer service.

Parent ASIN

The parent listing is used to establish relationships with child products. This allows sellers to group product variations on a single page for customer convenience.

PPC – Pay Per Click

An ad model wherein advertisers pay Amazon each time a user clicks on their ad.

PPV – Product Price Variance

The unit cost of an item that was purchased minus its standard cost, multiplied by the number of units purchased.

Private Label

Refers to finding a product that has a high number of sales and a low number of reviews, purchasing such a product, and labeling or rebranding that product.

Product Display Ads

An ad model from Amazon that allows sellers to show their ads to consumers who have used search keywords related to your product, viewed your product or a similar one, or have purchased from you in the past.

QBR – Quarterly Business Review

A once every quarter meeting with stakeholders to discuss strategies, trends, and ROI.

RA – Retail Arbitrage

Buying usually discounted products from retail outlets at a low price, and then flipping them for a profit on a digital marketplace such as Amazon. This is one of the oldest digital merchant strategies in the book.

RoAS – Return On Ad Spend

Revenue earned from your business for each dollar spent on advertising.

ROI – Return on Investment

The ratio between net income and investment. A high return on investment means that the gains outweigh the cost.

Sales Rank

A metric on Amazon explaining the relationship between products in one category based on sales performance.

SDE - Seller’s Discretionary Earnings

A basic metric used to determine the value of small businesses – generally those with annual sales under $1,000,000. SDE is calculated with the following formula:

SDE = Net income (or net loss) on the company tax return + interest expense + depreciation expense + amortization expense + the current owner’s salary + owner perks.

SKU – Stock Keeping Unit

A product or service identification code used by a store; often a barcode that can be read by a machine to keep track of inventory.

Stability Payment

A form of payment within earnout clauses, where priority is given to maintaining and exceeding the yearly performance targets of a sold business. Generally, this takes up 10-20% of the sales price and requires the buyer to exceed the previous 12 months of sales in the 12 months following the business acquisition.

Now it is your turn – do you have a question for the Benitago team? Or maybe you want to start a conversation with like-minded individuals? Feel free to share your thoughts in the comment section below!