Coran discusses with former client Leon about the extended transfer process and the emotional rollercoaster that turned into a 302-day exit.
- Having a Single target market
- The Transfers process
- Life after the exit
- Building a team
We're live and today I'm joined by Leon Hendrix one our former clients. What we're going to talk about today and why you might want to listen to this episode is we're talking about transferring Leon's business which was the first German based Amazon brand we successfully transferred and sold. We're going to go through that in great detail. Leon thanks much for joining us on the call.
Thanks for having me.
We're titling this one the 302 day Germany exit, well European exit. We're going to get into that a little bit but would you like to start Leon with just a little bit of background because I find that super interesting. Your story before you got started in building an Amazon based brands. What were you doing before launching the brand?
Yes sure. So
It started out of desperation back then I was fresh out of high school I'm pretty young and I decided to go traveling in Australia which is what a lot of Germans do once they finish high school. They just want to go travel. I went to Australia and it's that old story of meeting a girl there a local Australian girl and then having to leave and then you've been heartbroken. I ended up being back in Germany and all I wanted was to go back to Australia and I couldn't apply for any other visa. I didn't have a degree or anything that could get me a visa to go back. I decided that the only way to take control of my life and be able to go back there is by somehow making money online. I met this guy in a bar and he told me about this Amazon FBA thing. I got started and after a year I had launched quite a few products. It was making enough money to go back to Australia. I was back in Australia and I'm back with my girlfriend and we applied for a partner visa. Long story short I hired a small team, systemized the business and decided that I wanted to exit it because it has fulfilled its purpose. It got me back to Australia and got me the money that I wanted to make. I was ready to exit. I sold the business pretty quickly after starting it but the handover process that was that's another story.
We'll get into that before you jump ahead too far I just want to talk about a couple of things. First up like most of our all our client calls on this podcast the Truth About Exits we can't reveal information about the brands and the specifics of the deal or the buyers because of NDA's. That's just part for the course when it comes to business transactions. What I do want to talk in broad strokes is one of the great things about your business and why we had so much buyer interest. This was because you made the decision to build out a brand around one single target market and adding more products for that target market. Whereas some people selling on Amazon just go for whatever highest selling and they think they can rank. How did you decide to take that path instead of the random approach?
Well I have to say I was a bit lucky I found a pretty good niche or niche or however you want to call it. I saw quite a lot of potential in different products and they're all in the exact same niche. For me it was pretty simple and I knew that I wanted to build a sellable asset that could one day exit. I knew that having one brand it's just way more powerful because if you think Ryan Moran talked about it which you know as well of course he said that he launched a product I think it was in a yoga niche or something. He was selling a yoga mats and then later he launched a yoga block or something some other product that was already related to that. He not only boosted the sales office via the second part of the launch obviously but because he had two products sit the second product also boosted the sales of the first product. It really creates a lot of cross selling and it's just way more powerful. I just made a commitment. I told my friend who started alongside with me with his own business to stick with his brand and stick with his niche because he was also tempted to launch some other products and I told him just stick to it. It was definitely the right decision.
Absolutely. This was one of the biggest mistakes we see Amazon sellers or sellers that start that business on Amazon is not focusing and then wondering why a buyer would see their business as valuable. That's cool. Everyone out that should do that. That was awesome. As a result, we did find buyers relatively quickly after going to market. We had a number of conversations. We got an offer that was awesome for both you and the buyer and then we started the hand of the process. I started at the top of this with the premise of a 302-day European exit. That's the time it took from the time we signed the deal with the buyer until the time you were finally paid out and we could walk away from the deal. That was a long time.
We're going to dig into that a little bit. It was a bit painful on both sides so we'll tread lightly. But could you walk us through part of how that went down for you? We initially got the offer it was all very exciting. Could you explain just in broad strokes what how that felt or what happened next from your perspective and then we'll go into the actual transfer side.
Definitely. In the beginning I was really happy when I first when we first agreed on the purchase price and we came to an agreement. I was really excited but I also felt a bit worried just hoping that it would go smoothly and we could transfer it easily and there wouldn't be any issues because like most Amazon sellers. I was always afraid of Amazon always afraid that something was going to go wrong. That a competitor's going to try to get my listings down or whatever. I just hoped that nothing would happen. It turned out that it wasn't easy to transfer the business because I think the first thing that happened was the buyers they had to set up their own store in order to set up their own store they had to set up a business first and they what happened then I can't really remember.
For the bit of the backstory they needed to set up a new seller central account in Germany because you can't transfer a German based seller central accounts to a new entity even if you're doing this yourself as some of those may know. It's a pain and it takes a long time. We had one client it took a year to get approval to transfer between entities that he controlled. It's a pretty crazy process. What we did was a brand transfer and in this case the buyers didn't already have an Amazon account they needed to set up a seller central account. The first entity we won't go into the countries because this can change over time but basically where the entity the country that entity was from could open a seller account. As we got further down the process we realized they weren't able to access the FBA program. Then we started saying well if we can't use the FBA program they can’t get prime. That's going to impact sales then they had to go and find another country to open an entity and open a new seller central account. That was part of the problem on the transfer and meanwhile all this whole-time money is sitting in escrow. The buyers have funded the entire payment of the business inventory of course that was paid directly and Leon's got the asset we're wanting to transfer it across they're wanting to buy it. We're stuck in the middle. We're working with the buyers and Amazon to figure out how to get them set up. Fast forward it took quite a bit of time to first off realize that this country was unable to use the FBA program and then for the buyers to find the country that they wanted to set up in. That took a lot of time back and forth. Once we got to that which was quite a few months at this point let's talk about the actual physical transfer and how you guys worked with Amazon and with the buyer to transfer that asset the brand across and then the asset and the inventory.
That was ala little bit tricky but it wasn't too tricky but it took a bit of work. What happened was that we had we had our own account and the buyers they also had their own accounts. We had to transfer the inventory and also the FNSKU that are attached to the products that are specific to that were specific to my seller account. What we had to do is we had to slowly take out inventory into a third party warehouse that would then relabel them with the buyer's FNSKU's. Then slowly shipping the product into their warehouse because they obviously still have the limit. I think it's 5,000 products. We couldn't just transfer it all. What we'd have to do is we had to slowly transfer the inventory and they had to ask for inventory limits expansion whatever you want to call it. They just have to ask Amazon if they could get more storage or a higher storage limit. You can only do that once you show them that you have sales. It had to happen over time. We had to make sure that we track every single piece of inventory to make sure that it's getting paid properly because I mean probably every seller knows that things can get a bit messy once you have a certain number of products you have to keep track of them you have to know where they are and when it comes to an exit you also have to know what order of inventory is where and how many of them are in your inventory. Then in the third party warehouse, their warehouse and then how what was the cost of these specific orders and all that sort of stuff. It was a bit messy. I think we kept it under control pretty well because we really focused on keeping all the documents together and keeping track of all the inventory and over time we try to split the entire inventory.
The key is using a third party warehouse because you know obviously Amazon won't take well not obviously but Amazon won't take the liability despite us asking every time. They wouldn't take the liability of transferring products from one account to another. Also there's the labelling issue, the label needs to change right? That's part of it. Now what we were doing this handover we didn't just pull all of your inventory out and send that to the buyer. We kept you selling under your account and got the buyers up and running. You increase your price and they took the buy box from you once they were consistently selling and had upped their limits. We removed you as the seller and they were the only brand owner of this brand. We also gave them access to the brand and then transferred that brand registry across right as part of that process.
Exactly. we had to contact the German Brand Registry and then ask for them to transfer the registry and then they could transfer that on Amazon as well once they had all the documents showing that they are the owner of the brand now.
Awesome. Okay. this whole process and we make it sound kind of easy. Like I said at the top it was 302 days in total. This is the longest transfer and handover with we've been a part of to date. How was that process from your perspective of we have a deal but a lot of this is out of my control. From our perspective we kept the lines of communication open which I think is really important when something isn't going right and it's not within our control right? It was to keep the conversation and the communication open. But from your side how did that how did that play out on your side? And if someone's going through a difficult transfer or contemplating selling that business how would you think about it if you were to go through this process again?
Definitely. It was good that we kept in touch. The open communication is really good. We had a slack messenger set up together we could just stay on track with where everyone was at and just to prepare for a transfer definitely keep track of your numbers, your books, your documents, your orders and all that because otherwise you're going to pay for it later. I would say just stick in there make sure you stick to the rules of especially of Amazon. I mean there's no other choice than going through it right? Definitely keep the communication going and definitely. It's really important to work together on this
For sure, awesome. No I appreciate you sharing your perspective on that. It was a tough time but we got through it all together which was awesome and we didn't kill each other by the end that's nice. How did your life change post exit?
Interesting question, it's kind of like this is a thing that you hear about a little bit of falling into a hole. First of all you're really happy that it's finally over it and you're free. You feel this freedom but there's this question that comes into your head and it's like what's next? What do I do now? It can be quite scary because all of a sudden you have raised the bar you have successfully sold a business you have all this money and you know that the next business can’t just be another one of those or even something smaller. It has to be bigger. I don't know if it's just my ego but I think it's pretty common. I've heard similar stories like that. For me I just want to create something bigger now and there's definitely that pressure there to start all over again but it's also exciting. I just love the freedom of being freed up especially from all this from this tough handover period. I would definitely suggest to everyone that ends up selling the business to have a to have a celebration and take a few weeks off and really enjoyed the freedom.
That's tough to do as well because you go from there. That's the same with us. We know this is this is our business this is what we do. We get excited as well when contracts are signed. What we find is as a team is once the commission the payments come through it's often such a long time. I'm mostly a couple a months but in this case almost a full year before the full funds are released. It's that initial elation the work of getting it done and then when the money hits it's good that you bring that up. You should always have that plan of once this money comes in this is what I'm going to do to celebrate whatever that is for you. Make sure you have that ready to go because you can kind of feel like you've run a marathon but at the end and the money comes in and you're like well now it just feels the same. That's cool. That was really good that you brought that up. What are you working on now? What are you excited about now?
What I'm doing now is I'm currently doing some consulting for entrepreneurs who already have an established business and I'm just overwhelmed with the amount of workload. I help them systemize and automate their business and also helping them with delegating effectively because I know a lot of entrepreneurs struggle with that and I did as well in my business in the beginning. But I ended up hiring a team and building a small team that did help me a do all the annoying stuff like procurement, supply chain management, PPC management and all that sort of stuff. I'm currently I do that and I definitely need a vacation again. I haven't I haven't celebrated properly yet and I definitely need to do that.
Okay great. Well maybe we can we can catch up somewhere soon and celebrate together mate that'd be awesome. definitely. Let's do it. On the team building front and you mentioned the slack channel with the buyers earlier. I was in that slack channel as well of course because we were all communicating that your team was picking up the slack there and helping with the transfer process as well. You built a really good team and those processes and stuff in place helped. While it still was a long transfer process. It helped make that transfer easier.
Definitely I can highly recommend getting a system in place and getting help from someone who's done it before.
If people did want to reach out to Leonho what's the best way to get in touch with you?
I would suggest just add me on Facebook or LinkedIn just Leon Hendricks. You should find me there. Otherwise there's probably links in the description of this podcast and just feel free to reach out. I'm happy to help. Just let me know if you're going through a handover process as well. It's tough or maybe you want to sell your business. I'm always happy to help.
Awesome. Okay. Well like you said we'll put that in the show notes linking direct to you people can reach out and it's good just to have a friendly voice to talk to and someone that's outside of the deal too to talk to as well. that's awesome. Well thanks much for coming on Leon and reliving this epic transfer that we went through but I'm happy that we're through that and you're onto your next thing.
Thank you very much for having me as well. And thanks. Thanks for your help with helping me sell the business, transfer it and your perseverance through this tough handover process and everything. Thank you.
Cool. Thanks Leon. Cheers mate. Talk soon. Cheers.