Best Practices for Investing in FBA Private Label Brands

May 11, 2021

Sam Hörbye

Co-founder of Olsam Group

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Sam Hörbye is the Co-founder of Olsam Group, a UK-based firm that buys and grows Amazon FBA brands. Olsam Group’s mission is to be the first point of contact for Amazon sellers looking to achieve an amazing exit and continue to profit as their brand grows.

Before this, Sam was the Team Lead Manager at Amazon, where he managed some of the UK’s largest third-party sellers on Amazon’s worldwide marketplaces. He also started, scaled, and sold his own category-leading Amazon FBA business, Beechmore Books.

Here’s a glimpse of what you’ll learn:

Sam Hörbye’s thoughts on what has sparked the recent interest in private label Amazon businesses
How Sam leverages his former Amazon FBA experience at his firm, Olsam Group
Sam’s tips for maintaining the entrepreneurial passion behind an Amazon brand
Sam explains how he evaluates brands to invest in — and why he uses brokers to find leads
The steps Amazon sellers should take before putting their businesses on the market
When is the right time for a private label brand owner to sell their business?
How Sam captures and maximizes a business’ growth potential after a purchase

In this episode…

How do you know when it’s the right time to sell your Amazon private label business? What steps can you take to ensure that your brand will achieve the most profitable exit possible?

According to Sam Hörbye, there are a few key actions that every FBA private label brand owner should take before trying to sell their business. Most importantly, they should prepare their finances. As Sam says, Amazon sellers need to know what their profit margins are and what their businesses are worth, as these will play a huge role in valuing their brand. So, what other steps can you take to boost the value of your private label brand before a sale?

Sam Hörbye, the Co-founder of Olsam Group, joins James Thomson on this episode of the Buy Box Experts podcast to talk about his process for investing in FBA private label brands on Amazon. Sam explains how he identifies and evaluates profitable businesses for sale, his best practices for partial exits, and the various ways he leverages his former Amazon experience at his current company. Stay tuned.

Resources Mentioned in this episode

Sponsor for this episode…

Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.

The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.

Buy Box Experts prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.

Learn more about Buy Box Experts at BuyBoxExperts.com.

Podcast Episode Transcripts:

Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.

Intro 0:09

Welcome to the Buy Box Experts podcast we bring to light the unique opportunities brands face in today’s e commerce world.

James Thomson 0:18

Hi, I’m James Thomson, one of the hosts of the Buy Box Experts podcast. I’m a partner with Buy Box Experts and the former business head of selling on the Amazon team at Amazon, as well as Amazon’s first FBA account manager. I’m the co author of a couple of books on Amazon, including the recent book, Controlling Your Brand in the Age of Amazon. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire Buy Box Experts, you receive the strategy, optimization, and marketing performance to succeed on Amazon. We also support investors with due diligence services. Go to buyboxexperts.com to learn more. Before I introduce our guests today, I want to send a big shout out to the team at GETIDA. A global leader in Amazon FBA auditing and reimbursements, GETIDA analyzes your Amazon data, reconciles your FBA inventory and files claims for reimbursements on your behalf. To get your money back into your pockets you can focus on investing in more inventory and growing your business. To learn more, check out getida.com. Today on our podcast, we welcome Sam Hörbye, co founder of Olsam Group, a UK-based firm that buys and grows private label brands. Earlier Sam worked at Amazon where he managed some of the UK’s largest third party sellers on Amazon’s worldwide marketplaces. Sam also started, scaled, and sold his own category leading Amazon FBA business. Sam, welcome. And thank you for joining us today on the Buy Box Experts podcast.

Sam Hörbye 1:50

Thanks very much, James. It is great to be here.

James Thomson 1:53

So let’s start by talking about all these private label businesses. They are a hot commodity today, coming out of Amazon. What do you think has happened in the last couple of years to create so much interest in these firms? When by frankly, private label brands have been around since the beginning of the Amazon Marketplace?

Sam Hörbye 2:13

Yeah, it’s it’s a, it’s a big question. And there are probably a couple of a couple of major factors at play here. I think. For me, I kind of focus on that kind of for what three or four reasons and I think the first one this is purely come having kind of seen it internally is that over the last, I’d say four or five years, Amazon’s there’s been there’s been a progressive focus and shift towards investing the 3P’s our services now, aside from FBA are really quite an obvious one, there’s really been a huge amount of investment in sort of, you know, products, marketing products, and tools that help sellers just gain more visibility on the platform versus their retail competitors. So you’ve got, you know, brand analytics, you’ve got PPC related products, b2b, which was what I worked on at Amazon, you know, allowing a small business owner to potentially be able to sell to the likes of, I mean, it’s an incredible opportunity. So I think there’s been a huge amount of investments towards helping 3Ps succeed. And what’s that meant is that the sellers have just grown much faster, much in the last couple of years. And I’ve been extremely successful. I think, you know, the, the next point is, is just probably around the investor realization of like, how much the businesses are worth. Now, this was this was new to me, and I think is what chatted a lot with my business partner, all he is the kind of a key, I guess, you call them like, you know, the key, like super factors around Amazon brands, and why they’re worth what they are. And I think the key ones are around, you know, the compounding review mode, you know, and I wasn’t talking about this virtuous cycle, you know, more of us drives a higher sales rank, which drives more sales. And it’s just, it’s just a perpetual cycle. And this is something that brick and mortar stores just don’t have. And Shopify stores spend a lot of money to gain, right. And then I think you know, the the other points around the margin, the margin is good as 20% Plus, and again, this is hard for retail stores to compete with this. And then the final one is, this is amazing is that Amazon FBA brands have variable cost p&l because Amazon takes like so much of the work on a variable basis, the shipping returns, and the expenses are just much easier to manage. Contrast this with a small business where you know, the costs are high fixed costs are really high and the margins quite low. So these are what we think like, why I think investors are looking at seeing the value in FBA brands. And then the final one is just, you know, this is a huge opportunity. And I read one article which said that this can be the first trillion dollar asset class that’s come from scratch. Now, that’s been held By, you know, sure there’s COVID. There’s been tailwinds. But But I put what I think so cool. It’s just the the rate at which the Amazon platform is growing, and it’s growing, you rarely get a million new cells enjoying this year. So, I think, the sheer scale of an opportunity, and it’s hard to underestimate and if you package up all the investment that’s come in both, I think it’s really in a bit billion or something

James Thomson 5:25

else. It’s a huge number. It’s definitely a huge number huge. And I think that

Sam Hörbye 5:29

that captures only about .15% of the other marketplace. Now granted, of course, not the of course, the entire 3p marketplace, attractive investment opportunities, but still .15%. Those are kind of the reasons why I think has been a bit of a

James Thomson 5:43

so so let me ask you this, you worked at Amazon, but you also had the opportunity to cut your teeth on being an Amazon seller yourself and building a business. Were you building private label brands? Were you aggregating other people’s products and reselling them? What what kind of business model did you have? as part of your your original experience?

Sam Hörbye 6:05

Yeah, I mean, I think look, why is it like I told you before hopping on this, this, this zoom is that my my background is in e commerce. So I don’t come from a venture capital background. I don’t know much about investment banking, and m&a. But what I do know about is about Amazon FBA, so as you say, you know, began working in the marketplace in late 2015, helping UK European third party sellers, mixture of retail arbitrage and private label, essentially, my job was to get from page 100, to one. And while I was there, you know, I thought it was incredible to see just how fast these businesses can grow and how they can leverage the platform to scale. So yeah, I did what many sellers we speak to do, which is go to China, meet suppliers, you know, source products, and eventually, just really great teeth and place your first PR and scale from there. And it was it was, it was really scary, because pretty much all my savings at the time went into our first order. And you know, it was it was a private label brand in a niche that I felt was underserved, and, you know, eventually sold that in the middle of 2018. But what I want to emphasize is why it’s important is because like Seller Central was a really powerful tool and interface. I think it’s often underused, unless you really know if unless you’ve sold items. And before you know these tools, and you know, these reports that you can leverage. I mean, it was a great plus experience and kind of, you know, lens, why I started off with.